ANNUAL REPORT

                                    1998

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 Company, 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 twelve 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. An 
Equal Opportunity/Affirmative Action Employer (M/F/D/V), Slade's Ferry 
Trust Company employed a total of 136 full-time and 54 part-time employees 
as of December 31, 1998.  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.

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


                             SHAREHOLDERS LETTER

      As we bring this century to a close and finalize our preparation for 
the new millenium, the accomplishments of 1998 will serve as a springboard 
for our future success in the new century.

      Our assets grew from $302 Million at year-end 1997 to $340 Million or 
12.6% by year-end 1998. Our growth in new business came primarily from two 
marketplaces, the Rhode Island border towns and the Greater New Bedford 
area. Our investment in the New Bedford market in 1996 is now paying the 
dividends projected when we acquired the National Bank of Fairhaven.

      Profits rose dramatically from $2,845,990 at year-end 1997 to 
$3,363,042 or 18.2% by year-end 1998. The increased earnings were fueled by 
two sources: the highest interest margin on investable funds we have 
enjoyed in over twenty years, and the gains of $382,370 that we were able 
to realize from our stock portfolio. During the fourth quarter of 1998, we 
saw multiple reductions in interest rates, which have already greatly 
reduced our margins and put pressure on our earning projections for 1999.

      The return on average assets rose to 1.06% from .96% in 1997, while 
the earnings per share on a fully diluted basis rose $.09 from $.89 to 
$.98.

      During 1998, our stock price rode the crest of the market, as did 
most stocks, reaching a high of $19.13 per share and settling consistently 
at year-end at approximately $14.00 per share. Early in the year, we issued 
a 5% stock dividend, followed at mid year with an increase in cash 
dividends to $.06 per share, as well as an extra cash dividend at year end.

      During the summer, we purchased land on Ashley Boulevard in New 
Bedford and commenced construction of a new branch facility to be 
operational during the first quarter of 1999.

      We also purchased the former BankBoston banking facility on South 
Main Street in Fall River and completed extensive renovations by year-end. 
The newly refurbished branch opened in January of 1999 and promises to be 
one of the fastest growing and busiest branches in the years to come.

      The addition of these two branches will fill in gaps in our market 
service area, and makes Slade's Ferry Bank convenient to thousands more new 
and existing customers.

      In addition of these two branches will fill in gaps in our market 
service area, and makes Slade's Ferry Bank convenient to thousands more new 
and existing customers.

      In addition, during the year, we committed substantial resources to 
addressing all of the issues affecting us with the upcoming transition into 
the Year 2000 (Y2K). We assessed all of our computer system concerns to 
identify problems or replacement needs. We have systematically replaced, 
upgraded, tested and continue to test all our systems to assure our 
customers that the transition into the Year 2000 will be made without any 
interruption to our servicing abilities. We are extremely confident that 
your bank and the industry have sufficiently addressed the Y2K concerns to 
enter the new millenium prepared to continue the levels of service you have 
come to expect.

      1999 will mark the fortieth anniversary of Slade's Ferry Bank, which 
started from humble beginnings back in 1959.

      Because of your faith in us and our focus on personalized customer 
service, we have grown to be a well-respected, well-capitalized financial 
organization with continued bright prospects for the future.

      The addition of two new branches to our delivery system, our growth 
in 1998 and our Y2K preparations will propel us into the new century with 
solid financial footings, exciting growth potential, and increased ability 
to provide value and reward for your investment in our bank.

      We look to the new millenium with great excitement and anticipation.

Sincerely,




James D. Carey
Executive Vice President, Bancorp
President, Chief Executive Officer, Slade's Ferry Bank
January 29, 1999


                            SLADE'S FERRY BANCORP

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)                  1998          1997          1996          1995          1994
--------------------------------------------------------------------------------------------------------

<S>                                   <C>           <C>           <C>           <C>           <C>
EARNINGS DATA
  Interest Income                     $   24,306    $   23,150    $   19,495    $   16,541    $   13,546
  Interest Expense                        10,711        10,412         9,078         7,764         4,944
  Net Interest Income                     13,595        12,738        10,417         8,777         8,602
  Provision for Loan Losses                  600           500           400           550           645
  Noninterest Income                       1,568         1,562         1,305         1,056         1,099
  Noninterest Expense                      8,984         9,033         7,380         6,632         6,701
  Income Before Income Taxes               5,579         4,767         3,942         2,651         2,355
  Applicable Income Taxes                  2,216         1,921         1,564         1,005           888
  Net Income                               3,363         2,846         2,378         1,646         1,467

PER SHARE DATA (1)
  Net Income-Basic                    $     0.99    $    0.894    $    0.819    $    0.572    $    0.540
  Net Income-Diluted(2)               $     0.98    $    0.892    $       --    $       --    $       --
  Cash Dividends                      $     0.28    $    0.246    $    0.229    $    0.166    $    0.151
  Book Value (at end of period)       $     8.62    $    8.168    $    7.116    $    6.811         9.023
  Avg. Shs. Outstanding                3,402,218     3,184,857     2,903,131     2,875,162     2,717,207
  Shares Outstanding Year End          3,446,413     3,236,713     2,789,142     2,617,181     1,645,492

