Slade's Ferry Bank
                       Your Partner in Life's Journey.


                                Annual Report
                                    1997


Description of Business

      Slade's Ferry Bancorp, originally incorporated as Weetamoe Bancorp in
June of 1989 under the laws of the Commonwealth of Massachusetts, is a one
bank holding company which owns and controls 100% of the assets of Slade's
Ferry Trust Company and its subsidiaries.

      The primary business of Bancorp is the ongoing business of Slade's
Ferry Trust, a state chartered trust company incorporated in Massachusetts
in 1959.  The Trust Company is a member of the Federal Deposit Insurance
Corporation and serves as a retail bank.

      Slade's Ferry provides multiple deposit products and a wide range of
financial services, including consumer installment loans, residential and
commercial mortgages; as well as other forms of commercial lending.  It
serves a broad customer base derived from southeastern Massachusetts and
nearby Rhode Island, currently operating ten strategically located retail
facilities and multiple ATM's in the towns of Fairhaven, Somerset, Swansea
and Seekonk, and the cities of Fall River and New Bedford, MA.  The Bank
keeps convenient business hours, including Saturdays.

      The Bank actively competes with a variety of other financial
institutions - major banks, bank holding companies and credit unions - for
deposits, loans and additional forms of business by offering competitive
rates.  The Bank adheres to an established philosophy of providing
professional, highly personal service throughout its marketplace.

      An Equal Opportunity / Affirmative Action Employer (M/F/D/V),
Slade's Ferry Trust Company employed a total of 129 full-time and 56 part-
time employees as of December 31, 1997.

      Corporate offices are located at 100 Slade's Ferry Avenue, Somerset,
MA.


              EQUAL HOUSING                      MEMBER
                 LENDER                           FDIC


In Appreciation

      The Slade's Ferry family salutes Edward S. Machado and Bernard T.
Shuman as they retire from active service to the Slade's Ferry Bancorp Board
of Directors.  Mr. Machado has guided Slade's Ferry for thirty years, as both
a Director and as President of the Bank.  Mr. Shuman's steadfast service
dates from the Bank's incorporation in 1959.  Together, their vision and
personal integrity have shaped Slade's Ferry as a solid financial
institution and a responsible corporate neighbor.

      We reflect with gratitude on their many years of service and look
forward to the privilege of their continued counsel as Honorary Directors.

   [Photo of Edward S. Machado]           [Photo of Bernard T. Shuman]
         Edward S. Machado                    Bernard T. Shuman


Shareholders Letter

      In 1997, we successfully accomplished our financial objectives and
priorities.  Due to our cash purchase of the National Bank of Fairhaven in
1996, the bank's capital status was reduced to "adequately capitalized".
Our first priority in 1997 was to return the bank to the "well
capitalized" status through earnings and a public offering.

      The public offering at $9.75 per share generated 402,951 new shares,
and the addition of $3,866,171 to capital after related expenses.  The
public offering plus record earnings of $2,845,990 brought our capital to
$26,436,426 after dividends or 10.74%, well over the threshold of 6% for
well capitalized status.

                          [Photo of James D. Carey]

      Our earnings increased $467,795 or 19.67% over 1996 due to the full
year effect of the acquisition of the National Bank of Fairhaven in August
of 1996, growth of $14.7 Million in loans and stable interest margins.

      We also welcomed to our Board of Directors five members to provide
counsel, wisdom and support as we prepare for the new century:  Melvyn A.
Holland, Managing Partner in the CPA firm of Rosenfield, Holland and
Raymon PC; William Q. MacLean Jr., Vice President of Cornish & Company
Insurance and President of MacLean Consulting, Inc.; Shaun O'Hearn Sr.,
President of Bolger & O'Hearn, Inc.; Lawrence J. Oliveira DDS,
Orthodontist; and David F. Westgate, President of Quequechan Management
Corp.  These directors bring additional experience, perspective and
influence to our board, as well as valuable assistance in developing the
Greater New Bedford marketplace.

      As mentioned on the dedication page, two directors retired from
active board service and became honorary directors.  Bernard (Bert) T.
Shuman, whose service extends back to the origin of the bank in 1959, and
Edward S. Machado, who served as President of Slade's Ferry Bank for years
and as a director of the bank since 1968. Both of them dedicated years of
service to forging the character, principles and ideals of the bank, and
they have been major contributors to Slade's Ferry's success.

      Our stock, along with the rest of the market, enjoyed a very strong
year, rising from an average market price of $9.00 per share at the
beginning of 1997 to approximately $16.00 per share by year end.  Our
strong earnings allowed us to distribute an extra cash dividend at year
end and a 5% stock dividend in February of 1998.

      We are pleased to advise you that we are now listed on the NASDAQ
Small Cap Market with the symbol SFBC, which greatly enhances our
visibility and liquidity.  Our stock is presently trading at record
multiples of book value or earnings, but is priced consistently with other
banks in New England.

      As we look ahead into 1998, we will continue to focus our efforts on
expanding our presence in the Greater New Bedford market area.  We remain
intent on preserving our independence and increasing shareholder value as
your bank continues to grow and prosper.

      Your continued support of the bank, as displayed by the success of
our public offering and the fact that our dividend reinvestment program
has grown to almost 50% participation, is extremely gratifying and very
much appreciated.

Sincerely,

/s/ JAMES D. CAREY
James D. Carey
Executive Vice President
February 11, 1998


"Our life is frittered away by detail... Simplify, simplify."
    -- Henry David Thoreau


Partners in Life's Journey

      Throughout the ages, many different philosophers -- from Plato to Mick
Jagger -- have had something to say about how best to live life.  What's
important.  What brings happiness.

      We hear that life should be a journey, not a race.  Savor today's
precious moments, rather than rushing to pass the next milestone.  Stop
and smell the roses.

      Still, reality tells us that tomorrow won't take care of itself.
Each stage of life calls us to new opportunities and new challenges.  We
must plan for the future, for ourselves, our business, and for our family.

      Striking balance in life is a noble pursuit.  But we often find it's
more of a process than a product.  A process that's made a little easier
with help from the right people.  Their guidance lets us focus on the big
picture, not be daunted by the details.   So we're free to focus on the
relationships and the pastimes that give our lives meaning.

      When it comes to the details of banking and financial planning, no
one understands a customer's quest for simplicity better than a Slade's
Ferry Banker.  We recognize that we have an opportunity to make our
customers' lives less harried.  That every financial transaction -- from
buying a first car to planning for retirement -- can be made easier for
you if we really listen to your needs, and deliver truly personal,
individualized service.

      As a locally-owned, hometown bank, our fundamental service
commitment is based on the notion that our neighbors needn't sacrifice
financial clout and know-how to get the simplicity that comes from one-on-
one attention.   That's why we offer accessible expertise for the
financial decisions that accompany every step along life's journey.

      Such a commitment requires time -- time invested by your Slade's
Ferry Banker in you, in your business and in your future.  And when you're
choosing a lifetime banking partner, can you really afford to accept
anything less?

Embarking on New Challenges.

When a young, newlywed couple starts their life together, they may be
challenged by their very first independent financial decisions.  It's an
important step in becoming an adult.  But being "grown up" doesn't have to
mean going it alone.  We're here to help.

      We'll get you started with the right checking accounts to handle
your household expenses.  Arrange for direct deposit of your paycheck or
other income.  We'll even secure that new marriage certificate in a Safe
Deposit Box at the branch nearest you.

      Slade's Ferry offers MasterCard and Visa credit cards for young
borrowers who want to establish a good track record -- plus, the annual
fee is on us for the first year.  And when you find yourself with extra
expenses, your Slade's Ferry Banker can tailor a loan to meet your special
needs.  Like automobile loans when you need a second car.  Consumer loans
to help you furnish your new apartment -- or a baby nursery.  And mortgage
loans for first-time homebuyers who find they need more space for their
growing families.

"Well, we all need someone we can lean on ..." -- Mick Jagger


"It is thrifty to prepare today for the wants of tomorrow."
    -- Aesop, 550 B.C.

      Time has a funny way of building steam with each passing year.  At
Slade's Ferry, your banker will help you plan ahead.  Get your children
started with a preferred-rate First Mate savings account and U.S. Savings
Bonds.  Set you up with a savings and investment plan that fits your goals,
from statement savings accounts to Certificates of Deposit.  Even start you
on the road to a secure retirement with Individual Retirement Accounts.

      We know our customers can find financial products like these at most
any bank.  But a Slade's Ferry Banking relationship means more than
products.  It means people.  Experts who know you, and can anticipate your
financial needs.  People who are proud that their genuine interest in you
sets them apart from just any other banker.  And distinguishes Slade's
Ferry as an accessible financial partner, not just another bank.

Offering Strength for Every Walk of Life

      For years, you've held a dream to start your own business.  Now the
time is finally right.  You gather your determination and your skill, and
put the wheels in motion to fulfill that dream.

      Now's the time to find a financial ally who believes in you as much
as you believe in yourself.  A banker who knows the communities, and the
customers, your business serves.  And can put that confidence and
knowledge to work for your new company.

      Your partners at Slade's Ferry also offer the kind of fiscal
resources and competitiveness you may have thought were only available
from out-of-town megabanks.  Your business needn't endure the frustration
of dealing with a distant institution that's out of touch with your
markets and your needs.  The tools to help you achieve your success are
right here in your own backyard.

      At Slade's Ferry, we offer a full range of commercial checking,
savings and investment services to fit the way your firm does business.
Our lending capabilities are diverse and flexible.  Short-, medium- and
long-term loans.  Lines of credit.  Letters of credit.  Even loans secured
by receivables or inventory.

      When it's time to build, expand or invest in better equipment, your
Slade's Ferry Banker will offer a variety of financing packages that meet
your company's objectives.  Slade's Ferry can also arrange Small Business
Administration loans (low DOC, 7A and 504 programs), that are
Massachusetts and Rhode Island approved.

      And our everyday commercial services -- from automatic transfers and
electronic payroll tax payments, to employee savings plans through payroll
deduction -- will free you up to focus on your customers.  Or simply give
you time to savor your success.

      Because when your company succeeds, Slade's Ferry -- and the
communities we serve together -- succeed too.  With a Slade's Ferry
partnership, your banker won't disappear after the ribbon-cutting
ceremony.  Call us.  We'll be right over.


"Focus on making things better, not bigger."
   -- Life's Little Instruction Book


"The secret of success is constancy to purpose."  -- Benjamin Disraeli


Sustaining a Lifetime of Trust

      We've been with you through hardship and accomplishment.  Now it's time
to reap the rewards of your hard work.  One of those rewards is in knowing
that the financial partners you've trusted for years are still with you as
your priorities change.

      If your children are ready for college, we're here with special
loans for education.  Or maybe it's time to buy that second home, hoist
the sails of your own boat, or take the trip of a lifetime.  Your Slade's
Ferry Banker can help those cherished dreams become a reality.

      And perhaps you're wondering how to lay a foundation of financial
security for your grandchildren.  We can provide the answers through our
affiliation with the Trust Services Department at State Street Bank.

      It's a simple matter of looking to the friends at Slade's Ferry
whose reward is your lifetime of satisfaction and success.

      A well-spent life is the ultimate endeavor.  And, as with any
endeavor, making life well spent is a matter of choosing teammates whose
priorities match your own.  At every stage of life.

      A Slade's Ferry Banking partnership is one way to bring the big
picture into focus.  Let us help you enjoy the view.


"Leave everything a little better than you found it."
   -- Life's Little Instruction Book


Financial Table of Contents


Selected Financial Data                                               11

Management's Discussion and Analysis                                  12

Results of Operation                                                  12

Financial Condition                                                   15

Independent Auditors' Report                                          20

Consolidated Balance Sheets                                           21

Consolidated Statements of Income                                     22

Consolidated Statements of Changes in Stockholders' Equity            23

Consolidated Statements of Cash Flows                                 24

Notes to Consolidated Financial Statements                            26

Board of Directors and Officers                                       40



                            Slade's Ferry Bancorp


Market for Registrant's Common Equity and Related Stockholder Matters

Market Information

      On January 7, 1998, the Company's common stock became listed and
began trading on the NASDAQ Small Cap Market under the symbol SFBC.  Prior
thereto, the Company's common stock was listed in the "pink sheets" of the
over-the-counter market.  The following table sets forth the range of high
and low bid quotations as reported in the "pink sheets" by quarters for
the two most recent years.

<TABLE>
<CAPTION>
                      1997                1996
----------------------------------------------------
                 High      Low       High      Low
----------------------------------------------------

<S>             <C>       <C>       <C>       <C>
1st quarter     $ 9.75    $ 8.25    $ 8.75    $ 8.00
2nd quarter      10.50      8.88      8.50      7.88
3rd quarter      13.00      9.50      8.50      7.55
4th quarter      16.63     13.13      9.00      8.63
</TABLE>

      These quotations reflect interdealer prices, without mark-up, mark-
down, or commission and may not necessarily represent actual transactions.

      During the period May 16, 1997 to June 15, 1997, the Company,
through a public offering, issued 402,951 shares of common stock at $9.75
per share.

      As of December 31, 1997, there were 1,402 stockholders of record
of the Company's common stock.


Dividends - History and Policy

      The Company since its inception in 1990, and prior thereto the Bank,
has consistently paid dividends to the stockholders since 1961.

      In 1997, the Company paid quarterly cash dividends of $.05 per share
and an extra cash dividend of $.05 per share, for a total of $.25 per
share.

      In 1996, the Company issued a 5% stock dividend on the Company's
common stock, resulting in a distribution of 130,469 shares.  The Company
also paid quarterly cash dividends totaling $.16 per share, plus an extra
cash dividend in December 1996 of $.08 per share, for a total of $.24 per
share in 1996.

      The declaration of cash dividends is dependent on a number of
factors, including regulatory limitations, and the Bank's operating
results and financial condition.  The stockholders of the Company will be
entitled to dividends only when, and if, declared by the Company's Board
of Directors out of funds legally available.  Under the Massachusetts
Business Corporation Law, a dividend may not be declared if the
corporation is insolvent or if the declaration of the dividend would
render the corporation insolvent.

      Furthermore, the directors may be liable for authorization of a
dividend if such dividend is in violation of the Articles of Organization,
or if the corporation is then or is thereby rendered insolvent.  The
Company will be considered insolvent when it is unable to pay debts as
they fall due in the usual course of business, or when its liabilities are
in excess of the reasonable market value of assets held.

      Chapter 172 Section 28 of the Massachusetts Statutes on Bank and
Banking provides that a bank's Board of Directors may, subject to the
restriction contained in the section, declare and pay dividends on capital
stock out of net profits from time to time and to such extent as they deem
advisable.  However, under this provision, no cash dividend shall be paid
unless, following the payment of such dividend, the capital stock and
retained earnings account will be unimpaired.


Selected Financial Data

      The following table sets forth selected financial data for the last
five years.