BALANCE SHEET DATA
  Assets                              $  340,355    $  301,571    $  291,342    $  233,422    $  193,909
  Loans                                  218,230       213,736       198,986       151,094       136,191
  Unearned Discount                          691           690           643           527           403
  Allowance for Loan Losses                3,569         3,694         3,354         2,498         2,306
  Loans, Net                             213,938       209,310       194,935       148,069       133,482
  Goodwill                                 2,854         3,081         3,307            --            --
  Investments                             80,020        58,668        57,732        58,757        43,537
  Deposits                               303,786       271,322       267,791       214,221       177,315
  Stockholders' Equity                    29,707        26,436        19,847        17,827        14,848

FINANCIAL RATIOS
  Net Yield on Interest Earning
   Assets (3)                               4.70%         4.66%         4.44%         4.36%         4.78%
  Net Interest Spread (3)                   3.91          3.88          3.72          3.72          4.33
  Net Income as a Percentage of
   Average Assets                           1.06          0.96          0.94          0.75          0.75
  Average Equity                           11.98         12.27         12.69          9.99          9.71
  Dividend Payout Ratio                    28.54         27.57         27.95         29.03         27.93
  Average Equity to Average Assets          8.86          7.79          7.40          7.55          7.71

--------------------
<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. On January 12, 1998, the
      Company declared 5% stock dividend mailed to stockholders on February 11,
      1998. 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>

                            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 in 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 bids as 
reported for NASDAQ Small Cap Market by quarters for 1998, and high and low 
bid quotations as reported in the "pink sheets" by quarters for 1997.

<TABLE>
<CAPTION>

                             1998                1997(1)
                       ------------------------------------
                        High       Low      High       Low
                       ------------------------------------

        <S>            <C>       <C>       <C>       <C>
        1st Quarter    $17.00    $15.50    $ 9.75    $ 8.25
        2nd Quarter     19.13     17.50     10.50      8.88
        3rd Quarter     18.75     16.38     13.00      9.50
        4th Quarter     15.88     13.00     16.63     13.13

<F1>  These quotations reflect interdealer prices, without mark-up, mark-
      down, or commission and may not necessarily represent actual 
      transactions.

</TABLE>

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 January 
1998, the Company issued a 5% stock dividend on the Company's common stock, 
resulting in a distribution of 161,698 shares.   The Company also paid two 
quarterly cash dividends of $.05 per share and then increased its dividend 
to $.06 per share for the third and fourth quarter in 1998.  In addition, 
an extra cash dividend of $.06 per share was paid in December 1998 for a 
total of $.28 per share paid in 1998.

In 1997, the Company paid quarterly cash dividends of $.05 per share, plus 
an extra cash dividend of $.05 per share, for a total of $.25 per share 
before the effect of the 5% stock dividend issued in 1998.

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.

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.

Overview:

*     In 1998, Slade's Ferry Bancorp recorded net income of $3,363,042 or 
      $0.98 per share on a diluted basis compared to $2,845,990 or $0.89 
      per share on a diluted basis in 1997.  This represents an increase of 
      $517,052 or 18.2% in net income and $.09 or 10.11% per share on a 
      diluted basis between 1998 and 1997.

*     Return on average assets increased to 1.06% in 1998 from .96% in 1997 
      and .94% in 1996.  Return on average equity for 1998, 1997 and 1996 
      was 11.98%, 12.27%, and 12.69% respectively.

*     Book value of the Company's common stock increased to $8.62 in 1998 
      from $8.17 reported in 1997, and $7.12 reported in 1996.

*     The Company in February 1998 issued a 5% stock dividend to its 
      stockholders of common stock, and the cash dividend for the year 
      totaled $.28 per share, up from $.246 per share in 1997 and $.229 per 
      share in 1996.

*     Assets at December 31, 1998 increased by $38.8 Million or 12.9% to 
      $340.4 Million when compared to $301.6 Million in assets at December 
      31, 1997.  Net loans increased by 2.2% during 1998.  Deposit levels 
      were up by 12.0% at December 31, 1998 when compared to 1997.

*     Two new branch banking facilities are being added to the branch 
      network and are scheduled to open in early 1999.

Results of Operations
---------------------

Net interest income, which is the difference between interest and dividend 
income earned on earning assets and interest expense paid on interest-
bearing liabilities, is the dominate contributor to net income.  Increases 
or decreases in interest rates affect the yields earned on loans and 
investments and the rates paid on deposits and other borrowings.  On a 
fully taxable basis, net interest income was $13.8 Million in 1998, $12.9 
Million in 1997, and $10.6 Million in 1996.  The increase in net interest 
income in 1998 when compared to 1997 is primarily a result of growth in 
average earning assets of 6.13% from the prior year.  Growth in earning 
assets is due to general increases in business volumes.  The average 
earning assets produced a 8.35% yield, down slightly when compared to 8.43% 
in 1997.  In 1996 the yield on earning assets was 8.25%.  The loan 
portfolio, which generally produces higher yields than other earning assets 
represents 67.5% of average assets in 1998 compared to 69% in 1997 and 
67.3% in 1996.

Cost of funds decreased to 4.44% in 1998 primarily due to the lowering of 
rates paid on Other Time Deposits which is the largest component of 
interest-bearing liabilities.  Cost of funds in 1997 was 4.55% and 4.53% in 
1996.  During 1998 the average balances in interest-bearing liabilities 
increased to $241.4 Million compared to $229.1 Million in 1997 and $200.5 
Million in 1996.

The 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 3.91% in 1998 from 3.88% 
reported in 1997 and 3.72% in 1996.

Net yield on earning assets, which represents net interest income as a 
percent of average earning assets, increased to 4.70% from 4.66% in 1997 
and 4.44% in 1996.

The Provision to the Allowance for Loan Losses in 1998 was increased to 
$600,000 compared to $500,000 in 1997 and $400,000 in 1996.  This increase 
to the provision was based upon management's desire to maintain an 
appropriate ratio of the Allowance for Loan Losses to outstanding loans 
while recognizing the growth in the loan portfolio and the amount of charge 
offs that occurred in 1998 compared to prior years.

Total Other Income in 1998 increased slightly to $1,568,112 compared to 
$1,562,257 reported in 1997.  In 1996, Total Other Income was $1,305,497 
which reflected only four months of merger-related income associated with 
the acquisition of the National Bank of Fairhaven that took place in late 
August 1996.  Service charges on deposit accounts and overdrafts which are 
the largest component of Other Income decreased slightly to $881,964 in 
1998 compared to $902,079 and $849,425 reported in 1997 and 1996 
respectively.  As a result of favorable market conditions, various 
marketable equity securities were sold throughout 1998 whereby gains were 
realized totaling $382,370.  The Company realized gains in the security 
portfolio in 1997 totaling $313,844 and $112,631 in 1996.

Total Other Expense for 1998 decreased by $49,326 to $8,984,181 from 
$9,033,507 reported in 1997.  Salaries and Employees Benefits which is the 
largest component of Other Expenses increased by $162,571 due to general 
wage adjustments and increased costs associated with employees medical 
insurance and retirement plan.  In 1997 the Company incurred an increase of 
$989,218 in Salaries and Employees Benefits when compared to 1996 which was 
attributable to a full year associated with the retention of 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.

The increase in Salaries and Employees Benefits in 1998 was offset by the 
combination of a decrease in Occupancy Expense and Equipment Expense 
totaling $31,237, and a decrease of $97,047 created by a Gain on Sale of 
Other Real Estate Owned (OREO) totaling $54,590 in 1998 as opposed to a 
loss of $42,457 realized in 1997.  In 1996 the Bank incurred a loss of 
$21,008 on sale of OREO properties.  In 1998 the Bank did not incur any 
expense associated with the writedown of values on Other Real Estate Owned, 
while in 1997, writedowns totaled $67,480 and $30,000 in 1996.

Federal Deposit Insurance Corporation (FDIC) deposit insurance premiums in 
1998 were $32,353 compared to $71,880 in 1997 and $6,278 in 1996.  In 1997, 
under federal legislation enacted in 1996, FDIC Bank Insurance Fund 
deposits were assessed to finance the annual interest costs on government 
bonds issued to assist in recapitalizing certain thrift institutions in 
prior years.  The resulting increase is reflected in 1997 and 1998 
premiums.

Stationery and Supplies expense in 1998 decreased to $229,344 from costs of 
$311,546 in 1997 and $243,653 in 1996.  In 1997 the Bank incurred 
additional costs due to the need to stock the Fairhaven and New Bedford 
Massachusetts branches which were acquired through the merger acquisition.

The following table sets forth the components of the line item Other 
Expense, which reflects an increase of $105,596 to $2,042,253 in 1998 
compared to $1,936,657 in 1997.  In 1996 Other Expense was $1,678,873.  
Expense items in 1996 reflect four months attributed to the acquisition of 
the National Bank of Fairhaven compared to twelve full months in 1997 and 
1998.

<TABLE>
<CAPTION>

                                         1998          1997          1996
----------------------------------------------------------------------------

<S>                                   <C>           <C>           <C>
Amortization of Goodwill              $  226,800    $  226,800    $   98,000
Advertising and Public Relations         405,737       400,502       337,947
Communications                           290,253       269,239       257,575
Professional Fees & Other Services       571,952       536,710       499,448
Other Various Expenses                   547,511       503,406       485,903
----------------------------------------------------------------------------
Total Other Expense                   $2,042,253    $1,936,657    $1,678,873
============================================================================

</TABLE>

The increases noted above are attributed to normal business growth.

Income taxes in 1998 increased to $2,216,160 up by $295,419 when compared 
to $1,920,741 in 1997, and up by $652,159 when compared to $1,564,001 in 
1996.

DISTRIBUTION OF ASSETS, LIABILITIES, AND STOCKHOLDERS' EQUITY; INTEREST 
RATES AND INTEREST DIFFERENTIAL

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, 1998, December 31, 1997, and December 31, 1996.  Averages are 
daily averages.