<TABLE>
<CAPTION>
                                                               Year Ended December 31
------------------------------------------------------------------------------------------------------------
(Dollars in Thousands Except per Share Data)     1997         1996         1995         1994         1993
------------------------------------------------------------------------------------------------------------

<S>                                            <C>          <C>          <C>          <C>          <C>
EARNINGS DATA
  Interest Income                              $  23,150    $  19,495    $  16,541    $  13,546    $  13,247
  Interest Expense                                10,412        9,078        7,764        4,944        5,214
  Net Interest Income                             12,738       10,417        8,777        8,602        8,033
  Provision for Loan Losses                          500          400          550          645        1,455
  Noninterest Income                               1,562        1,305        1,056        1,099        1,226
  Noninterest Expense                              9,033        7,380        6,632        6,701        5,853
  Income Before Income Taxes                       4,767        3,942        2,651        2,355        1,951
  Applicable Income Taxes                          1,921        1,564        1,005          888          723
  FASB 109 Adjustment                                 --           --           --           --           40
  Net Income                                       2,846        2,378        1,646        1,467        1,268

PER SHARE DATA(1)
  Net Income-Basic                             $   0.940    $   0.860    $   0.601    $   0.567    $   0.494
  Net Income-Diluted(2)                        $   0.940    $      --    $      --    $      --    $      --
  Cash Dividends                               $   0.250    $   0.240    $   0.174    $   0.151    $   0.092
  Book Value (at end of period)                $   8.168    $   7.116    $   6.811    $   9.023    $   9.904
  Avg. Shs. Outstanding                        3,033,197    2,764,887    2,738,250    2,587,816    2,568,909
  Shares Outstanding Year End                  3,236,713    2,789,142    2,617,181    1,645,492    1,552,820

BALANCE SHEET DATA
  Assets                                       $ 301,571    $ 291,342    $ 233,422    $ 193,909    $ 196,476
  Loans                                          213,736      198,986      151,094      136,191      126,078
  Unearned Discount                                  690          643          527          403          313
  Allowance for Possible Loan Losses               3,694        3,354        2,498        2,306        1,954
  Loans, Net                                     209,310      194,935      148,069      133,482      123,811
  Goodwill                                         3,081        3,307           --           --           --
  Investments                                     58,668       57,732       58,757       43,537       50,187
  Deposits                                       271,322      267,791      214,221      177,315      179,567
  Stockholders' Equity                            26,436       19,847       17,827       14,848       15,380

FINANCIAL RATIOS
  Net Yield on Interest Earning Assets(3)           4.66%        4.44%        4.36%        4.78%        4.59%
  Interest Rate Margins(3)                          3.88         3.72         3.72         4.33         4.19
  Net Income as a Percentage of
    Average Assets                                  0.96         0.94         0.75         0.75         0.66
    Average Equity                                 12.27        12.69         9.99         9.71         8.68
  Dividend Payout Ratio                            27.57        27.95        29.03        27.93        19.55
  Average Equity to
    Average Assets                                  7.79         7.40         7.55         7.71         7.64


<F1>  Earnings per share are computed based on the average number of
      shares of common stock outstanding during the year.  On January 19,
      1994, the Company declared a 5% stock dividend mailed to
      stockholders on February 1, 1994.  On  February 24, 1995, the
      Company declared a 5% stock dividend mailed to stockholders on March
      1, 1995 and on March 13, 1995, the Company announced a 3 for 2 stock
      split mailed to stockholders on April 18, 1995.  On January 8, 1996,
      the Company declared a 5% stock dividend mailed to stockholders on
      January 31, 1996.  Per share data has been restated to reflect the
      effect of the stock splits and the stock dividends.

<F2>  There were no stock options outstanding in years prior to 1997.

<F3>  Calculated on a fully taxable equivalent basis.
</TABLE>


Management's Discussion and Analysis

      The purpose of Management's Discussion and Analysis is to focus on
certain significant factors which have affected the Company's operating
results and financial condition, and to provide stockholders a more
comprehensive review of the figures contained in the financial data of
this report.

      On May 16, 1997, the Company offered 550,000 shares of its Common
Stock, par value of $.01 per share, at an offering price of $9.75 per
share to the general public.  The offering, which was not underwritten,
was scheduled to expire on May 31, 1997, but at the option of the Company,
was extended to June 13, 1997.  The offering resulted in 402,951 shares
being issued for total proceeds of $3,928,772.  The net proceeds were used
to increase the capital of the Bank and to assist in meeting the
requirements of a "well capitalized" bank.  As a result of the merger and
the acquisition of $65.1 Million in assets from the National Bank of
Fairhaven, which occurred in August 1996, the capital ratio of the Bank
and the Company had decreased to an "adequately capitalized" status from
the "well capitalized" status that was previously maintained.  On June 30,
1997 the Company, through its current year to date earnings level,
returned to a "well capitalized" status.  The capital ratios were further
enhanced by the additional capital obtained from the public offering.
After deducting total expenses pertaining to the offering of $62,601, the
Company contributed $2,300,000 to the Bank as an infusion of capital.  The
remaining $1,566,171 was retained by the Company until such time as growth
of the Bank should warrant additional capital, or the possibility of
acquiring another institution should avail itself.

      In July, 1997, the Board of Directors voted to increase the optional
cash contribution in the Dividend Reinvestment Plan from $1,000 to $5,000
annually, and a registration statement under the Securities Act of 1933
was submitted to the Securities and Exchange Commission for registration
of 100,000 shares in the Dividend Reinvestment Plan.  Under the plan,
participating stockholders purchase additional shares in lieu of receiving
cash dividends, and may contribute up to $5,000 annually for additional
shares of the Company's common stock without incurring any service fees or
commissions.

Results of Operation

      The Company's principal source of earnings is net interest and
dividend income, which is the difference between the interest earned on
loans and investments and interest paid on deposits and borrowings.  Net
interest income is affected by interest rate spread, the difference
between the yield earned on earning assets and the rates paid on interest
bearing liabilities.  The results of operations are dependent on net
interest income and also affected by the level of deposit service fees,
operating expenses, the provision for possible loan losses, and the impact
of federal and state taxes.

      For the year ended December 31, 1997, the Company recorded earnings
of $2,845,990 or $.94 per share, compared to earnings of $2,378,195 or
$.86 per share in 1996, and $1,645,587 or $.60 per share in 1995.  The
increase of $467,795 or 19.67% in 1997 is attributed to a larger asset
base derived from normal growth and the acquisition of assets from the
National Bank of Fairhaven in late August, 1996.  Increased loan demand
throughout 1997 has resulted in new loan originations generating income at
higher yields than other earning assets which in turn improved our net
interest margin.  Return on average assets increased to .96% in 1997 from
 .94% in 1996 and .75% in 1995.  Return on average equity for 1997, 1996,
and 1995 was 12.27%, 12.69% and 9.99% respectively.  The return on average
equity decreased from 1996 to 1997 due to the addition to equity of
$3,866,171 of net proceeds associated with the public offering of the
Company's common stock in June, 1997.

      On a fully tax-equivalent basis, net interest income was $12.9
Million in 1997, $10.5 Million in 1996, and $8.9 Million in 1995.  Growth
in net interest income in 1997 when compared with 1996 is primarily the
result of an increase of 16.3% in average earning assets, with the largest
increase in the loan portfolio.  This increase in earning assets was
funded with cash flow from earnings, higher levels of customer deposits,
and net proceeds associated with the public offering.  Yields on earning
assets increased to 8.43% in 1997 compared to 8.25% in 1996 and 8.17% in
1995.  This is primarily due to a combination of higher interest rates on
loans and a change in the mix of earning assets.  In 1997, the loan
portfolio made up 74.4% of earning assets, compared to 71.7% in 1996, and
69.7% in 1995.

      Cost of funds increased slightly to 4.55% in 1997, from 4.53% in
1996 and 4.45% in 1995.  During 1997, the average balance of interest-
bearing liabilities increased by $28.6 Million, from $200.5 Million in
1996 to $229.1 Million in 1997, of which the largest volume of increase
was in the time deposit category.  This deposit category pays higher rates
than the lower cost interest-bearing core deposits, such as savings and
NOW accounts.

      Net interest spread, which represents the difference between the
weighted average yield on interest-earning assets and the weighted average
cost of interest-bearing liabilities, increased to 3.88% in 1997 from
3.72% reported in 1996 and 1995.

      Net yield on earning assets, which represents net interest income as
a percent of average earning assets, increased to 4.66% from 4.44% in
1996, and 4.36% in 1995.

      In 1997, the Company provided $500,000 to the Allowance for Loan
Losses, an increase of $100,000 when compared to 1996, due to the increase
in the loan portfolio.  The provision for 1995 was $550,000.

      Total other income increased by $256,760 to $1,562,257 in 1997 from
$1,305,497 in 1996.  Total other income in 1995 was $1,055,959.  Service
charges on deposit accounts, the largest component of Other Income,
increased by $25,752 from $628,997 in 1996 to $654,749 in 1997.  This
increase is attributable to recording twelve months of service charge
income in 1997 on merger related deposit accounts and a larger deposit
base.  Since the acquisition occurred in late August, 1996, only four
months of merger related service fees were earned in 1996.  Service
charges on deposit accounts increased by $54,572 from 1995 to 1996.
Overdraft service charges increased in 1997 by $26,902 from $220,428 to
$247,330.  In 1995, the Bank earned $152,855 in overdraft charges.  Gains
on sales of securities for 1997, 1996, and 1995 were $313,844, $112,631
and $64,810 respectively.  As a result of favorable market conditions in
1997, various marketable equity securities were sold realizing gains.  The
market trends of these types of investments are continuously monitored and
acted upon when management feels it advantageous to respond to these
market opportunities.

      The line item Other Income was $346,334, $343,441 and $263,869 for
1997, 1996 and 1995 respectively.  A slight increase of $2,893 occurred in
1997 when compared with 1996, and an increase of $79,572 occurred from
1995 to 1996.  The largest item in this category is safe deposit rental
fees which increased in 1997 by $26,503.  This increase was partially
offset by a $21,000 decrease in interest earned on funds placed in escrow
in 1996 and deposited with an independent depositor, who acted as Exchange
and Paying Agent for the acquisition of Fairbank, Inc. common stock during
the stock tendering process.  This account was closed in April, 1997.
Various other miscellaneous and fee income decreased by $2,610 in 1997.
The increase of $79,572 in Other Income from 1995 to 1996 was comprised of
$30,000 of interest earned on the above mentioned escrow account,
additional revenue of $20,342 on safe deposit rentals and other
miscellaneous and fee income of $20,230.

      Total Other Expense for 1997 increased by $1,653,346 or 22.40% to
$9,033,507 from $7,380,161 reported in 1996.  Total Other Expense in 1996
increased by $748,634 or 11.29% from $6,631,527 reported in 1995.
Salaries and employee benefits, the largest component of Other Expense,
increased by $989,218 from $4,328,402 reported in 1996 to $5,317,620 in
1997.  The increase from 1995 to 1996 was $365,419.  In addition to
general annual wage adjustments and increases in employee benefits, the
increase is attributable to the retention of the officers and employees of
the National Bank of Fairhaven acquired by Slade's Ferry Bank in late
August, 1996.  Personnel costs associated with these new employees were
expensed for twelve months in 1997, compared to four months in 1996.

      Occupancy and equipment expense combined increased to $1,285,867 in
1997, up by $213,920 from $1,071,947 reported in 1996.  In 1995, occupancy
and equipment expense reported was $881,122.  The increases in this area
are primarily due to the additional expense in maintaining the banking
facilities acquired through the merger, additional depreciation of the
Brayton Avenue drive-up facility opened in August, 1996, and increased
depreciation attributed to new equipment.

      In 1997, the Bank realized a net loss of $42,457 on the sale of
Other Real Estate Owned properties, compared to a net loss of $21,008
realized in 1996, and a net gain of $26,728 in 1995.  The writedown
expense to adjust Other Real Estate Owned book values to recently
appraised values totalled $67,480 in 1997, compared to $30,000 in 1996,
and $104,578 in 1995.

      Federal Deposit Insurance Corporation (FDIC) deposit insurance
premiums in 1997 were $71,880, compared to $6,278 recorded in 1996, and
$204,477 in 1995.  Effective in June, 1995, the FDIC lowered deposit
insurance premium rates for the FDIC Bank Insurance Fund (BIF) and further
reduced the premiums in 1996.  In 1997, under federal legislation enacted
in 1996, BIF deposits were assessed to finance annual interest costs on
government bonds issued to assist in recapitalizing certain thrift
institutions in prior years.  In addition to this assessment, an increased
deposit base due to the merger caused 1997 premiums to increase.

      Stationery and supplies expense in 1997 increased by $67,893, from
$243,653 in 1996 to $311,546 in 1997.  This expense in 1995 was $197,392.
The increase in 1997 and 1996 is attributed to additional supplies needed
to stock the Fairhaven and New Bedford branches acquired in August, 1996.

  The following table sets forth the components of the line item Other
Expense, which reflects an increase of $257,784 in 1997 from $1,678,873 in
1996 to $1,936,657 in 1997.  This item was $1,307,703 in 1995.

<TABLE>
<CAPTION>
                                            1997          1996          1995
-------------------------------------------------------------------------------

<S>                                      <C>           <C>           <C>
Amortization of Goodwill                 $  226,800    $   98,000    $       --

Advertising & Public Relations              334,025       289,029       178,501

Communications                              269,239       257,575       199,588

Professional Fees & Other Services          630,953       586,078       489,452

Other                                       475,640       448,191       440,162
-------------------------------------------------------------------------------

Total Other Expense                      $1,936,657    $1,678,873    $1,307,703
===============================================================================
</TABLE>

      Amortization of Goodwill, a new expense item in 1996, was the result
of the premium paid above book value to the stockholders of Fairbank, Inc.
Goodwill is amortized over a fifteen year period.  In 1997, the
amortization of goodwill reflects a full year of amortization totaling
$226,800, compared to four months in 1996.  Advertising and Public
Relations increased in 1997 compared to 1996 by $44,996, primarily due to
the continuing emphasis on promoting the Bank in the Fairhaven-New Bedford
area.  Communications increased by $11,664 in 1997, from $257,575 in 1996
to $269,239.  This increase is a result of the larger customer base now
being serviced due to the acquisition.  Professional Fees and Other
Services increased in 1997 by $44,875 from $586,078 in 1996 to $630,953.
The material expenditures in this category include an increase for various
legal fees of $28,482, and an increase in computer fees of $15,437.  Other
Expenses have increased through normal business transactions due to the
increased asset base after the acquisition.  These various expenditures
increased by $27,449 in 1997, from $448,191 in 1996, to $475,640 in 1997.

      Income Tax Expense for 1997 increased to $1,920,741 up by $356,740
when compared to $1,564,001 in 1996 and up by $914,969 when compared to
$1,005,772 in 1995.

      The following table sets forth the Company's average assets,
liabilities, and stockholders' equity, interest income earned and interest
paid, average rates earned and paid, and the net interest margin for the
periods ending December 31, 1997, December 31, 1996, and December 31,
1995.  Averages are daily averages.