<TABLE>
<CAPTION>

                                       1998                                1997                                1996
----------------------------------------------------------------------------------------------------------------------------------
                         Average   Interest(1)   Avg. Int.   Average   Interest(1)   Avg. Int.   Average   Interest(1)   Avg. 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       $ 42,244    $ 3,953       9.36%     $ 36,195    $ 3,466       9.58%     $ 23,440   $ 2,191         9.35%
  Commercial Real
   Estate                 118,939     11,630       9.78       110,093     10,740       9.76        90,576     9,035         9.98
  Residential Real
   Estate                  45,781      3,520       7.69        52,894      4,116       7.78        50,486     3,788         7.50
  Consumer Loans            6,767        652       9.63         6,503        659      10.13         6,094       613        10.06
--------------------------------------------------------------------------------------------------------------------------------
Total Loans               213,731     19,755       9.24       205,685     18,981       9.23       170,596    15,627         9.16
  Federal Funds Sold       12,214        630       5.16        11,309        607       5.37        14,994       783         5.22
  U.S. Treas/Govt 
   Agencies                54,842      3,366       6.14        49,682      3,099       6.24        43,871     2,715         6.19
  States & Political
   Subdivisions             9,763        649       6.65         6,948        477       6.87         5,959       400         6.71
  Mutual Funds                209         14       6.70           301         15       4.98           241        13         5.39
  Marketable Equity 
   Securities               2,761        105       3.80         2,518        120       4.77         1,946        75         3.85
  Other Investments             6          0       0.00           126          8       6.35           197        15         7.61
--------------------------------------------------------------------------------------------------------------------------------
  Total Earning Assets    293,526    $24,519       8.35%      276,569    $23,307       8.43%      237,804   $19,628         8.25%
--------------------------------------------------------------------------------------------------------------------------------
  Allowance for Loan
   Losses                  (3,602)                             (3,474)                             (2,958)
  Unearned Income            (715)                               (665)                               (597)
  Cash and Due From 
   Banks                   12,186                              11,366                               9,565
  Other Assets             15,376                              14,022                               9,489
--------------------------------------------------------------------------------------------------------------------------------
Total Assets             $316,771                            $297,818                            $253,303
================================================================================================================================
LIABILITIES & 
 STOCKHOLDERS' EQUITY:
  Savings                $ 43,885    $ 1,075       2.45%     $ 42,642    $ 1,067       2.50%     $ 40,246   $ 1,006         2.50%
  NOW's                    38,764      1,196       3.09        37,739      1,202       3.19        28,788       858         2.98
  Money Market Accounts    13,777        273       1.98        14,116        281       1.99        13,326       270         2.03
  CD's > $100M             22,945      1,266       5.52        23,162      1,256       5.42        18,813     1,104         5.87
  Other Time Deposits     119,118      6,700       5.62       109,278      6,460       5.91        97,957     5,754         5.87
  Other Borrowings          2,933        201       6.85         2,114        146       6.91         1,374        86         6.26
--------------------------------------------------------------------------------------------------------------------------------
  Total Interest-bearing
   Liabilities            241,422    $10,711       4.44%      229,051    $10,412       4.55%      200,504   $ 9,078         4.53%
--------------------------------------------------------------------------------------------------------------------------------
  Demand Deposits          46,217                              43,724                              33,572
  Other Liabilities         1,063                               1,847                                 493
--------------------------------------------------------------------------------------------------------------------------------
  Total Liabilities       288,702                             274,622                             234,569
--------------------------------------------------------------------------------------------------------------------------------
  Common Stock                 34                                  30                                  28
  Paid-in Capital          21,448                              16,899                              14,393
  Retained Earnings         6,395                               6,308                               4,486
  Net Unrealized Gain 
   (Loss) on Available-
   for-Sale Securities        192                                 (41)                               (173)
--------------------------------------------------------------------------------------------------------------------------------
  Total Stockholders'
   Equity                  28,069                              23,196                              18,734
--------------------------------------------------------------------------------------------------------------------------------
Total Liabilities & 
 Stockholders' Equity    $316,771                            $297,818                            $253,303
================================================================================================================================
Net Interest Income                  $13,808                             $12,895                            $10,550
================================================================================================================================
Net Interest Spread                                3.91%                               3.88%                                3.72%
================================================================================================================================
Net Yield on Earning
 Assets                                            4.70%                               4.66%                                4.44%
================================================================================================================================

--------------------
<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 $212,000 in 1998, $157,000 in 
      1997 and $133,000 in 1996.

<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
-----

The loan portfolio increased by $4.5 Million to $218.2 Million at the end 
of 1998 when compared to $213.7 Million reported at the end of 1997, 
notwithstanding principal pay-downs averaging $2.5 Million per month.  
Paydowns reflect the normal monthly amortization occurring under the 
original terms of the loans.  In addition, throughout 1998, a very 
competitive rate environment existed among lending entities along with some 
lowering of credit underwriting standards.  The Bank, while offering 
competitive rates, however, has not lessened any of its credit criteria and 
strives to maintain the quality of the loan portfolio.  The Bank manages 
its credit granting programs for commercial loans through an internal 
credit department that performs an independent analysis of the financial 
condition of the borrower and the business entity.  In turn, the borrowing 
request is further evaluated by Executive Management and submitted to the 
Executive Committee of the Board of Directors for final approval before the 
loan is granted.

The largest segment of the loan portfolio is commercial real estate loans 
which represent 52% of total loans.  These loans are collateralized by 
various types of commercial properties located within the Bank's market 
area extending throughout southeastern Massachusetts and abutting cities 
and towns in Rhode Island.  There is no predominate type of property nor 
concentration of credit in any one industry.  The properties consist of 
apartment complexes, medical centers, strip malls, factories with multiple 
tenants, and retail office units.  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.  
Analysis of financial statements of the business is performed periodically 
and if it is determined that there are any weaknesses developing in the 
business or any negative trends occurring, contact with the borrower is 
made to determine the cause and what remedial action is planned.

Residential real estate, another large component of loans which accounts 
for 23% 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.

Other types of loans total 25% of the portfolio and 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.

Deposits
--------

Deposit levels increased substantially in 1998 to $303.8 Million, up by 
$32.5 Million when compared to $271.3 Million reported at the end of 1997.  
The most significant increase occurred in the time deposit category.  Time 
deposits is the largest component of deposits.  Growth in deposits occurred 
through a practical customer service philosophy complimented by competitive 
interest rates and fees.  This approach contributed to the overall 
expansion of the Bank's customer base.  Deposits are the Bank's largest 
source of funding.

The Bank is a member of the Federal Home Loan Bank, (FHLB) and borrows 
funds secured by residential mortgage loans and other assets.  This 
borrowing mechanism enables the Bank to match-fund loans to commercial 
borrowers that meet certain credit and deposit requirements.  At December 
31, 1998, the Bank had $4.5 Million of loans match-funded with FHLB.

Interest Rate Risk
------------------

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 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 effect.  At December 31, 1998 the analysis of the 
GAP report indicates that there is an excess of $0.7 Million in assets 
subject to repricing in the 0 to 2 year category.  This equates to a 
percentage of total assets of 0.19%.  Management believes that this is an 
ideal situation recognizing that most of the liabilities will be repriced 
in relatively the same time frame as assets, thereby having a minimal 
impact on interest rate risk.

In addition to the gap analysis used to evaluate the Bank's interest rate 
risk exposure, the Bank utilizes a model to monitor earnings-at-risk.  This 
model provides management a measurement tool to assess the effect of 
changes in interest rates on the Bank's current and future earnings.  A 
specific risk limit with respect to the Bank's potential loss of net 
interest income due to rising or declining interest rates has been 
established.  This limit provides management an internal tolerance level to 
control interest rate risk exposure and is monitored on a quarterly basis.

INTEREST RATE - SENSITIVITY GAPS

Repricing Period at December 31, 1998

<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                    $ 14,500    $    --    $    --    $    --    $    --    $ 14,500
  Investment Securities                   10,030      6,956      5,906     18,969     37,583      79,444
  Residential Mortgages                   19,985      9,698      7,226      1,612     11,664      50,185
  Commercial Mortgages                    74,560     15,023     12,376      5,072      3,916     110,947
  Other Loans                             44,108      3,607      2,706      2,733        613      53,767
                                        ----------------------------------------------------------------
    Total Earning Assets                $163,183    $35,284    $28,214    $28,386    $53,776    $308,843
                                        ----------------------------------------------------------------
Interest Bearing Liabilities:
  NOW Checking and Savings Deposits     $ 39,766    $10,388    $10,388    $27,700    $    --    $ 88,242
  Money Market Deposits                    3,730      1,865      1,865      4,977         --      12,437
  Term Deposits                          122,341     18,836     13,649         --         --     154,826
  Borrowed Funds                             848         --         --         --      4,475       5,323
  Other Interest-bearing Liabilities          42         --         --         --         --          42
                                        ----------------------------------------------------------------
  Total Interest-bearing Liabilities    $166,727    $31,089    $25,902    $32,677    $ 4,475    $260,870
                                        ----------------------------------------------------------------
Net Interest Sensitivity Gap            $ (3,544)   $ 4,195    $ 2,312    $(4,291)   $49,301    $ 47,973
Cumulative Gap                          $ (3,544)   $   651    $ 2,963    $(1,328)   $47,973    $     --
Cumulative Gap as a Percent
 of Total Assets                            1.04%      0.19%      0.87%      0.39%     14.10%         --
                                        ================================================================

--------------------
<F1>  Nonaccrual loans amounting to $3.3 Million have been eliminated from 
      the loan balances.

</TABLE>

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

The investment portfolio represents the second largest component of the 
Company's assets and consists of securities in the Available-for-Sale 
category and securities in the Held-to-Maturity category.  The designation 
of which category the security is to be classified as is determined at the 
time of the purchase of the investment instrument.  Securities in the 
Available-for-Sale category are securities that 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 or other factors.  Any unrecognized gains or losses, net of taxes, is 
reflected in Stockholders Equity as a separate component.  Securities in 
the Available-for-Sale category consist predominately of securities of U.S. 
Treasury and other U.S. Government corporations and agencies, mortgage-
backed securities, 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.  The Company 
amortizes premiums and accretes discounts over the life of the security 
unless it is a callable bond, in which case the premium or discount is 
amortized or accreted to the call date.  Marketable equity securities, 
however, have a greater risk as they are subject to rapid market 
fluctuations.  These securities are constantly monitored and evaluated to 
determine their suitability for sale or retention in the portfolio.  
Management minimizes its risk by limiting the total amount invested into 
marketable equity securities to 5% of the total investment portfolio.  At 
December 31, 1998, the amount invested in marketable equity securities was 
2.5% of the total investment portfolio distributed over various business 
sectors.