<TABLE>
<CAPTION>
                                                   1997                            1996                           1995
-----------------------------------------------------------------------------------------------------------------------------------
                                                                Avg.                           Avg.                           Avg.
                                      Average    Interest(1)    Int.   Average   Interest(1)   Int    Average   Interest(1)   Int.
(Dollars in Thousands)                Balance      Inc/Exp      Rate   Balance     Inc/Exp     Rate   Balance     Inc/Exp     Rate
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                   <C>          <C>         <C>     <C>         <C>        <C>     <C>         <C>        <C>
ASSETS:
Earning Assets(2)
  Commercial Loans                    $ 36,195     $ 3,466      9.58%  $ 23,440    $ 2,191     9.35%  $ 17,478    $ 1,705     9.75%
  Commercial Real Estate               110,093      10,740      9.76     90,576      9,035     9.98     70,060      6,703     9.57
  Residential Real Estate               52,894       4,116      7.78     50,486      3,788     7.50     48,901      3,706     7.58
  Consumer Loans                         6,503         659     10.13      6,094        613    10.06      5,630        628    11.15
-----------------------------------------------------------------------------------------------------------------------------------
  Total Loans                          205,685      18,981      9.23    170,596     15,627     9.16    142,069     12,742     8.97
  Federal Funds Sold                    11,309         607      5.37     14,994        783     5.22     10,361        598     5.77
  U.S. Treasury/Government Agencies     49,682       3,099      6.24     43,871      2,715     6.19     45,300      2,924     6.45
  States & Political Subdivisions        6,948         477      6.87      5,959        400     6.71      4,753        339     7.13
  Mutual Funds                             301          15      4.98        241         13     5.39        170          8     4.71
  Marketable Equity Securities           2,518         120      4.77      1,946         75     3.85      1,098         39     3.55
  Other Investments                        126           8      6.35        197         15     7.61         55          4     7.27
  Total Earning Assets                 276,569     $23,307      8.43%   237,804    $19,628     8.25%   203,806    $16,654     8.17%
  Allowance for Possible Loan Losses    (3,474)                          (2,958)                        (2,450)
  Unearned Income                         (665)                            (597)                          (434)
  Cash and Due From Banks               11,366                            9,565                          8,387
  Other Assets                          14,022                            9,489                          9,016
-----------------------------------------------------------------------------------------------------------------------------------
Total Assets                          $297,818                         $253,303                       $218,325
===================================================================================================================================

LIABILITIES & STOCKHOLDERS' EQUITY:
  Savings                             $ 42,642     $ 1,067      2.50%  $ 40,246    $ 1,006    2.50%   $ 37,790    $   955     2.53%
  NOW's                                 37,739       1,202      3.19     28,788        858    2.98      21,568        757     3.51
  Money Market Accounts                 14,116         281      1.99     13,326        272    2.04      16,355        332     2.03
  CD's > $100M                          23,162       1,256      5.42     18,813      1,104    5.87      15,403        856     5.56
  Other Time Deposits                  109,278       6,460      5.91     97,957      5,754    5.87      82,290      4,801     5.83
  Other Borrowings                       2,114         146      6.91      1,374         86    6.26       1,179         63     5.34
-----------------------------------------------------------------------------------------------------------------------------------
  Total Interest-bearing Liabilities   229,051     $10,412      4.55%   200,504    $ 9,080    4.53%    174,585    $ 7,764     4.45%
===================================================================================================================================
  Demand Deposits                       43,724                           33,572                         26,674
  Other Liabilities                      1,847                              493                            591
-----------------------------------------------------------------------------------------------------------------------------------
  Total Liabilities                    274,622                          234,569                        201,850
-----------------------------------------------------------------------------------------------------------------------------------
  Common Stock                              30                               28                             26
  Paid-in Capital                       16,899                           14,393                         12,871
  Retained Earnings                      6,308                            4,486                          4,227
  Net Unrealized Loss on Available-
   for-Sale Securities                     (41)                            (173)                          (649)
-----------------------------------------------------------------------------------------------------------------------------------
  Total Stockholders' Equity            23,196                           18,734                         16,475
-----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities & Stockholders'
 Equity                               $297,818                         $253,303                       $218,325
===================================================================================================================================

Net Interest Income                                $12,895                         $10,548                        $ 8,890
===================================================================================================================================

Net Interest Spread                                             3.88%                         3.72%                           3.72%
===================================================================================================================================

Net Yield on Earning Assets                                     4.66%                         4.44%                           4.36%
===================================================================================================================================


<F1>   On a fully taxable equivalent basis based on tax rate of 34%.
       Interest income on investments and net interest income includes a
       fully taxable equivalent adjustment of $157,000 in 1997, $133,000 in
       1996, and $113,000 in 1995.

<F2>   Average balance includes non-accruing loans.  The effect of
       including such loans is to reduce the average rate earned on the
       Company's loans.
</TABLE>


Financial Condition

Loans

      Loans at year end 1997 totaled $213.7 Million, which is an increase
of $14.7 Million or 7.39% from $199.0 Million reported at the end of 1996.
Management attributes this increase to a very active business development
program and enhanced recognition of the Bank's name in the Fairhaven and
New Bedford communities.  Also contributing to loan growth is an overall
improvement in the economy of southeastern Massachusetts and the abutting
state of Rhode Island.

      The largest segment of the portfolio is commercial real estate
loans, which represents 50.5% of the total loan portfolio.  Residential
real estate loans account for 26.0% and the remaining 23.5% is commercial,
consumer, and other type loans.  Commercial real estate loans generally
have a higher degree of credit risk than residential real estate loans
because they are predominately dependent on the success of the business.
Various types of commercial property collateralize these loans, which are
primarily located in Southeastern Massachusetts and nearby cities and
towns in Rhode Island.  There is no specific type of property nor
concentration of credit in any one industry.

      The Bank manages its credit granting program for commercial loans
through a credit department which analyzes the financial condition and
business status of a prospective borrower.  In turn, the borrowing request
is then further evaluated by Executive Management and submitted to the
Executive Committee of the Board of Directors for final approval before
the loan is granted.

      In 1997, the Bank received special recognition from Southeastern
Development Corporation (SEED) for its participation in small business
loans.  SEED is a nonprofit organization which works in conjunction with
the Small Business Administration (SBA) and provides assistance to small
businesses.  Loans are generally in the $5,000 to $50,000 range, and are
used to develop these small businesses and create new jobs in the
community.  The Bank also participates in larger loans with the SBA.

      Residential real estate, which is the second largest component of
the loan portfolio, is comprised of mortgages on one-to-four family
residential properties.  Credit is granted based on income to debt ratio,
a satisfactory credit report and the appraised value of the property.  The
Bank also provides a "minimum down payment" program to encourage home
ownership for first time home buyers.  This enables prospective homeowners
the opportunity to purchase a home without having to save, over an
extended period of time, the normally required 20% down payment.  The Bank
retains the mortgages that it originates and does not sell them to the
secondary market.  Management believes that this practice enhances and
strengthens continued customer relationships.

      Other type loans are comprised of commercial loans, which are
generally short term loans to finance business inventory, consumer credit
installment loans, automobile financing, and credit card loans.

Investments

      The Company manages its investment portfolio by maintaining a
suitable composition of securities with various scheduled maturities
laddered within a short term period of 1-3 years; a midterm period of 3-5
years; and some securities extending out to 10 years.  Upon the purchase
of a security, it is classified into one of two categories:  Available-
for-Sale or Held-to-Maturity.

      The Available-for-Sale category is securities which the Company
intends to hold for an indefinite period of time, but not necessarily to
maturity.  These securities may be sold in response to interest rate
changes, liquidity needs and other factors.  Any unrecognized gains or
losses, net of taxes, on securities classified as Available-for-Sale are
reflected in Stockholders' Equity as a separate component.

      Investments in the Available-for-Sale category consist predominately
of securities of U.S. Treasury and other U. S. Government corporations and
agencies, and marketable equity securities.  Securities of U.S. Treasury
and U. S. Government corporations and agencies have little or no credit
risk, other than being sensitive to changes in interest rates; and if held
to maturity, these securities will mature at par.  However, marketable
equity securities have a greater risk as they are subject to rapid market
fluctuations.

      The Company minimizes its risk by limiting the total amount invested
into marketable equity securities to 5% of the total investment portfolio.
These securities are monitored and evaluated frequently to determine
whether to sell or to retain them in the portfolio.

      The Available-for-Sale category had unrecognized gains, net of
taxes, of $149,287 at December 31, 1997 and unrecognized losses, net of
taxes, of $2,628 at December 31, 1996.

      The Held-to-Maturity category consists of securities of U.S.
Treasury, U.S. government corporations and agencies, and securities issued
by states of the United States and political subdivisions of states.  The
Company has the positive intent and ability to hold these securities to
maturity.

      In management of the portfolio, the Company seeks to maximize its
return and maintain consistency to meet short and long term liquidity
forecasts.  The Company does not purchase investments with off-balance
sheet characteristics, such as swaps, options, futures and other hedging
activities that are called derivatives.  The main objective of the
investment policy is to provide adequate liquidity to meet any reasonable
decline in deposits and any anticipated increase in the loan portfolio, to
provide safety of principal and interest, to generate earnings adequate to
provide a significant stable income, and to fit within the overall
asset/liability management of the objectives of the Company.

Nonperforming Assets

      The Company's nonperforming assets are nonaccrual loans, loans past
due 90 days or more but still accruing, restructured loans not performing
in accordance with amended terms, and other real estate acquired through
foreclosure.  Nonperforming assets as a total increased to $4.9 Million at
year end 1997, from $4.8 Million reported at year end 1996.

      The Company places a loan on nonaccrual status when, in the opinion
of management, the collectibility of the principal and interest becomes
doubtful.  Generally, when a commercial loan, commercial real estate loan
or a residential real estate loan becomes past due 90 days or more, the
Company discontinues the accrual of interest and reverses previously
accrued interest.  The loan remains in the nonaccrual status until the
loan is current and six months of payments are made.  Then it is
reclassified as an accruing loan.  When it is determined that the
collectibility of the loan no longer exists, it is charged off to the
Allowance for Loan Losses or, if applicable, any real estate
collateralizing the loan is acquired through foreclosure, and categorized
as Other Real Estate Owned.


Nonperforming Assets

<TABLE>
<CAPTION>
                                                                  December 31
------------------------------------------------------------------------------------------------
(Dollars In Thousands)                             1997      1996      1995      1994      1993
------------------------------------------------------------------------------------------------

<S>                                               <C>       <C>       <C>       <C>       <C>
Nonaccrual loans                                  $4,597    $4,352    $2,695    $3,238    $4,084

Loans 90 days or more past due and still
 accruing                                            147       112        23       204       427

Real estate acquired by foreclosure or
 substantively repossessed                           159       308       633       888     2,160
------------------------------------------------------------------------------------------------

Total nonperforming assets                        $4,903    $4,772    $3,351    $4,330    $6,671
================================================================================================

Restructured debt performing in accordance
 with amended terms, not included above           $1,265    $  819    $  459    $  139    $   --
================================================================================================

Percentage of nonaccrual loans to total loans       2.15%     2.19%     1.78%     2.38%     3.24%

Percentage of nonaccrual loans, restructured
 loans, and real estate acquired by foreclosure
 or substantively repossessed to total assets       2.00%     1.88%     1.62%     2.20%     3.18%

Percentage of allowance for possible loan
 losses to nonaccrual loans                        80.36%    77.07%    92.69%    71.22%    47.85%
</TABLE>


      The largest segment of nonperforming assets is nonaccrual loans. At
December 31, 1997, this category had increased to $4.6 Million from $4.4
Million reported at end of previous year.  Included in the nonaccrual
loans is a $1.5 Million commercial real estate loan that was classified as
nonaccrual in March, 1997.  As with all other nonaccrual loans, payments
received on this loan are applied to principal, and until the borrower can
demonstrate a consistent payment pattern and the loan becomes current,
this loan will remain as nonaccrual.  The real estate collateralizing this
loan was appraised in December, 1997 at $2.7 Million.  Due to the excess
collateral values, the Bank does not anticipate any loss on this loan.
The remaining $3.1 Million of nonaccrual loans represents 29 separate
relationships.

      Loans 90 days or more past due and still accruing increased slightly
by $35,000 to $147,000 from $112,000 reported at year end 1996.
Management continues to accrue on these loans, due to the excess of values
of collateral securing these loans compared to their outstanding balances.

      Real estate acquired by foreclosure or substantively repossessed
decreased from $308,000 at year end 1996 to $159,000 at year end 1997.
Annual appraisals are performed on all properties acquired through
foreclosure, and if the appraised value is less than the carrying value,
the carrying value is written down by a charge to the Writedown on Other
Real Estate Owned expense account.

      The percentage of nonaccrual loans, restructured loans, and real
estate acquired by foreclosure to total assets increased from 1.88%,
reported at year end 1996, to 2.00% at year end 1997, primarily due to the
increase in the nonaccrual category and the increase in restructured
loans.  The $1.3 Million of restructured loans represent several borrowers
whose original loan terms were amended.  These borrowers are current in
their payments under the amended terms.

      Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan", was adopted by the Company as of
January 1, 1995.  Statement 114 applies to all loans except large groups
of smaller balance homogeneous loans that are collectively evaluated for
impairment, loans measured at fair value or at a lower of cost or fair
value, leases, and debt securities defined in Statement 115.  Statement
114 requires that impaired loans be valued at the present value of
expected future cash flows discounted at the loan's effective interest
rate or as a practical expedient, at the loan's observable market value of
the collateral if the loan is collateral dependent.  Smaller balance
homogeneous loans are considered by the Company to include consumer
installment loans and credit card loans.  At December 31, 1997, there were
$5.6 Million of loans which the Company has determined to be impaired, of
which $1.8 Million has a related allowance for credit losses of $0.6
Million, and $3.8 Million has no related allowance for credit losses.

      The Company has $500,000 of potential problem loans for which
payments are presently current but are identified as a possible risk.
This assessment is based on an objective review of the borrower's
financial statements.  In addition, the past experience with the borrower,
the borrower's background, and the applicable value of the assets
collateralizing these loans provide a degree of assurance that the loan
will continue to be paid as per the loan agreement.  These issues are
monitored carefully to determine if there is any change in status that
would cause management to reclassify the loan from the accrual category to
nonaccrual.

      The Allowance for Possible Loan Losses is available to absorb losses
on loans deemed by management as uncollectible.  The level of the
allowance is determined to be adequate based upon management's assessment
of the entire loan portfolio, the level of nonaccrual loans,  the overall
status of certain loans and specific borrower situations and the current
and anticipated economic climate.  Additions to the allowance are provided
by charges to earnings.  The Allowance for Possible Loan Losses at
December 31, 1997 as a percentage of outstanding loans was 1.73%, compared
to 1.69% reported at year end 1996.  The ratios at years ending 1995, 1994
and 1993 were 1.65%, 1.70%, and 1.55% respectively.  In 1997, the Company
provided $500,000 to the allowance and recovered $94,405 from previously
charged off loans.  Loans charged off during 1997 totaled $254,851.  This
resulted in net charge offs of $160,446.  Net charge offs for prior years
were $-0-, $358,085, $293,003, and $1,468,300 for 1996, 1995, 1994 and
1993 respectively.  Recoveries are a result of continued collection
efforts and improvement in business conditions on accounts that were
previously deemed as uncollectible.

      In addition to management's assessment of the Allowance for Possible
Loan Losses, the allowance is also evaluated by regulatory agencies and
independent public accountants as part of their examination and audit
procedures.

      The table below illustrates the changes in the Allowance for
Possible Loan Losses for the periods indicated.