The Held-to-Maturity category consists predominately 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 managing the Held-to-Maturity portfolio the Company seeks to 
maximize its return and maintain consistency to meet short and long term 
liquidity forecasts by purchasing securities with maturities laddered 
within a short term period of 1-3 years, a mid term period of 3-5 years and 
some securities extending out to 10 years.  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 
reasonable declines in deposits and any anticipated increases in the loan 
portfolio, to provide safety of principal and interest, to generate 
earnings adequate to provide a stable income, and to fit within the overall 
asset/liability management of the objectives of the Company.

Nonperforming Assets
--------------------

The Company considers nonaccrual loans, loans past due 90 days or more but 
still accruing, restructured loans not performing in accordance with 
amended terms, and real estate acquired through foreclosure as 
nonperforming assets.  Nonperforming assets as a total decreased to $4.7 
Million at year end 1998, from $4.9 Million reported at year end 1997.

Nonaccrual loans is the largest component of nonperforming assets, and at 
December 31, 1998, this category decreased to $3.3 Million from $4.6 
Million reported at the end of the previous year.

The Company places a loan on nonaccrual status, when, in the opinion of 
management, the collectability 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.

If it is determined that the collectibility of the loan no longer exists, 
the loan 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.

Loans 90 days or more past due but still accruing increased to $317,000 
from $147,000 reported at year end 1997.  Management continues to accrue on 
these loans due to the excess values of collateral securing these loans 
compared to their outstanding balances.

Real estate acquired by foreclosure or substantively repossessed increased 
to $1,026,000 at December 31, 1998 compared to $159,000 reported at the end 
of the prior year.  This amount represents five separate pieces of 
property.  The Bank currently has one purchase and sales agreement on hand 
which is targeted for an early 1999 sale.

The percentage of nonaccrual loans to total loans decreased substantially 
from prior years due to the reduction in the nonaccrual category and the 
growth of the loan portfolio.  In addition, the percentage of nonaccrual 
loans, restructured loans and real estate acquired by foreclosure to total 
assets also decreased as a result of increased asset levels.  The $867,000 
of restructured loans represent several borrowers whose original loan terms 
were amended and are current in their payments under the amended terms.

Statement of Financial Accounting Standards No. 114 "Accounting by 
Creditors for Impairment of a Loan" 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 as 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, 1998, there were $5.2 Million of loans which the Company 
has determined to be impaired, of which $1.3 Million has a related 
allowance for credit losses of $0.3 Million and $3.9 Million has no related 
allowance for credit losses.

Nonperforming Assets
--------------------

<TABLE>
<CAPTION>

                                                              December 31
-------------------------------------------------------------------------------------------
(Dollars in Thousands)                        1998      1997      1996      1995      1994
-------------------------------------------------------------------------------------------

<S>                                          <C>       <C>       <C>       <C>       <C>
Nonaccrual loans                             $3,331    $4,597    $4,352    $2,695    $3,238

Loans 90 days or more past
 due and still accruing                         317       147       112        23       204

Real estate acquired by foreclosure
 or substantively repossessed                 1,026       159       308       633       888
-------------------------------------------------------------------------------------------
Total nonperforming assets                   $4,674    $4,903    $4,772    $3,351    $4,330
-------------------------------------------------------------------------------------------
Restructured debt performing in
 accordance with amended terms,
 not included above                          $  867    $1,265    $  819    $  459    $  139
-------------------------------------------------------------------------------------------
Percentage of nonaccrual loans
 to total loans                                1.53%     2.15%     2.19%     1.78%     2.38%

Percentage of nonaccrual loans,
 restructured loans, and real estate 
 acquired by foreclosure or substantively
 repossessed to total assets                   1.54%     2.00%     1.88%     1.62%     2.30%

Percentage of allowance for loan losses
 to nonaccrual loans                         107.15%    80.36%    77.07%    92.69%    71.22%

</TABLE>

Management is not aware of any other loans that pose a potential credit 
risk or where the loans are current but the borrowers are experiencing 
financial difficulty.

Allowance for Loan Losses
-------------------------

The Allowance for Loan Losses is available to absorb losses on loans deemed 
by management as uncollectible.  In assessing the adequacy of the level of 
the allowance, management considers the status of nonaccrual loans and 
specific borrower situations, the current and anticipated economic climate 
of the area including national credit trends and the historical credit 
experiences within the region.  Additions to the Allowance are provided by 
charges to earnings and recoveries on previously charged- off loans.  
Deductions from the Allowance are transacted as a charge off when a loan is 
deemed uncollectible.  The Allowance for Loan Losses as a percentage of 
outstanding loans at December 31, 1998 was 1.64% compared to 1.73% reported 
at year end 1997.  The ratios at years ending 1996, 1995 and 1994 were 
1.69%, 1.65% and 1.70% respectively.  In 1998 the Company provided $600,000 
to the allowance and recovered $67,724 from previously charged off loans.  
Loans charged off during 1998 totaled $792,307.  This resulted in net 
charge-offs of $724,583.  Net charge-offs for prior years were $160,446, 
-0-, $358,085, and $293,003 for 1997, 1996, 1995 and 1994 respectively.

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

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

<TABLE>
<CAPTION>

                                                           December 31
----------------------------------------------------------------------------------------
(Dollars In Thousands)                     1998      1997      1996      1995      1994
----------------------------------------------------------------------------------------

<S>                                       <C>       <C>       <C>       <C>       <C>
Balance at January 1                      $3,694    $3,354    $2,498    $2,306    $1,954
Charge Offs:
  Commercial                                  (0)      (40)     (144)     (184)      (22)
  Real estate construction                    (0)       (0)       (0)       (0)       (0)
  Real estate mortgage                      (716)     (147)     (136)      (79)     (246)
  Installment/Consumer                       (76)      (68)     (159)     (134)      (93)
                                          ----------------------------------------------
                                            (792)     (255)     (439)     (397)     (361)
                                          ----------------------------------------------
Recoveries:
  Commercial                                   8        41        59         1        51
  Real estate construction                     0         0         0         0         0
  Real estate mortgage                        43        16       333        16         2
  Installment/Consumer                        16        38        47        22        15
                                          ----------------------------------------------
                                              67        95       439        39        68
                                          ----------------------------------------------
Net charge offs                             (725)     (160)       (0)     (358)     (293)
                                          ----------------------------------------------
Additions charged to operations              600       500       400       550       645
Allowance attributable to acquisition          0         0       456         0         0
                                          ----------------------------------------------
Balance at end of period                  $3,569    $3,694    $3,354    $2,498    $2,306
                                          ==============================================
Allowance for Loan Losses as a percent
 of year end loans                           1.64%    1.73%     1.69%     1.65%     1.70%
Ratio of net charge offs to average
 loans outstanding                           0.34%    0.08%     0.00%     0.25%     0.23%

</TABLE>

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 origination, 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 three 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 for liquidity purposes 
from correspondent banks, the Federal Home Loan Bank, as well as the 
Federal Reserve Bank of Boston by pledging various investment securities as 
collateral.  Tax payments made by our customers which are owed to the 
Federal Reserve Bank Treasury Tax and Loan account are classified as Other 
Borrowed Funds.  Note Payable represents a note due to Fleet Bank.  The 
note is attributable to Fairbank, Inc. and was assumed at the time of the 
merger.  It has a final maturity in November, 1999.  Due to the applicable 
prepayment fees, it is advantageous for the Bank to continue with the 
applicable terms of the note.  Advances from the Federal Home Loan Bank 
represents the match funding program that is available to qualified 
borrowers.

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.

Liquidity in 1998 was primarily provided by the maturity and sales of 
securities totaling $43.5 Million, and the increase in deposits of $32.5 
Million.  This was offset by the purchases of additional securities of 
$64.0 Million and the net increase in loans totaling $6.2 Million. Other 
events that affected liquidity were advances from the Federal Home Loan 
Bank of $4.1 Million, investment in life insurance policies of $1.6 
Million, capital expenditures of $1.6 Million, and other factors including 
cash provided by operating and financing activities as indicated in the 
cash flow statements.

Capital
-------

At December 31, 1998, the Company had total capital of $29,707,385, up by 
$3,270,959 from $26,436,426 reported at year end 1997.  The increase 
consists primarily of net earnings totaling $3,363,042 offset by cash 
dividends of $959,693 and $8,117 paid for fractional shares resulting from 
the 5% stock dividend issued in February 1998.  Other additions to capital 
consisted of $215,924 of optional cash contributions, $473,242 of dividend 
reinvestment associated with the Dividend Reinvestment Program and proceeds 
from exercised stock options of $51,789.  Also affecting capital is the net 
increase in other comprehensive income which consists of the net increase 
in unrealized Available-for-Sale securities from December 31, 1997 to 
December 31, 1998 of $215,657, net of taxes, and the minimum pension 
liability adjustment of $80,885, net of taxes, for a total of $134,772.

Under the requirements for Risk-Based and Leverage Capital of the federal 
banking agencies, a minimum level 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 criteria for the "well capitalized" category 
established by the federal banking agencies at December 31, 1998.

The following table illustrates the capital position of Slade's Ferry 
Bancorp and Slade's Ferry Trust Company for years ending December 31, 1998 
and 1997.