<TABLE>
<CAPTION>
                                                               December 31
----------------------------------------------------------------------------------------------
(Dollars In Thousands)                          1997      1996      1995      1994      1993
----------------------------------------------------------------------------------------------

<S>                                            <C>       <C>       <C>       <C>       <C>
Balance at January 1                           $3,354    $2,498    $2,306    $1,954    $1,967
Charge offs:
  Commercial                                      (40)     (144)     (184)      (22)     (963)
  Real estate construction                         (0)       (0)       (0)       (0)       (0)
  Real estate mortgage                           (147)     (136)      (79)     (246)     (451)
  Installment/Consumer                            (68)     (159)     (134)      (93)      (85)
----------------------------------------------------------------------------------------------
                                                 (255)     (439)     (397)     (361)   (1,499)
----------------------------------------------------------------------------------------------

Recoveries:
  Commercial                                       41        59         1        51         0
  Real estate construction                          0         0         0         0         0
  Real estate mortgage                             16       333        16         2         2
  Installment/Consumer                             38        47        22        15        29
----------------------------------------------------------------------------------------------
                                                   95       439        39        68        31
----------------------------------------------------------------------------------------------
  Net charge offs                                (160)       (0)     (358)     (293)   (1,468)
----------------------------------------------------------------------------------------------
Additions charged to operations                   500       400       550       645     1,455
Allowance attributable to acquisition               0       456         0         0         0
Balance at end of period                       $3,694    $3,354    $2,498    $2,306    $1,954
==============================================================================================
Allowance for Loan Losses as a percent of
 year end loans                                  1.73%     1.69%     1.65%     1.70%     1.55%
Ratio of net charge offs to average loans
 outstanding                                     0.08%     0.00%     0.25%     0.23%     1.18%
==============================================================================================
</TABLE>

Deposits

      Deposits at December 31, 1997 were $271.3 Million up by $3.5 Million
or 1.31% when compared to $267.8 Million reported at year end 1996.
Demand deposits and NOW accounts combined were up by 2.13%.  Savings
account balances decreased by 1.01%.  The overall total number of accounts
being serviced in the checking and savings categories has increased
particularly at the outlying branches.  Money market accounts were down by
8.61% from year end 1996, primarily due to outflow of funds to non-banking
products.  This trend is also occurring nationwide as consumers seek
higher returns on their investable funds.  The time deposit products grew
by 2.75%.  The deposit components consist of 16.30% in demand deposits,
35.03% in savings and NOW deposits, and 48.67% in time deposits.

      The Company, cognizant of interest rate risk, continues to offer
competitive rates on time deposits to maintain its customer base and to
attract new customers into long-term banking relationships.  Through the
deposit accounts, customers may engage in other banking services, thereby
enhancing our customer base.


Interest Rate - Sensitivity Gaps
Repricing Period at December 31, 1997

<TABLE>
<CAPTION>
                                                  Within       1-2         2-3         3-5       Over 5
(Dollars in Thousands)                            1 Year      Years       Years       Years       Years       Total
---------------------------------------------------------------------------------------------------------------------

<S>                                              <C>         <C>         <C>         <C>         <C>         <C>
Interest Earning Assets:(1)
  Federal Funds Sold                             $  7,000    $     --    $     --    $     --    $     --    $  7,000
  Investment Securities                            15,216       6,308       6,506      12,793      17,062      57,885
  Residential Mortgages                            18,992       8,823       8,801       1,232      11,434      49,282
  Commercial Mortgages                             86,094      12,415      11,052       5,218       1,094     115,873
  Other Loans                                      36,160       3,177       2,038       1,924         686      43,985
---------------------------------------------------------------------------------------------------------------------
      Total Earning Assets                       $163,462    $ 30,723    $ 28,397    $ 21,167    $ 30,276    $274,025
---------------------------------------------------------------------------------------------------------------------
Interest Bearing Liabilities:
  NOW Checking and Savings Deposits              $ 38,358    $  9,160    $  9,160    $ 24,426    $     --    $ 81,104
  Money Market Deposits                             4,182       2,091       2,091       5,576          --      13,940
  Term Deposits                                   111,743      12,216       8,052          40          --     132,051
  Borrowed Funds                                       --         945          --          --         430       1,375
  Other Interest Bearing Liabilities                1,200          --          --          --          --       1,200
---------------------------------------------------------------------------------------------------------------------
      Total Interest Bearing Liabilities         $155,483    $ 24,412    $ 19,303    $ 30,042    $    430    $229,670
---------------------------------------------------------------------------------------------------------------------
Net Interest Sensitivity Gap                     $  7,979    $  6,311    $  9,094    $ (8,875)   $ 29,846    $ 44,355
Cumulative Gap                                   $  7,979    $ 14,290    $ 23,384    $ 14,509    $ 44,355          --
Cumulative Gap as a Percent of Total Assets          2.65%       4.74%       7.75%       4.81%      14.71%         --
=====================================================================================================================

<F1>   Nonaccrual loans amounting to $4.6 Million have been eliminated
       from the loan balances.
</TABLE>


      The Company's Asset-Liability Management Committee, comprised of the
Bank's executive management team, monitors and evaluates the interest rate
sensitivity of the Company's assets and liabilities.  The committee
utilizes a GAP report (as summarized on page 17) which indicates the
differences or gap between interest-earning assets and interest-bearing
liabilities in various maturity time periods.  This, in conjunction with
certain assumptions and other related factors, such as anticipated changes
in interest rates and anticipated cash flows from loans, investments and
deposits, provides a means of evaluating interest rate risk.  Management
also considers that certain assets and liabilities react differently to
changes in interest rates.  Some assets may have rate caps or prepayment
fees attached to the instrument, and some liabilities have early
withdrawal penalties.

      A positive gap results when more assets than liabilities are
expected to reprice within a certain time frame and a negative gap
reflects an excess of liabilities repricing in that period.  A positive
gap would tend to increase net interest income when rates are rising and
decrease net interest income when rates are falling.  A negative gap
position would tend to produce the opposite effects.  At December 31,
1997, the cumulative gap up to two years indicates that the Company has an
excess of assets of $14.2 million that could effect its interest income
negatively if interest rates declined.

Liquidity

      Liquidity represents the ability of the Bank to meet its funding
requirements.  In assessing the appropriate level of liquidity, the Bank
considers deposit levels, lending requirements, and investment maturities
in light of prevailing economic conditions.  Through this assessment, the
Bank manages its liquidity level to optimize earnings and respond to
fluctuations in customer borrowing needs.

      The Company's principal sources of funds are customer deposits, loan
amortization, loan payoffs, and the maturities of investment securities.
Through these sources, funds are provided for customer withdrawals from
deposit accounts, loan originations, draw-downs on loan commitments,
acquisitions of investment securities and other normal business
activities.  Investors' capital also provides a source of funding.

      The largest source of funds is provided by depositors.  The largest
component of the Company's deposit base is term certificates which extend
out to a maximum of five years.  The Company does not participate in
brokered deposits.  Deposits are obtained from consumers and commercial
customers within the Bank's community reinvestment area, being Bristol
County, Massachusetts and several abutting towns in Rhode Island.

      The Company also has the ability to borrow funds from correspondent
banks, the Federal Home Loan Bank and the Federal Reserve Bank of Boston
by pledging various investment securities.

      Excess available funds are invested on a daily basis into Federal
Funds Sold.  An appropriate level of Federal Funds Sold is maintained to
meet loan commitments, anticipated loan growth and deposit forecasts.
Funds exceeding this level are then used to purchase investment securities
that are suitable in yields and maturities for the investment portfolio.
The investment portfolio has securities maturing at strategic time periods
and is comprised of U.S. Treasury Securities, securities of U.S.
Government Agencies, and obligations of state and political subdivisions.

      Liquidity in 1997 was primarily provided by the maturity and sales
of securities totaling $33.1 Million, offset by the purchasing of
additional securities of $33.5 Million and the net increase in loans
totaling $15.3 Million.  Other events that affected liquidity were the net
proceeds derived from the sale of the Company's common stock totaling $4.4
Million, the increase in time deposits of $3.5 Million and other factors
including cash provided by operating activities and financing activities
as indicated in the statements of cash flows.

Capital

      At December 31, 1997, the Company had total capital of $26,436,426.
This represents an increase of $6,589,101 from $19,847,325 reported at
year end 1996.  This increase is a combination of several factors.
Additions consisted of $3,866,171 of the net proceeds associated with the
public offering of the Company's common stock, current year's earnings of
$2,845,990 and $509,604 of stock issued through the Dividend Reinvestment
Plan and the Optional Cash Contribution Plan. Offsetting these increases
were cash dividends paid to stockholders of $784,579.  Also affecting
capital is the adjustment of $151,915 on securities classified as
Available-for-Sale.

      Under the requirements for Risk-Based and Leverage Capital of the
federal banking agencies, a minimum level of capital will vary among banks
based on safety and soundness of operations.  Risk-Based Capital ratios
are calculated with reference to risk-weighted assets, which include both
on and off balance sheet exposure.

      In addition to meeting the minimum requirements, the Company and the
Bank's capital ratios meet the levels of the well capitalized category at
December 31, 1997.

      The following table illustrates the capital position of Slade's
Ferry Bancorp and Slade's Ferry Trust Company at December 31, 1997 and
1996.

Slade's Ferry Bancorp

<TABLE>
<CAPTION>
                                                                1997                  1996
-------------------------------------------------------------------------------------------------
(Dollars in Thousands)                                    Amount     Ratio      Amount     Ratio
-------------------------------------------------------------------------------------------------

<S>                                                      <C>         <C>       <C>          <C>
Total Capital (to Risk Weighted Assets)                  $ 25,907    12.04%    $ 19,044     9.56%
Minimum required                                           17,210     8.00       15,938     8.00
  Excess                                                    8,697     4.04        3,106     1.56
Tier 1 Capital (to Risk Weighted Assets)                   23,206    10.74       16,543     8.27
Minimum required                                            8,645     4.00        8,003     4.00
  Excess                                                   14,561     6.74        8,540     4.27
Risk Adjusted Assets, net of goodwill, nonqualifying
 intangibles, excess allowance and excess deferred
 tax assets                                              $215,174              $199,183

Tier 1 Capital (Leverage Ratio)                          $ 23,206     7.79%    $ 16,543     5.70%
Minimum required                                           11,910     4.00       11,617     4.00
  Excess                                                   11,296     3.79        4,926     1.70
Quarterly average total assets, net of goodwill,
 nonqualifying intangibles and excess deferred tax
 assets                                                  $297,895              $290,429


<CAPTION>
Slade's Ferry Trust Company

                                                                1997                  1996
-------------------------------------------------------------------------------------------------
(Dollars in Thousands)                                    Amount     Ratio      Amount     Ratio
-------------------------------------------------------------------------------------------------

<S>                                                      <C>         <C>       <C>          <C>
Total Capital (to Risk Weighted Assets)                  $ 24,022    11.18%    $ 18,935     9.51%
Minimum required                                           17,183     8.00       15,934     8.00
  Excess                                                    6,839     3.18        3,001     1.51
Tier 1 Capital (to Risk Weighted Assets)                   21,325     9.88       16,435     8.22
Minimum required                                            8,631     4.00        8,001     4.00
  Excess                                                   12,694     5.88        8,434     4.22
Risk Adjusted Assets, net of goodwill, nonqualifying
 intangibles, excess allowance and excess deferred tax
 assets                                                  $214,865              $199,085

Tier 1 Capital (Leverage Ratio)                          $ 21,325     7.18%    $ 16,435     5.66%
Minimum required                                           11,876     4.00       11,615     4.00
  Excess                                                    9,449     3.18        4,820     1.66
Quarterly average total assets, net of goodwill,
 nonqualifying intangibles and excess deferred tax
 assets                                                  $297,005              $290,386
</TABLE>

Other Matters

      The Company has established a program to ensure that, at the turn of
the century, its computer and operational systems will be capable of
processing without any impact arising from the conversion of the calendar
year to the year 2000.  Computer systems have generally provided two
digits to identify a calendar year and in turn serve as the basis for
reports, transaction processing and calculations.  The program adopted
provides a series of tests and vendor assurances that the Company's
computer system will meet Year 2000 compliance.

      The Company does not currently expect that the cost of its Year 2000
compliance program will be material to its financial condition and
believes that it will satisfy such compliance program by the end of 1998
without material disruption of its operations.  In the event that the
Company's significant suppliers do not successfully and timely achieve
Year 2000 compliance, the Company's business or operations could be
adversely affected.  However, management believes that the Company's own
internal system, networks and resources would allow the Company to
effectively operate and service its customers in the event its significant
vendors do not achieve satisfactory Year 2000 compliance.  In addition, if
significant vendors failed to meet Year 2000 operating requirements, the
Company intends to engage alternative vendors and suppliers.  While the
Company cannot estimate the costs and expenses associated with hiring new
vendors and suppliers, management believes that such costs would not have
a material impact in the Company's earnings or results of operations.

      The Bank is involved in a civil suit brought in Plymouth Superior
Court by a former employee of the National Bank of Fairhaven, which
primarily alleged a breach of contract.  The demand by the plaintiff was
$550,000 to settle the case.  However, a partial summary judgment was
granted on defendant's motion dismissing all claims except the basic claim
for breach of contract.  The case is still in the pretrial phase and a
motion is pending to amend the complaint to add a new count of intentional
infliction of emotional distress.  The Company believes there are
meritorious defenses to the remaining claim and to the motion to amend,
and it intends to vigorously defend the suit.  The Company believes that
the suit will not have a material adverse effect on the Company's
financial condition, results of operation or liquidity, and no reserves
have been accrued to cover the potential liability.


                     SHATSWELL, MacLEOD & COMPANY, P.C.

                        CERTIFIED PUBLIC ACCOUNTANTS

                               83 PINE STREET
                   WEST PEABODY, MASSACHUSETTS 01960-3635
                          Telephone (978) 535-0206
                          Facsimile (978) 535-9908


The Board of Directors
and Stockholders
Slade's Ferry Bancorp
Somerset, Massachusetts


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

      We have audited the accompanying consolidated balance sheets of
Slade's Ferry Bancorp and Subsidiary as of December 31, 1997 and 1996 and
the related consolidated statements of income, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1997.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

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

      In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Slade's Ferry Bancorp and Subsidiary as of December
31, 1997 and 1996, and the consolidated results of their operations and
their cash flows for each of the years in the three-year period ended
December 31, 1997, in conformity with generally accepted accounting
principles.



                                     /s/ SHATSWELL, MacLEOD & COMPANY, P.C.
                                         SHATSWELL, MacLEOD & COMPANY, P.C.

West Peabody, Massachusetts
January 23, 1998


                    Slade's Ferry Bancorp and Subsidiary


Consolidated Balance Sheets
December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                                         1997            1996
-------------------------------------------------------------------------------------------------

<S>                                                                  <C>             <C>
Assets
Cash and due from banks                                              $ 13,323,501    $ 11,128,724
Federal funds sold                                                      7,000,000      13,000,000
-------------------------------------------------------------------------------------------------
  Cash and cash equivalents                                            20,323,501      24,128,724
Interest bearing time deposits with other banks                           106,688         149,598
Investments in available-for-sale securities (at fair value)           40,176,218      37,255,163
Investments in held-to-maturity securities (fair values of
 $17,748,500 as of December 31, 1997 and $19,544,811 as of
 December 31, 1996)                                                    17,601,536      19,586,678
Federal Home Loan Bank stock                                              890,600         890,600
Loans, net                                                            209,309,840     194,934,845
Premises and equipment                                                  5,718,534       5,970,874
Goodwill                                                                3,080,568       3,307,368
Other real estate owned                                                   159,373         307,591
Accrued interest receivable                                             1,796,467       1,853,783
Other assets                                                            2,407,260       2,957,251
-------------------------------------------------------------------------------------------------
      Total assets                                                   $301,570,585    $291,342,475
=================================================================================================

Liabilities and Stockholders' Equity
Demand Deposits                                                      $ 44,228,157    $ 44,458,040
Savings and NOW Deposits                                               95,043,420      94,814,767
Time Deposits                                                         132,050,673     128,518,202
-------------------------------------------------------------------------------------------------
      Total deposits                                                  271,322,250     267,791,009
-------------------------------------------------------------------------------------------------
Note Payable                                                              945,308       1,042,626
Advances from Federal Home Loan Bank                                      430,000
Other borrowed funds                                                    1,200,000       1,200,000
Due to brokers                                                            255,000         499,375
Other liabilities                                                         981,601         962,140
-------------------------------------------------------------------------------------------------
      Total liabilities                                               275,134,159     271,495,150
-------------------------------------------------------------------------------------------------
Stockholders' equity:
  Common stock, par value $.01 per share; authorized
   5,000,000 shares; issued and outstanding 3,236,712.7 in
   1997 and 2,789,142.3 shares in 1996                                     32,367          27,891
  Paid-in capital                                                      18,978,598      14,607,299
  Retained earnings                                                     7,276,174       5,214,763
  Net unrealized holding gain (loss) on available-for-sale
   securities                                                             149,287          (2,628)
-------------------------------------------------------------------------------------------------
    Total stockholders' equity                                         26,436,426      19,847,325
-------------------------------------------------------------------------------------------------
    Total liabilities and stockholder's equity                       $301,570,585    $291,342,475
=================================================================================================
</TABLE>


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



Consolidated Statements Of Income
Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                  1997           1996           1995
--------------------------------------------------------------------------------------------------------

<S>                                                            <C>            <C>            <C>
Interest and dividend income:
  Interest and fees on loans                                   $18,981,050    $15,626,903    $12,741,564
  Interest and dividends on securities:
    Taxable                                                      3,251,526      2,810,656      2,972,484
    Tax-exempt                                                     302,616        266,866        225,942
  Other interest                                                   615,267        790,506        601,210
--------------------------------------------------------------------------------------------------------
      Total interest and dividend income                        23,150,459     19,494,931     16,541,200
--------------------------------------------------------------------------------------------------------
Interest expense:
  Interest on deposits                                          10,266,135      8,992,244      7,700,901
  Interest on securities sold under agreements to repurchase                                         556
  Interest on Federal Home Loan Bank advances                        1,555
  Interest on other borrowed funds                                  52,318         59,688         62,816
  Interest on notes payable                                         92,470         26,139
--------------------------------------------------------------------------------------------------------
      Total interest expense                                    10,412,478      9,078,071      7,764,273
--------------------------------------------------------------------------------------------------------
      Net interest and dividend income                          12,737,981     10,416,860      8,776,927
Provision for loan losses                                          500,000        400,000        550,000
--------------------------------------------------------------------------------------------------------
      Net interest and dividend income after provision for
       loan losses                                              12,237,981     10,016,860      8,226,927
--------------------------------------------------------------------------------------------------------
Other income:
  Service charges on deposit accounts                              654,749        628,997        574,425
  Overdraft service charges                                        247,330        220,428        152,855
  Securities gains, net                                            313,844        112,631         64,810
  Other income                                                     346,334        343,441        263,869
--------------------------------------------------------------------------------------------------------
      Total other income                                         1,562,257      1,305,497      1,055,959
--------------------------------------------------------------------------------------------------------
Other expense:
  Salaries and employee benefits                                 5,317,620      4,328,402      3,962,983
  Occupancy expense                                                715,094        567,458        448,383
  Equipment expense                                                570,773        504,489        432,739
  Stationery and supplies                                          311,546        243,653        197,392
  FDIC deposit insurance premium                                    71,880          6,278        204,477
  (Gain) loss on sales of other real estate owned, net              42,457         21,008        (26,728)
  Writedown of other real estate owned                              67,480         30,000        104,578
  Other expense                                                  1,936,657      1,678,873      1,307,703
--------------------------------------------------------------------------------------------------------
      Total other expense                                        9,033,507      7,380,161      6,631,527
--------------------------------------------------------------------------------------------------------
      Income before income taxes                                 4,766,731      3,942,196      2,651,359
Income taxes                                                     1,920,741      1,564,001      1,005,772
========================================================================================================
      Net income                                               $ 2,845,990    $ 2,378,195    $ 1,645,587
========================================================================================================

Earnings per common share and earnings per common share,
 assuming dilution                                             $       .94    $       .86    $       .60
</TABLE>


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


Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                                        Net Unrealized
                                                                                         Holding Gain
                                                                                          (Loss) On
                                                                                          Available-
                                                 Common      Paid-in       Retained        For-Sale
                                                  Stock      Capital       Earnings       Securities        Total
---------------------------------------------------------------------------------------------------------------------

<S>                                              <C>       <C>            <C>            <C>              <C>
Balance, December 31, 1994                       $16,455   $11,784,662    $4,586,951     $(1,540,384)     $14,847,684
Net change in unrealized holding loss on
 available-for-sale securities                                                             1,573,406        1,573,406
Net income                                                                 1,645,587                        1,645,587
Stock split (3 for 2)                              8,654                     (11,041)                          (2,387)
Issuance of 5% common stock dividend                 821     1,107,542    (1,113,162)                          (4,799)
Issuance of common stock from dividend
 reinvestment plan                                   209       209,683                                        209,892
Stock issuance relating to optional cash
 contribution plan                                    33        35,036                                         35,069
Dividends declared ($.18 per share)                                         (477,727)                        (477,727)
---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995                        26,172    13,136,923     4,630,608          33,022       17,826,725
Net change in unrealized holding gain on
 available-for-sale securities                                                               (35,650)         (35,650)
Net income                                                                 2,378,195                        2,378,195
Issuance of 5% common stock dividend               1,304    1,124,644     (1,129,308)                          (3,360)
Issuance of common stock from dividend
 reinvestment plan                                   375      312,572                                         312,947
Stock issuance relating to optional cash
 contribution plan                                    40       33,160                                          33,200
Dividends declared ($.24 per share)                                         (664,732)                        (664,732)
---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996                        27,891    14,607,299     5,214,763          (2,628)      19,847,325
Net change in unrealized holding loss
 on available-for-sale securities                                                            151,915          151,915
Net income                                                                 2,845,990                        2,845,990
Issuance of common stock from dividend
 reinvestment plan                                   308       351,141       351,449
Stock issuance relating to optional cash
 contribution plan                                   138       158,017       158,155
Net proceeds from stock offering                   4,030     3,862,141     3,866,171
Dividends declared ($.25 per share)                                                         (784,579)        (784,579)
---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997                       $32,367   $18,978,598    $7,276,174     $   149,287      $26,436,426
=====================================================================================================================
</TABLE>


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


Consolidated Statements of Cash Flows
Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                                 1997            1996            1995
-------------------------------------------------------------------------------------------------------------------------

<S>                                                                          <C>             <C>             <C>
Cash flows from operating activities:
  Net income                                                                 $  2,845,990    $  2,378,195    $  1,645,587
  Adjustments to reconcile net income to net cash provided by operating
   activities:
    Amortization of goodwill                                                      226,800          98,000
    Accretion, net of amortization of fair market value adjustments                (5,718)         (1,429)
    Amortization of organization cost                                                                               3,440
    Gain on sale of fixed assets                                                   (4,000)         (8,702)
    Securities gains, net                                                        (313,844)       (112,631)        (64,810)
    Disposal of fixed assets                                                                                       11,229
    Depreciation and amortization                                                 653,344         500,378         421,344
    Provision for loan losses                                                     500,000         400,000         550,000
    Deferred tax benefit                                                          (90,885)        (92,207)       (147,018)
    Increase (decrease) in taxes payable                                          184,331        (103,889)       (130,854)
    (Increase) decrease in interest receivable                                     57,316         384,435        (377,291)
    Increase (decrease) in interest payable                                       (12,184)        (49,768)         46,544
    Increase in accrued expenses                                                   60,838          88,631          78,916
    (Increase) decrease in prepaid expenses                                       (78,662)       (130,768)         29,878
    Increase (decrease) in other liabilities                                           29        (139,617)         60,975
    (Increase) decrease in other assets                                           345,234        (322,275)        468,150
    Accretion, net of amortization of securities                                 (220,167)       (430,515)       (131,441)
    Change in unearned income                                                      47,142         115,825         123,639
    (Gain) loss on sales of other real estate owned, net                           42,457          21,008         (26,728)
    Writedown of other real estate owned                                           67,480          30,000         104,578
-------------------------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                                     4,305,501       2,624,671       2,666,138
-------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Purchases of available-for-sale securities                                  (18,776,994)    (10,128,087)    (11,242,820)
  Proceeds from sales of available-for-sale securities                          1,171,136         661,644       1,677,568
  Proceeds from maturities of available-for-sale securities                    14,786,873      14,859,193       6,340,942
  Purchases of held-to-maturity securities                                    (14,714,192)    (16,141,095)    (25,375,641)
  Proceeds from maturities of held-to-maturity securities                      17,142,658      19,514,788      16,421,213
  Net (increase) decrease in interest bearing time deposits with other
   banks                                                                           42,910          (7,519)
  Purchases of Federal Home Loan Bank stock                                                      (409,400)       (290,700)
  Redemption of Federal Home Loan Bank stock                                                       93,600
  Proceeds from sales of fixed assets                                               4,000           8,702
  Proceeds from sales of other real estate owned                                  291,293         147,458       1,219,832
  Net increase in loans                                                       (15,258,154)    (14,971,481)    (16,343,674)
  Cash and cash equivalents of $19,936,591 acquired in the purchase of
   Fairbank, Inc., less cash of $8,575,284 paid for the common stock of
   Fairbank, Inc.                                                                              11,361,307
  Capital expenditures                                                           (394,602)     (1,085,521)       (126,146)
  Recoveries of previously charged-off loans                                       94,405         439,788          38,553
-------------------------------------------------------------------------------------------------------------------------
  Net cash provided by (used in) investing activities                         (15,610,667)      4,343,377     (27,680,873)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


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


Consolidated Statements of Cash Flows (continued)
Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                                 1997            1996            1995
-------------------------------------------------------------------------------------------------------------------------

<S>                                                                          <C>             <C>             <C>
Cash flows from financing activities:
  Fractional shares paid in cash                                                                   (3,360)         (7,186)
  Proceeds from issuance of common stock                                        4,438,376         346,147         244,961
  Cost of stock issuance                                                          (62,601)
  Net increase (decrease) in demand deposits, NOW and savings accounts             (1,230)      1,912,803      (4,318,602)
  Net increase (decrease) in time deposits                                      3,529,471      (3,191,933)     41,224,488
  Net decrease in securities sold under agreements to repurchase                                                 (113,551)
  Net increase (decrease) in other borrowed funds                                                 458,227        (458,227)
  Advances from Federal Home Loan Bank                                            430,000
  Dividends paid                                                                 (734,073)       (658,165)       (455,345)
  Payment on notes payable                                                       (100,000)       (243,013)
-------------------------------------------------------------------------------------------------------------------------
  Net cash provided by (used in) financing activities                           7,499,943      (1,379,294)     36,116,538
-------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                           (3,805,223)      5,588,754      11,101,803
Cash and cash equivalents at beginning of year                                 24,128,724      18,539,970       7,438,167
-------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                     $ 20,323,501    $ 24,128,724    $ 18,539,970
=========================================================================================================================

Supplemental disclosures:
  Loans transferred to other real estate owned                               $    446,612    $    144,741    $  1,581,571
  Loans originating from the sale of other real estate owned                      193,600         435,000         205,000
  Interest paid                                                                10,424,662       9,127,839       7,717,729
  Income taxes paid                                                             1,827,295       1,760,097       1,283,644
  Other real estate owned transferred to loans                                                                    333,000

  In 1996 the Company purchased all of the common stock of Fairbank,
   Inc. for $8,575,284.  In conjunction with the acquisition,
   liabilities were assumed as follows:
    Fair value of assets acquired                                                            $ 65,141,843
    Cash paid for the common stock                                                              8,575,284
-------------------------------------------------------------------------------------------------------------------------
    Liabilities assumed                                                                      $ 56,566,559
=========================================================================================================================
</TABLE>


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


                    Slade's Ferry Bancorp and Subsidiary


Notes to Consolidated Financial Statements
Years Ended December 31, 1997, 1996 and 1995


NOTE 1 - Nature of Operations

      Slade's Ferry Bancorp (Company) (formerly known as Weetamoe Bancorp)
is a Massachusetts corporation that was organized in 1990 to become the
holding company of Slade's Ferry Trust Company (Bank).

      In December of 1996 the stockholders of the Company approved the
change of the name of the Company to Slade's Ferry Bancorp effective
January 1, 1997.  The Company's primary activity is to act as the holding
company for the Bank.  The Bank is a state chartered bank, which was
incorporated in 1959 and is headquartered in Somerset, Massachusetts.  The
Bank operates its business from ten banking offices located in
Massachusetts.  The Bank is engaged principally in the business of
attracting deposits from the general public and investing those deposits
in residential and real estate loans, and in commercial, consumer and
small business loans.

NOTE 2 - Accounting Policies

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

Pervasiveness of Estimates:

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

Basis of Presentation:

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

Cash and Cash Equivalents:

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

Securities:

      Investments in debt securities are adjusted for amortization of
premiums and accretion of discounts.  Gains or losses on sales of
investment securities are computed on a specific identification basis.

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

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

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

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

Loans:

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

      Interest on loans is recognized on a simple interest basis.

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

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

Allowance for Possible Loan Losses:

      An allowance is available for losses which may be incurred in the
future on loans in the current portfolio.  The allowance is increased by
provisions charged to current operations and is decreased by loan losses,
net of recoveries.  The provision for loan losses is based on management's
evaluation of current and anticipated economic conditions, changes in the
character and size of the loan portfolio, and other indicators.  The
balance in the allowance for possible loan losses is considered adequate
by management to absorb any reasonably foreseeable loan losses.

      The Company considers a loan to be impaired when, based on current
information and events, it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms of the loan
agreement.  The Company measures impaired loans on a loan by loan basis by
either the present value of expected future cash flows discounted at the
loan's effective interest rate, the loan's observable market price, or the
fair value of the collateral if the loan is collateral dependent.

      The Company considers for impairment all loans, except large groups
of smaller balance homogeneous loans that are collectively evaluated for
impairment, loans that are measured at fair value or at the lower of cost
or fair value, leases, and convertible or nonconvertible debentures and
bonds and other debt securities.  The Company considers its residential
real estate loans and consumer loans that are not individually significant
to be large groups of smaller balance homogeneous loans.

      Factors considered by management in determining impairment include
payment status, net worth and collateral value.  An insignificant payment
delay or an insignificant shortfall in payment does not in itself result
in the review of a loan for impairment.  The Company reviews its loans for
impairment on a loan-by-loan basis.  The Company does not apply impairment
to aggregations of loans that have risk characteristics in common with
other impaired loans.  Interest on a loan is not generally accrued when
the loan becomes ninety or more days overdue.  The Company may place a
loan on nonaccrual status but not classify it as impaired, if (i) it is
probable that the Company will collect all amounts due in accordance with
the contractual terms of the loan or (ii) the loan is an individually
insignificant residential mortgage loan or consumer loan.  Impaired loans
are charged-off when management believes that the collectibility of the
loan's principal is remote.  Substantially all of the Company's loans that
have been identified as impaired have been measured by the fair value of
existing collateral.

Premises and Equipment:

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

Goodwill:

      Goodwill arising from the acquisition of Fairbank, Inc. is reported
net of accumulated amortization.  Goodwill is being amortized on a
straight-line basis over a period of fifteen years.

Other Real Estate Owned and In-Substance Foreclosures:

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

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

Income Taxes:

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

Fair Values of Financial Instruments:

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

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

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

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

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

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

Earnings Per Share:

      Statement of Financial Accounting Standards No. 128 (SFAS No. 128),
"Earnings per Share" is effective for periods ending after December 15,
1997.  SFAS No. 128 simplifies the standards of computing earnings per
share (EPS) previously found in APB Opinion No. 15.  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 and
requires a reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted EPS
computation.

      Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common
shares outstanding for the period.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Diluted EPS is computed similarly to fully diluted EPS pursuant to APB
Opinion No. 15.

      The Company has computed and/presented EPS for the year ended
December 31, 1997 in accordance with SFAS No. 128.  EPS as so computed
does not differ materially from EPS that would have resulted if APB
Opinion No. 15 had been applied.  In accordance with SFAS No. 128 all
prior-period EPS data presented has been restated.  EPS so restated does
not differ materially from EPS previously presented.

Stock Based Compensation:

      Prior to 1997, the Company did not make stock-based compensation
awards.  In 1997, the Company began making such awards and had the option,
under SFAS No. 123, of accounting for stock-based compensation using the
intrinsic value approach in APB No. 25 and the fair value method
introduced in SFAS No. 123.  The Company elected to use the APB No. 25
method.  Entities electing to follow the provisions of APB No. 25 must
make pro forma disclosure of net income and earnings per share, as if the
fair value method of accounting defined in SFAS No. 123 had been applied.
The Company has made the pro forma disclosures required by SFAS No. 123.

NOTE 3 - Acquisition of Fairbank, Inc.

      On August 23, 1996 the Company effected its acquisition of Fairbank,
Inc., a Massachusetts corporation, and its wholly owned subsidiary, the
National Bank of Fairhaven, through the Company's wholly owned subsidiary,
Slade's Ferry Trust Company.  The acquisition was accomplished by the
payment by Slade's Ferry Trust Company of $8,575,284 in cash from its
capital funds for all of the outstanding shares of the common stock of
Fairbank, Inc.  As a result of the acquisition, Fairbank, Inc. was
dissolved, and the National Bank of Fairhaven was merged into Slade's
Ferry Trust Company.  The National Bank of Fairhaven's two banking offices
in Fairhaven and New Bedford, Massachusetts have become branches of
Slade's Ferry Trust Company.

      The acquisition has been accounted for as a purchase, and the
results of operations of Fairbank, Inc. since the date of the acquisition
are included in the consolidated financial statements.  Goodwill reflected
by the purchase accounting amounted to $3,405,368 and is being amortized
over 15 years on a straight-line basis.

      The following summary, prepared on an unaudited pro forma basis
presents the results of operations as though the Company and Fairbank,
Inc. had been merged as of the beginning of the years ended December 31:

<TABLE>
<CAPTION>
                                                             1996           1995
------------------------------------------------------------------------------------

<S>                                                       <C>            <C>
Net interest income after provision for loan losses       $12,077,046    $11,023,354
Noninterest income                                          1,349,224      1,375,517
------------------------------------------------------------------------------------
  Total                                                    13,426,270     12,398,871
Noninterest expense                                         9,251,100      9,376,107
------------------------------------------------------------------------------------
  Income before income taxes                                4,175,170      3,022,764
Income taxes                                                1,543,200      1,034,117
------------------------------------------------------------------------------------
  Net income                                              $ 2,631,970    $ 1,988,647
====================================================================================
</TABLE>

      The pro forma results are not necessarily indicative of what
actually would have occurred if the acquisition had been in effect for the
entire years of 1996 and 1995.  In addition, they are not intended to be a
projection of future results and do not reflect any effects that might be
achieved from combined operations.

NOTE 4 - Securities

      Debt and equity securities have been classified in the consolidated
balance sheets according to management's intent.  The carrying amount of
securities and their approximate fair values are as follows as of December
31:

<TABLE>
<CAPTION>
                                                                               Gross         Gross
                                                                             Unrealized    Unrealized
                                                              Amortized       Holding       Holding
                                                              Cost Basis       Gains         Losses      Fair Value
--------------------------------------------------------------------------------------------------------------------

<S>                                                           <C>             <C>           <C>          <C>
Available-for-sale securities:
  December 31, 1997:
  Debt securities issued by the U.S. Treasury and other
   U.S. government corporations and agencies                  $30,401,644     $ 84,683      $ 91,311     $30,395,016
  Mortgage-backed securities                                    7,747,509       23,504        19,934       7,751,079
  Asset-backed securities                                         234,136                        279         233,857
  Marketable equity securities                                  1,565,123      301,666        70,523       1,796,266
--------------------------------------------------------------------------------------------------------------------
                                                              $39,948,412     $409,853      $182,047     $40,176,218
====================================================================================================================

  December 31, 1996:
  Debt securities issued by the U.S. Treasury and other
   U.S. government corporations and agencies                  $32,792,636     $ 80,150      $281,010     $32,591,776
  Mortgage-backed securities                                    2,469,385           90        38,367       2,431,108
  Asset-backed securities                                         245,806                        377         245,429
  Marketable equity securities                                  1,775,288      267,778        56,216       1,986,850
--------------------------------------------------------------------------------------------------------------------
                                                              $37,283,115     $348,018      $375,970     $37,255,163
====================================================================================================================

Held-to-maturity securities:
  December 31, 1997:
  Debt securities issued by the U.S. Treasury and other
   U.S. government corporations and agencies                  $ 9,415,554     $ 55,276      $  3,871     $ 9,466,959
  Debt securities issued by states of the United States
   and political subdivisions of the states                     7,975,728      106,237        13,079       8,068,886
  Mortgage-backed securities                                      209,254        2,384                       211,638
  Other debt securities                                             1,000           17                         1,017
--------------------------------------------------------------------------------------------------------------------
                                                              $17,601,536     $163,914      $ 16,950     $17,748,500
====================================================================================================================

  December 31, 1996:
  Debt securities issued by the U.S. Treasury and other
   U.S. government corporations and agencies                  $13,192,933     $ 30,164      $  7,784     $13,215,313
  Debt securities issued by states of the United States
   and political subdivisions of the states                     6,130,922       37,952        67,043       6,101,831
  Mortgage-backed securities                                      256,823                     35,178         221,645
  Debt securities issued by foreign governments                     6,000           28             6           6,022
--------------------------------------------------------------------------------------------------------------------
                                                              $19,586,678     $ 68,144      $110,011     $19,544,811
====================================================================================================================
</TABLE>

      The scheduled maturities of held-to-maturity securities and
available-for-sale securities (other than equity securities) were as
follows as of December 31, 1997:

<TABLE>
<CAPTION>
                                                          Held-to-maturity              Available-for-sale
                                                             securities:                   securities:
-------------------------------------------------------------------------------------------------------------
Debt securities other than mortgage-backed and       Amortized                     Amortized
 asset-backed securities:                            Cost Basis     Fair Value     Cost Basis     Fair Value
-------------------------------------------------------------------------------------------------------------

<S>                                                  <C>            <C>            <C>            <C>
  Due within one year                                $ 5,257,100    $ 5,257,259    $ 5,048,467    $ 5,031,429
  Due after one year through five years                7,290,512      7,365,732     18,057,224     18,051,285
  Due after five years through ten years               4,714,146      4,783,085      7,295,953      7,312,302
  Due after ten years                                    130,524        130,786
Mortgage-backed securities                               209,254        211,638      7,747,509      7,751,079
Asset-backed securities                                                                234,136        233,857
-------------------------------------------------------------------------------------------------------------
                                                     $17,601,536    $17,748,500    $38,383,289    $38,379,952
=============================================================================================================
</TABLE>

      During 1997, proceeds from sales of available-for-sale securities
amounted to $1,171,136.  Gross realized gains and gross realized losses on
those sales amounted to $315,281 and $1,437, respectively.  During 1996,
proceeds from sales of available-for-sale securities amounted to $661,644.
Gross realized gains and gross realized losses on those sales amounted to
$117,911 and $5,280, respectively.  During 1995, proceeds from sales of
available-for-sale securities amounted to $1,677,568.  Gross realized
gains and gross realized losses on those sales amounted to $125,954 and
$61,144, respectively.

      There were no securities of issuers whose aggregate carrying amount
exceeded 10% of stockholders' equity as of December 31, 1997.

      A total par value of $9,696,228 and $8,685,000 of debt securities
was pledged to secure treasury tax and loan, trust department and public
funds on deposit and the loan from Fleet National Bank as of December 31,
1997 and 1996, respectively.

NOTE 5 - Loans

      Loans consisted of the following as of December 31:

<TABLE>
<CAPTION>
                                                          1997            1996
----------------------------------------------------------------------------------

<S>                                                   <C>             <C>
Commercial, financial and agricultural                $ 36,640,703    $ 31,243,643
Real estate - construction and land development          6,677,684       6,891,200
Real estate - residential                               55,477,271      59,499,876
Real estate - commercial                               108,007,972      94,545,028
Consumer                                                 6,746,866       6,681,825
Obligations of states and political subdivisions             9,372          16,044
Other                                                      176,635         108,596
----------------------------------------------------------------------------------
                                                       213,736,503     198,986,212
Allowance for possible loan losses                      (3,693,865)     (3,354,311)
Unearned income                                           (690,048)       (642,906)
Unamortized adjustment to fair value                       (42,750)        (54,150)
----------------------------------------------------------------------------------
Net loans, carrying amount                            $209,309,840    $194,934,845
==================================================================================
</TABLE>

      Certain directors and executive officers of the Company and
companies in which they have significant ownership interest were customers
of the Bank during 1997.  Total loans to such persons and their companies
amounted to $4,794,166 as of December 31, 1997.  During the year ended
December 31, 1997, $2,545,129 of new loans were made and repayments
totaled $3,562,088.

      Changes in the allowance for possible loan losses were as follows
for the years ended December 31:

<TABLE>
<CAPTION>
                                                        1997          1996          1995
-------------------------------------------------------------------------------------------

<S>                                                  <C>           <C>           <C>
Balance at beginning of period                       $3,354,311    $2,497,774    $2,305,860
Loans charged off                                      (254,851)     (439,229)     (396,639)
Provision for loan losses                               500,000       400,000       550,000
Recoveries of loans previously charged off               94,405       439,788        38,553
Transfer of Fairbank, Inc.'s allowance to Slade's
 Ferry Trust Company                                                  455,978
-------------------------------------------------------------------------------------------
Balance at end of period                             $3,693,865    $3,354,311    $2,497,774
===========================================================================================
</TABLE>

      Information about loans that meet the definition of an impaired loan
in Statement of Financial Accounting Standards No. 114 is as follows as of
December 31:

<TABLE>
<CAPTION>
                                                                              1997                         1996
-------------------------------------------------------------------------------------------------------------------------
                                                                     Recorded       Related       Recorded      Related
                                                                    Investment     Allowance     Investment    Allowance
                                                                    In Impaired    For Credit    In Impaired   For Credit
                                                                       Loans         Losses         Loans        Losses
-------------------------------------------------------------------------------------------------------------------------

<S>                                                                 <C>             <C>          <C>            <C>
Loans for which there is a related allowance for credit losses      $1,776,557      $623,570     $3,763,977     $838,290
Loans for which there is no related allowance for credit losses      3,792,560                    1,907,942
-------------------------------------------------------------------------------------------------------------------------
  Totals                                                            $5,569,117      $623,570     $5,671,919     $838,290
=========================================================================================================================
Average recorded investment in impaired loans during the year
 ended December 31                                                  $6,173,640                   $4,618,045
=========================================================================================================================
Related amount of interest income recognized during the time, in
 the year ended December 31, that the loans were impaired
  Total recognized                                                  $   79,340                   $  148,102
=========================================================================================================================
  Amount recognized using a cash-basis method of accounting         $        0                   $  148,102
=========================================================================================================================
</TABLE>

NOTE 6 - Premises and Equipment

      The following is a summary of premises and equipment as of December 31:

<TABLE>
<CAPTION>
                                                  1997           1996
-------------------------------------------------------------------------

<S>                                            <C>            <C>
Land                                           $ 1,145,368    $ 1,145,368
Buildings                                        3,920,080      3,505,679
Furniture and equipment                          2,831,566      2,559,912
Leasehold improvements                           1,376,689      1,376,689
Renovations in process                                            323,481
-------------------------------------------------------------------------
                                                 9,273,703      8,911,129
Accumulated depreciation and amortization       (3,555,169)    (2,940,255)
-------------------------------------------------------------------------
                                               $ 5,718,534    $ 5,970,874
=========================================================================
</TABLE>

NOTE 7 - Deposits

      The aggregate amount of time deposit accounts (including CDs), each
with a minimum denomination of $100,000, was approximately $23,111,663 and
$21,473,151 as of December 31, 1997 and 1996, respectively.

      For time deposits as of December 31, 1997, the aggregate amount of
maturities for each of the following four years ended December 31, are:

<TABLE>

      <S>                                              <C>
      1998                                             $111,683,774
      1999                                               12,678,703
      2000                                                7,653,181
      2001                                                   40,265
      Less:  Unamortized adjustment to fair value            (5,250)
      -------------------------------------------------------------
                                                       $132,050,673
      =============================================================
</TABLE>

NOTE 8 - Securities Sold Under Agreements to Repurchase

      Securities sold under agreements to repurchase generally matured
within one to four days from the transaction date.

      There were no agreements outstanding as of December 31, 1997 and
1996.  There were no securities sold under agreements to repurchase during
1997 and 1996.

      Information concerning securities sold under agreements to
repurchase is summarized as follows for the year ended December 31, 1995:

      Average balance during the year                      $14,622
      Average interest rate during the year                   3.80%
      Maximum month-end balance during the year            $     0

NOTE 9 - Other Borrowed Funds

      Other borrowed funds consist of treasury tax and loan deposits and
generally are repaid within one to 120 days from the transaction date.

NOTE 10 - Note Payable

      Note payable consisted of the following as of December 31, 1997:

      Note payable by the Bank to Fleet National Bank.  The note payable
was assumed by the Bank in the acquisition of Fairbank, Inc.  Minimum
quarterly principal payments of $25,000 are payable on the last business
day of each calendar quarter.  The interest rate on the loan is 3 month
LIBOR plus 1.2% floating, which has been swapped to yield a 9.01% fixed
rate.  Interest payments are due quarterly and the maturity of the loan is
November 25, 1999.  Collateral for the loan consists of U. S. Treasury or
agency securities owned by the Bank.

      The maturity requirements of the note payable are as follows based
on minimum quarterly principal payments of $25,000 as described above as
of December 31, 1997:


<TABLE>

      <S>                                              <C>
      1998                                             $100,000
      1999                                              850,000
      Less:  Unamortized adjustment to fair value        (4,692)
      ---------------------------------------------------------
                                                       $945,308
      =========================================================
</TABLE>

NOTE 11 - Advances from Federal Home Loan Bank of Boston

      Advances consist of funds borrowed from the Federal Home Loan Bank
of Boston (FHLB).  The components of these borrowings are as follows as of
December 31, 1997:

<TABLE>
<CAPTION>
              Amount        Maturity Date         Rate
             --------      ----------------       -----

             <S>           <C>                    <C>
             $430,000      December 9, 2017       5.66%
             ========
</TABLE>

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

NOTE 12 - Income Taxes

      The components of income tax expense are as follows for the years
ended December 31:

<TABLE>
<CAPTION>
                                     1997          1996          1995
------------------------------------------------------------------------

<S>                               <C>           <C>           <C>
Current:
  Federal                         $1,463,401    $1,204,212    $  866,336
  State                              548,225       451,996       286,454
------------------------------------------------------------------------
                                   2,011,626     1,656,208     1,152,790
------------------------------------------------------------------------
Deferred:
  Federal                            (71,848)      (51,722)     (105,334)
  State                              (19,037)      (40,485)      (41,684)
------------------------------------------------------------------------
                                     (90,885)      (92,207)     (147,018)
------------------------------------------------------------------------
     Total income tax expense     $1,920,741    $1,564,001    $1,005,772
========================================================================
</TABLE>

      The reasons for the differences between the statutory federal income
tax rates and the effective tax rates are summarized as follows for the
years ended December 31:

<TABLE>
<CAPTION>
                                                     1997       1996       1995
--------------------------------------------------------------------------------
                                                     % of       % of       % of
                                                    Income     Income     Income
--------------------------------------------------------------------------------

<S>                                                 <C>        <C>        <C>
Federal income tax at statutory rate                34.0%      34.0%      34.0%
Increase (decrease) in tax resulting from:
  Tax-exempt income                                 (2.2)      (2.3)      (2.9)
  Dividends received deduction                       (.2)       (.3)       (.3)
  Unallowable expenses                                .5         .6        1.0
  Amortization of goodwill                           1.6         .8
State tax, net of federal tax benefit                6.6        6.9        6.1
--------------------------------------------------------------------------------
                                                    40.3%      39.7%      37.9%
--------------------------------------------------------------------------------
</TABLE>

      The Company had gross deferred tax assets and gross deferred tax
liabilities as follows as of December 31:

<TABLE>
<CAPTION>
                                                                      1997          1996
-------------------------------------------------------------------------------------------

<S>                                                                <C>           <C>
Deferred tax assets:
  Operating loss carryover                                         $  173,663    $  342,442
  Allowance for loan losses                                         1,309,659     1,127,190
  Deferred loan fees                                                  256,635       227,354
  Interest on non-performing loans                                    211,491       137,931
  Accrued employee benefits                                           153,011       118,464
  Other real estate owned valuation                                       985        43,246
  Other adjustments                                                     3,317         3,365
  Net unrealized holding loss on available-for-sale securities                       25,324
-------------------------------------------------------------------------------------------
      Gross deferred tax assets                                     2,108,761     2,025,316
===========================================================================================
Deferred tax liabilities:
  Accelerated depreciation                                           (232,613)     (223,344)
  Prepaid pensions                                                    (63,341)      (53,531)
  Discount accretion                                                   (1,139)       (2,334)
  Net unrealized holding gain on available-for-sale securities        (78,520)
-------------------------------------------------------------------------------------------
      Gross deferred tax liabilities                                 (375,613)     (279,209)
-------------------------------------------------------------------------------------------
Net deferred tax assets                                            $1,733,148    $1,746,107
===========================================================================================
</TABLE>

      Deferred tax assets as of December 31, 1997 and 1996 have not been
reduced by a valuation allowance because management believes that it is
more likely than not that the full amount of deferred tax assets will be
realized.

      As of December 31, 1997, the Company had approximately $511,000 in
operating loss carryovers for tax purposes which expire in 2010.

NOTE 13 - Employee Benefits

      The Company has a defined benefit pension plan (plan) covering
substantially all of its full time employees who meet certain eligibility
requirements.  Employees are eligible under the plan upon attaining age 21
and completing one year of service.  The benefits paid are based on 1.5%
of total salary plus .5% of compensation in excess of integration level
per year of service.  The integration level is the first $750 of monthly
compensation.  The accrued benefit is based on years of service.

      The following table sets forth the funded status of the plan and
amounts recognized in the Company's consolidated balance sheet as of
December 31:

<TABLE>
<CAPTION>
                                                                   1997           1996
-----------------------------------------------------------------------------------------

<S>                                                             <C>            <C>
Actuarial present value of benefit obligations:
  Accumulated benefit obligation (including vested benefits
   of $1,038,366, and $532,732, respectively)                   $ 1,059,333    $  536,848
=========================================================================================

Projected benefit obligation for services rendered to date      $(1,424,299)   $ (875,343)

Plan assets at fair value, primarily invested in corporate
 stocks, U.S. government securities and cash and cash
 equivalents                                                      1,131,394       916,360
-----------------------------------------------------------------------------------------

Plan assets greater (less) than projected benefit obligation       (292,905)       41,017

Unrecognized net gain from past experience different from
 that assumed and effect of changes in assumptions                  656,570       318,010

Unrecognized prior service cost                                    (338,714)     (365,736)

Unrecognized net obligation from 1988 transition date being
  amortized over 25.78 years                                        126,400       134,407

-----------------------------------------------------------------------------------------
Prepaid pension cost included on the balance sheet              $   151,351    $  127,698
=========================================================================================
</TABLE>

      Net periodic pension cost included the following components for the
years ended December 31:

<TABLE>
<CAPTION>
                                                        1997        1996        1995
--------------------------------------------------------------------------------------

<S>                                                   <C>         <C>         <C>
Service cost-benefits earned during the period        $ 97,214    $ 92,434    $115,008
Interest cost on projected benefit obligation          104,822      65,745     171,702
Actual return on plan assets                           (95,773)    (70,423)   (176,649)
Net amortization and deferral                           45,584      (5,699)     59,332
--------------------------------------------------------------------------------------
Net periodic pension cost                             $151,847    $ 82,057    $169,393
======================================================================================
</TABLE>

      The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.5% and 2.0%, respectively.  The
expected long-term rate of return on assets was 8.5%.

      The Bank has a 401K plan for eligible employees who attain age 21
and complete one year of service.  The Bank contributes a discretionary
amount to be allocated to eligible participants.  Current contributions
vest fully after seven years of continuous service.  The amount that may
be deferred by the employees is limited by the amount that will not cause
the plan to exceed IRS limitations.  Contributions made by the Bank
charged to employee benefit expense amounted to $9,500, $7,000 and $6,000
for the years ended December 31, 1997, 1996 and 1995, respectively.

NOTE 14 - Commitments and Contingent Liabilities

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

      The Company is obligated under various lease agreements covering
branch offices and equipment.  These agreements are considered to be
operating leases.  The total minimum rental due in future periods under
these agreements is as follows as of December 31, 1997:

<TABLE>

      <S>                                 <C>
      1998                                $ 70,662
      1999                                  70,662
      2000                                  70,662
      2001                                  70,662
      2002                                  70,662
      Thereafter                           309,725
      --------------------------------------------
      Total minimum lease payments        $663,035
      ============================================
</TABLE>

      Certain leases contain provisions for escalation of minimum lease
payments contingent upon increases in real estate taxes and percentage
increases in the consumer price index.  The total rental expense amounted
to $90,210 for 1997, $66,223 for 1996 and $46,592 for 1995.

NOTE 15 - Financial Instruments

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

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

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

      Standby letters of credit are conditional commitments issued by the
Company to guarantee the performance by a customer to a third party.  The
credit risk involved in issuing letters of credit is essentially the same
as that involved in extending loan facilities to customers.  Of the total
standby letters of credit outstanding as of December 31, 1997, $797,842
are secured by deposits at the Bank.

      The estimated fair values of the Company's financial instruments,
all of which are held or issued for purposes other than trading, are as
follows as of December 31:

<TABLE>
<CAPTION>
                                                                    1997                            1996
--------------------------------------------------------------------------------------------------------------------
                                                          Carrying         Fair           Carrying         Fair
                                                           Amount          Value           Amount          Value
--------------------------------------------------------------------------------------------------------------------

<S>                                                     <C>             <C>             <C>             <C>
Financial assets:
  Cash and cash equivalents                             $ 20,323,501    $ 20,323,501    $ 24,128,724    $ 24,128,724
  Interest bearing time deposits with other banks            106,688         106,688         149,598         149,598
  Available-for-sale securities                           40,176,218      40,176,218      37,255,163      37,255,163
  Held-to-maturity securities                             17,601,536      17,748,500      19,586,678      19,544,811
  Federal Home Loan Bank stock                               890,600         890,600         890,600         890,600
  Loans                                                  209,309,840     209,036,000     194,934,845     195,498,000
  Accrued interest receivable                              1,796,467       1,796,467       1,853,783       1,853,783

Financial liabilities:
  Note payable                                               945,308         945,340       1,042,626       1,047,220
  Other borrowed funds                                     1,200,000       1,200,000       1,200,000       1,200,000
  Advances from Federal Home Loan Bank                       430,000         396,000
  Deposits                                               271,322,250     271,637,000     267,791,009     268,344,000
</TABLE>

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

      The notional amounts of financial instrument liabilities with off-
balance sheet credit risk are as follows as of December 31:

<TABLE>
<CAPTION>
                                                                       1997           1996
----------------------------------------------------------------------------------------------

<S>                                                                 <C>            <C>
Commitments to originate loans                                      $10,148,013    $ 9,402,290
Standby letters of credit                                             2,356,380      1,176,936
Unadvanced portions of loans:
  Consumer loans (including credit card loans and student loans)      3,545,582      2,805,679
  Commercial real estate loans                                          851,935        223,000
  Home equity loans                                                   1,501,126      1,755,198
  Commercial lines of credit                                         14,032,988      9,744,425
  Construction loans                                                  2,768,196      1,641,700
----------------------------------------------------------------------------------------------
                                                                    $35,204,220    $26,749,228
==============================================================================================
</TABLE>

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

      The Company has no derivative financial instruments subject to the
provisions of SFAS No. 119 "Disclosure About Derivative Financial
Instruments and Fair Value of Financial Instruments" other than the
interest rate swap described in Note 10.

NOTE 16 - Significant Group Concentrations of Credit Risk

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

NOTE 17 - Earnings per Share (EPS)

      Earnings per share were calculated using the weighted average number
of shares outstanding.

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

<TABLE>
<CAPTION>
                                                                Income          Shares        Per-Share
                                                              (Numerator)    (Denominator)     Amount
-------------------------------------------------------------------------------------------------------

<S>                                                           <C>              <C>              <C>
Year ended December 31, 1997
  Basic EPS
    Net income and income available to common stockholders    $2,845,990       3,033,197        $.94
    Effect of dilutive securities, options                                         4,981
                                                              --------------------------------------
  Diluted EPS
    Income available to common stockholders and assumed
     conversions                                              $2,845,990       3,038,178        $.94
                                                              ======================================

Year ended December 31, 1996 - As restated
  Basic EPS
    Net income and income available to common stockholders    $2,378,195       2,764,887        $.86
    Effect of dilutive securities, options                                             0
                                                              --------------------------------------
  Diluted EPS
    Income available to common stockholders and assumed
     conversion                                               $2,378,195       2,764,887        $.86
                                                              ======================================

Year ended December 31, 1995 - As restated
  Basic EPS
    Net income and income available to common stockholders    $1,645,587       2,738,250        $.60
    Effect of dilutive securities, options                                             0
                                                              --------------------------------------
  Diluted EPS
    Income available to common stockholders and assumed
     conversions                                              $1,645,587       2,738,250        $.60
                                                              ======================================
</TABLE>

NOTE 18 - Regulatory Matters

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

      Quantitative measures established by regulation to ensure capital
adequacy require the Company and the Bank to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier 1 capital (as
defined in the regulations) to risk-weighted assets (as defined), and of
Tier 1 capital (as defined) to average assets (as defined).  Management
believes, as of December 31, 1997, that the Company and the Bank meet all
capital adequacy requirements to which they are subject.

      As of December 31, 1997, the most recent notification from the
Federal Deposit Insurance Corporation categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action.
To be categorized as well capitalized the Bank must maintain minimum total
risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in
the table.  There are no conditions or events since that notification that
management believes have changed the Bank's category.

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

<TABLE>
<CAPTION>
                                                                                               To Be Well
                                                                                           Capitalized Under
                                                                        For Capital        Prompt Corrective
                                                     Actual          Adequacy Purposes:    Action Provisions:
                                                -----------------    ------------------    ------------------
(Dollar Amounts in Thousands)                   Amount     Ratio     Amount      Ratio     Amount      Ratio
-------------------------------------------------------------------------------------------------------------

<S>                                             <C>        <C>       <C>         <C>       <C>         <C>
As of December 31, 1997:
  Total Capital (to Risk Weighted Assets):
  Consolidated                                  $25,907    12.04%    $17,210     >=8%          N/A
  Slade's Ferry Trust Company                    24,022    11.18      17,183     >=8       $21,479     >=10%
  Tier 1 Capital (to Risk Weighted Assets):
  Consolidated                                   23,206    10.74       8,645     >=4           N/A
  Slade's Ferry Trust Company                    21,325     9.88       8,631     >=4        12,947     >=6
  Tier 1 Capital (to Average Assets):
  Consolidated                                   23,206     7.79      11,910     >=4           N/A
  Slade's Ferry Trust Company                    21,325     7.18      11,876     >=4        14,845     >=5

As of December 31, 1996:
  Total Capital (to Risk Weighted Assets):
  Consolidated                                  $19,044     9.56%    $15,938     >=8%          N/A
  Slade's Ferry Trust Company                    18,935     9.51      15,934     >=8       $19,918     >=10%
  Tier 1 Capital (to Risk Weighted Assets):
  Consolidated                                   16,543     8.27       8,003     >=4           N/A
  Slade's Ferry Trust Company                    16,435     8.22       8,001     >=4        12,002     >=6
  Tier 1 Capital (to Average Assets):
  Consolidated                                   16,543     5.70      11,617     >=4          N/A
  Slade's Ferry Trust Company                    16,435     5.66      11,615     >=4        14,519     >=5
</TABLE>

      The declaration of cash dividends is dependent on a number of
factors, including regulatory limitations, and the Company's operating
results and financial condition.  The stockholders of the Company will be
entitled to dividends only when, and if, declared by the Company's Board
of Directors out of funds legally available therefore.  Under the
Massachusetts Business Corporation Law, a dividend may not be declared if
the corporation is insolvent or if the declaration of the dividend would
render the corporation insolvent.  The declaration of future dividends,
whether by the Board of Directors of the Company or the Bank, will be
subject to favorable operating results, financial conditions, tax
considerations, and other factors.

      As of December 31, 1997 the Company would be restricted from
declaring dividends in an amount greater than $26,436,426 as such
declaration would render the corporation insolvent.  As of December 31,
1997 the Bank would be restricted from declaring dividends in an amount
greater than approximately $6,839,000 as such declaration would decrease
capital below the Bank's required minimum level of regulatory capital.

NOTE 19 - Stock Option Plan

      At the 1996 annual meeting stockholders approved a 1996 stock option
plan (Plan).  No options were granted in 1996.  A summary of the Plan is
as follows.

      The Plan is divided into two separate equity incentive programs, a
Discretionary Grant Program and an Automatic Grant Program.  The maximum
number of shares of common stock issuable over the term of the Plan may
not exceed 250,000 shares and the maximum aggregate number of shares
issuable under both programs in any plan year may not exceed 50,000
shares.  Unless sooner terminated by the Board, the Plan will in all
events terminate on March 11, 2006.

      Under the Discretionary Grant Program, key employees, including
officers, may be granted incentive stock options to purchase shares of
common stock.  The option exercise price per share may not be less than
one hundred percent of the fair market value of common stock at grant date
and generally become exercisable in periodic installments over the
optionee's period of service.  Two types of stock appreciation rights are
authorized for issuance: (1) tandem rights, which require the option
holder to elect between the exercise of the underlying option for shares
of common stock and the surrender of such option for appreciation
distribution and (2) limited rights, which are automatically exercised
upon the occurrence of a hostile takeover.

      Eligibility for participation in the Automatic Grant Program is
limited to non-employee directors of the Company or its subsidiary who
have completed three full years of service as directors.  Under the
Automatic Grant Program a nonstatutory option for 2,000 shares of common
stock shall be granted each plan year to eligible directors.  The exercise
price per share will be equal to one hundred percent of the fair market
value per share of common stock at grant date and each option will have a
maximum five year term.  Any purchased shares will be subject to
repurchase by the Company, at the exercise price paid per share, upon the
director's cessation of Board service prior to vesting in such shares.
The shares subject to each grant will vest (and the Company's repurchase
rights will lapse) in three equal annual installments over the director's
period of Board service measured from the grant date.

      The Company applies APB Opinion 25 and related Interpretations in
accounting for its plan.  Accordingly, no compensation cost has been
recognized for its stock option plan.  Had compensation cost for the
Company's stock-based compensation plan been determined based on the fair
value at the grant dates for awards under those plans consistent with the
method of FASB Statement 123, the Company's net income and earnings per
share for the year ended December 31, 1997 would have been reduced to the
pro forma amounts indicated below:

      Net income                    As reported      $2,845,990
                                    Pro forma        $2,807,466

      Basic earnings per share      As reported      $.94
                                    Pro forma        $.93

      Diluted earnings per share    As reported      $.94
                                    Pro forma        $.92

      The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in the year ended December
31, 1997:  dividend yield of 2 percent; expected volatility of 13 percent,
risk-free interest rate of 6.7 percent; and expected lives of 4 years.

      A summary of the status of the Company's stock option plan as of
December 31, 1997 and changes during the year ending on that date is
presented below:

<TABLE>
<CAPTION>
                                                          Weighted-Average
                     Options                    Shares     Exercise Price
      --------------------------------------------------------------------

      <S>                                       <C>             <C>
      Outstanding at beginning of year               0
      Granted                                   31,000          $9.34
      Exercised                                      0
      Forfeited                                      0
                                                ------
      Outstanding at end of year                31,000          $9.34
                                                ======

      Options exercisable at year-end           31,000
      Weighted-average fair value of options
       granted during the year                  $ 1.74
</TABLE>

      The following table summarizes information about fixed stock options
outstanding at December 31, 1997:

<TABLE>
<CAPTION>
                      Options Outstanding and Exercisable
      ---------------------------------------------------------------------
                                       Weighted-Average
                           Number         Remaining        Weighted-Average
      Exercise Price    Outstanding    Contractual Life     Exercise Price
      ---------------------------------------------------------------------

          <S>              <C>            <C>                   <C>
          $9.34            31,000         4.5 Years             $9.34
</TABLE>

NOTE 20 - Litigation

      The Bank is involved in a civil suit brought by a former employee of
the National Bank of Fairhaven, which primarily alleges a breach of
contract and other related claims.  The demand by the plaintiff was
$550,000 to settle the case.  However, a partial summary judgment was
granted on a defendant's motion dismissing all claims except the basic
claim for breach of contract.  The case is still in the pretrial phase and
a motion is pending to amend the complaint to add a count of intentional
infliction of emotional distress.  The Company estimates its potential
liability to be less than $550,000 and it believes it has meritorious
defenses to the claim.  The Company believes that the suit will not have a
material adverse effect on the Company's financial condition, results of
operations or liquidity.


                            Slade's Ferry Bancorp
                             Parent company only


NOTE 21 - Parent Company Only Condensed Financial Statements

      The following condensed financial statements are for Slade's Ferry
Bancorp (Parent Company Only) and should be read in conjunction with the
consolidated financial statements of Slade's Ferry Bancorp and Subsidiary.


Condensed Financial Statements
Balance Sheets

<TABLE>
<CAPTION>
                                                                         December 31,
--------------------------------------------------------------------------------------------
                                                                     1997           1996
--------------------------------------------------------------------------------------------

<S>                                                               <C>            <C>
Assets
Cash                                                              $   319,437    $   180,607
Investments in available-for-sale securities (at fair value)        1,446,722
Investments in held-to-maturity securities (fair value of
 $246,917 as of December 31, 1997)                                    247,465
Investment in subsidiary, Slade's Ferry Trust Company              24,557,163     19,740,124
Premises and equipment                                                                 4,448
Accrued interest receivable                                             5,977
Other assets                                                           38,539         37,713
--------------------------------------------------------------------------------------------
                                                                  $26,615,303    $19,962,892
============================================================================================

Liabilities and Stockholders' Equity
Other liabilities                                                 $   178,877    $   115,567
--------------------------------------------------------------------------------------------
    Total liabilities                                                 178,877        115,567
--------------------------------------------------------------------------------------------
Stockholders' equity:
  Common stock, par value $.01 per share; authorized 5,000,000
   shares; issued and outstanding 3,236,712.7 shares in 1997
   and 2,789,142.3 shares in 1996                                      32,367         27,891
  Paid-in capital                                                  18,978,598     14,607,299
  Retained earnings                                                 7,276,174      5,214,763
  Net unrealized holding gain (loss) on available-for-sale
   securities                                                         149,287         (2,628)
--------------------------------------------------------------------------------------------
    Total stockholders' equity                                     26,436,426     19,847,325
--------------------------------------------------------------------------------------------
                                                                  $26,615,303    $19,962,892
============================================================================================
</TABLE>

Statements of Income

<TABLE>
<CAPTION>
                                                                            Years Ended December 31,
-----------------------------------------------------------------------------------------------------------
                                                                        1997          1996          1995
-----------------------------------------------------------------------------------------------------------

<S>                                                                  <C>           <C>           <C>
Dividends from subsidiary                                            $  475,000    $  360,000    $  267,000
Interest and dividends on securities:
  Taxable                                                                40,199
Other Interest Income                                                     4,267         2,474         1,827
Management fee income from subsidiary                                   438,479       415,904       546,028
Other income                                                              4,000
-----------------------------------------------------------------------------------------------------------
  Total income                                                          961,945       778,378       814,855
-----------------------------------------------------------------------------------------------------------
Salaries and employee benefits                                          333,410       311,038       433,766
Equipment expense                                                         4,449        20,596        33,605
Other expense                                                           124,676        96,872        98,281
-----------------------------------------------------------------------------------------------------------
  Total expense                                                         462,535       428,506       565,652
-----------------------------------------------------------------------------------------------------------
Income before income taxes (benefit) and equity in undistributed
 net income of subsidiary                                               499,410       349,872       249,203
Income taxes (benefit)                                                   16,754        (2,400)       11,688
-----------------------------------------------------------------------------------------------------------
Income before equity in undistributed net income of subsidiary          482,656       352,272       237,515
Equity in undistributed net income of subsidiary                      2,363,334     2,025,923     1,408,072
-----------------------------------------------------------------------------------------------------------
  Net income                                                         $2,845,990    $2,378,195    $1,645,587
===========================================================================================================
</TABLE>


Statements of Cash Flows
Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                    1997           1996           1995
----------------------------------------------------------------------------------------------------------

<S>                                                              <C>            <C>            <C>
Cash flows from operating activities:
Net Income                                                       $ 2,845,990    $ 2,378,195    $ 1,645,587

Adjustments to reconcile net income to net cash provided
 by operating activities:
  Undistributed net income of subsidiary                          (2,363,334)    (2,025,923)    (1,408,072)
  Amortization of organization cost                                                                  3,440
  Accretion, net of amortization of securities                       (34,220)
  Depreciation and amortization                                        4,448         10,677         21,039
  Disposal of fixed assets                                                                          11,229
  Increase (decrease) in taxes payable                                 5,007         (5,668)         1,659
  Increase in accrued expenses                                           775            910            989
  Increase in prepaid expenses                                       (13,223)          (210)        (1,394)
  Increase in interest receivable                                     (5,977)
  (Increase) decrease in other assets                                 13,639        (14,785)         5,313
  Increase (decrease) in other liabilities                             6,988           (636)
----------------------------------------------------------------------------------------------------------
  Net cash provided by operating activities                          460,093        342,560        279,790
----------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Additional investment in subsidiary bank                        (2,300,000)
  Purchases of held-to-maturity securities                        (2,613,316)
  Proceeds from maturities of held-to-maturity securities          2,400,000
  Purchases of available-for-sale securities                      (1,449,649)
----------------------------------------------------------------------------------------------------------
  Net cash used in investing activities                           (3,962,965)
----------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Fractional shares paid in cash                                                     (3,360)        (7,186)
  Dividends paid                                                    (734,073)      (658,165)      (455,345)
  Proceeds from issuance of common stock                           4,375,775        346,147        244,961
----------------------------------------------------------------------------------------------------------
  Net cash provided by (used in) financing activities              3,641,702       (315,378)      (217,570)
----------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                            138,830         27,182         62,220
Cash and cash equivalents at beginning of year                       180,607        153,425         91,205
----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                         $   319,437    $   180,607    $   153,425
==========================================================================================================

Supplemental disclosure:
  Income taxes paid                                              $    11,747    $     3,268    $    10,029
</TABLE>

      The Parent Company Only Statements of Changes in Stockholders'
Equity are identical to the Consolidated Statements of Changes in
Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995,
and therefore are not reprinted here.


                      Slade's Ferry Bancorp and Subsidiary



Board of Directors
Slade's Ferry Bancorp -
Slade's Ferry Trust Company

Thomas B. Almy
Architect - I.T. Almy Associates

James D. Carey
Executive Vice President of Bancorp
President of Bank
Chief Executive Officer of Bank

Peter G. Collias, Esquire
Clerk/Secretary of Bancorp and Bank

Donald T. Corrigan
Chairman of the Board of Bancorp
Chairman of the Board of Bank

Melvyn A. Holland
Managing Partner
Rosenfield, Holland & Raymon PC
Certified Public Accountants

William Q. MacLean, Jr.
Vice President
Cornish & Co. Inc. Insurance

Francis A. Macomber
President - LeComtes All Star Dairy Inc.

Majed Mouded MD
Physician

Shaun O'Hearn, Sr.
President - Bolger & O'Hearn Inc.

Lawrence J. Oliveira DDS
Orthodontist

Peter Paskowski
Past President of Bank

Kenneth R. Rezendes
President/CEO of Bancorp
President - K.R. Rezendes, Inc.

William J. Sullivan
President - Sullivan Funeral Homes

Charles Veloza
President - Charlie's Oil Co., Inc.

David F. Westgate
President
Quequechan Management Corp.



Honorary Directors

Edward S. Machado
Past President of Bank

Bernard T. Shuman
Past President/Treasurer
Priscilla Dress Corp.

Officers
Slade's Ferry Bancorp

Donald T. Corrigan
Chairman of the Board

Kenneth R. Rezendes
President
Chief Executive Officer

James D. Carey
Executive Vice President

Ralph S. Borges
Treasurer


Executive Management
Slade's Ferry Trust Company

James D. Carey
President
Chief Executive Officer

Ralph S. Borges
Senior Vice President/Treasurer

Susan R. Hajder
Senior Vice President

Charlene J. Jarest
Vice President

Carol A. Martin
Senior Vice President

Manuel J. Tavares
Senior Vice President


Officers
Slade's Ferry Trust Company

James H. Amidon
Vice President

Isola A. Anctil
Assistant Vice President
Assistant Clerk/Secretary

Cherie Ashton
Assistant Vice President

Maria C. Barbosa
Vice President

Edward Bernardo Jr.
Vice President

Catherine Blakey
Assistant Vice President

Noelia M. Brum
Assistant Treasurer



Peter G. Collias
Corporate Secretary

Daniel B. Costa
Assistant Treasurer

Sandra Curtis
Compliance Auditor

Luisa DiManno
Assistant Treasurer

William E. Diskin
Vice President

Sergio do Rego
Assistant Treasurer

Raymond L. Foster
Vice President

Joseph J. Ganem
Vice President

Joseph Gesualdo
Vice President

Russell F. Godin
Vice President

Elaine M. Guillemette
Assistant Vice President

Raymond J. Harris
Vice President

Sandra Medeiros
Assistant Treasurer

Charlotte C. Nadeau
Loan Operations Officer

Cecelia M. Machado
Vice President

Ann Padula
Assistant Vice President

Jeannine M. Paliotti
Assistant Vice President

Janice R. Partridge
Vice President

Fatima M. Rapoza
Assistant Vice President

Michelle Rivera
Assistant Treasurer

Deborah A. Silvia
Assistant Treasurer

Eduardo F. Sousa
Assistant Treasurer

Mary M. Sullivan
Vice President


Corporate Headquarters
Slade's Ferry Bancorp
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
Tel. (508) 675-2121
Fax (508) 675-1751

Branch Locations
Fairhaven, MA
75 Huttleston Avenue

Fall River, MA
249 Linden Street
855 Brayton Avenue

New Bedford, MA
838 Pleasant Street

Seekonk, MA
1400 Fall River Avenue (Rte.6)

Somerset, MA
100 Slade's Ferry Avenue
2722 County Street
Somerset High School

Swansea, MA
Swansea Mall
2388 G.A.R. Highway

General Counsels
Atty. Peter G. Collias
84 North Main Street
Fall River, Massachusetts 02720
Tel. (508) 675-7894

Atty. Thomas H. Tucker
High Street Tower
125 High Street
Suite 2601
Boston, Massachusetts 02110
Tel. (617) 951-0047

Independent Certified Public Accountants
Shatswell, MacLeod and Company, P.C.
Certified Public Accountants
83 Pine Street
West Peabody, Massachusetts 01960
Tel. (978) 535-0206

Form 10-KSB
A copy of the Annual Report on Form 10-KSB for Slade's Ferry Bancorp as
filed with the Securities and Exchange Commission will be forwarded
without charge to any stockholder upon written request to:

Ralph S. Borges, Treasurer
Slade's Ferry Bancorp
100 Slade's Ferry Avenue
Somerset, MA  02726

Shareholder Services
Slade's Ferry Bancorp
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
Tel. (508) 675-2121

Annual Meeting
The Annual Meeting of Stockholders of
Slade's Ferry Bancorp will be held at 7:30 p.m. on April 13, 1998 at the
Venus de Milo Restaurant, 75 G.A.R. Highway, Swansea, Massachusetts.

Dividend Reinvestment Plan
The Plan provides for:
*   Reinvestment of all of the dividends
*   Voluntary cash contributions of up to $5,000 annually, minimum $100.
*   No service fees or commissions

Information may be obtained by contacting Shareholder Services at (508) 675-2121

Stock Trading
The common stock of Slade's Ferry Bancorp
is listed on the NASDAQ Small Cap Market under the symbol SFBC.

Design: MediaConcepts Corporation, Assonet, MA



                            Slade's Ferry Bancorp


Corporate Headquarters       100 Slade's Ferry Avenue      Somerset, MA 02726

                 Tel. (508) 675-2121      Fax (508) 675-1751