<TABLE>
<CAPTION>

Slade's Ferry Bancorp                               1998                  1997
------------------------------------------------------------------------------------
(Dollars in Thousands)                        Amount     Ratio      Amount     Ratio
------------------------------------------------------------------------------------

<S>                                          <C>         <C>       <C>         <C>
Total Capital (to Risk Weighted Assets)      $ 29,647    12.80%    $ 25,907    12.04%
Minimum required                               18,536     8.00       17,210     8.00
  Excess                                       11,111     4.80        8,697     4.04
Tier I Capital (to Risk Weighted Assets)       26,569    11.47%      23,206    10.74
Minimum required                                9,268     4.00        8,645     4.00
  Excess                                       17,301     7.47       14,561     6.74
Risk Adjusted Assets, net of goodwill,
 nonqualifying intangibles, excess 
 allowance and excess deferred tax assets    $231,700              $215,174
Tier I Capital (Leverage Ratio)              $ 26,569     8.12%    $ 23,206     7.79%
Minimum required                               13,081     4.00       11,910     4.00
  Excess                                       13,488     4.12       11,296     3.79
Quarterly average total assets, net of
 goodwill, nonqualifying intangibles and
 excess deferred tax assets                  $327,025              $297,895

<CAPTION>

Slade's Ferry Trust Company                         1998                  1997
------------------------------------------------------------------------------------

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

<S>                                          <C>         <C>       <C>         <C>
Total Capital (to Risk Weighted Assets)      $ 27,034    11.69%    $ 24,022    11.18%
Minimum required                               18,500     8.00       17,183     8.00
  Excess                                        8,534     3.69        6,839     3.18
Tier I Capital (to Risk Weighted Assets)       23,961    10.36       21,325     9.88
Minimum required                                9,250     4.00        8,631     4.00
  Excess                                       14,711     6.36       12,694     5.88
Risk Adjusted Assets, net of goodwill,
 nonqualifying intangibles, excess 
 allowance and excess deferred tax assets    $231,250              $214,865
Tier I Capital (Leverage Ratio)              $ 23,961     7.38%    $ 21,325     7.18%
Minimum required                               12,989     4.00       11,876     4.00
  Excess                                       10,972     3.38        9,449     3.18
Quarterly average total assets, net of
 goodwill, nonqualifying intangibles and
 excess deferred tax assets                  $324,725              $296,900

</TABLE>

Year 2000 Compliance
--------------------

The approaching Year 2000 presents companies in all industries with a 
myriad of challenges including the ongoing operation of their data systems 
to check proper interpretation of calendar year digits and resulting 
calculations.  To meet these challenges, the Company has completed an 
assessment of Year 2000 issues, developed a plan to resolve these issues, 
and commenced the implementation of changes and testing required to achieve 
compliance.

The Company is on schedule to complete changes and testing of essential 
systems by March 31, 1999 utilizing both internal and external resources.  
Essential systems have been identified as the applications for processing 
depositors' and borrowers' accounts, stockholder information, origination 
and receiving of electronic charges and credits (ACH) items, general ledger 
processing and the PC network system, including the teller system.  The 
first two phases of a four phase testing schedule have been completed and 
verified.  The remaining phases three and four have been installed and are 
currently in the process of final testing and verification.

The final phase of testing on the Federal Reserve Bank's fedline system, 
which provides the Company the ability to perform various operations 
including originating and receiving ACH items, performing wire transfers 
and purchasing securities, was completed and verified in December 1998.  
The necessary upgrade to the teller system has been installed and is being 
tested with final verification by February 1999.  The ATM renovation and 
testing is in process and due for completion by June 1999.

Key vendors and customers have been identified and contacted to determine 
any vulnerability the Company may have due to the failure of these parties 
to remedy their own Year 2000 issues.  The above mentioned testing has been 
performed using the resources of the key vendors and the Company's own 
internal resources.  To the extent that key vendors, customers or other 
general suppliers, not affiliated with the Company, such as communications 
and electric suppliers, are unsuccessful in properly addressing the Year 
2000 issue, the Company could possibly be negatively impacted.

Although the Company does not anticipate any system to be non-compliant, 
should a problem arise with a key vendor, customer or general supplier, the 
Company is finalizing a contingency plan to deal with these issues. It is 
impossible at this time to determine what effect this could have on the 
Company's operations, liquidity and financial condition.

The total cost of the Year 2000 project is estimated at $40,000 to $50,000.  
These costs are not expected to be material to the Company's operations, 
liquidity and financial condition.  These estimated costs are based upon 
management's best estimates which have been derived from numerous 
assumptions of future events which include the availability of certain 
resources, third party modification plans and other factors. However, there 
is no guarantee that these estimates will hold true and actual results 
could differ from those anticipated.  The Company has incurred Year 2000 
related expenses of $5,300 during 1998.

The Federal Deposit Insurance Corporation (FDIC) has established Year 2000 
standards for safety and soundness consistent with the Federal Financial 
Institutions Examination Council (FFIEC) guidance papers describing certain 
essential steps that each FDIC-supervised financial institution must take 
to become Year 2000 ready. There is ongoing regulatory oversight by the 
FDIC of all insured financial institution, including the Company, 
concerning Year 2000 compliance.

Other Matters
-------------

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 
alleges a breach of contract.  The original demand by the plaintiff was 
$550,000 to settle the case, which was lowered to $250,000 by the plaintiff 
in 1998.  Discovery has been completed and the case is currently scheduled 
for trial on February 22, 1999.  The Company believes there are meritorious 
defenses to the plaintiff's claim 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.


                 [LOGO of Shatswell, MacLeod & Company, P.C.




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, 1998 and 1997 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, 1998.  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, 1998 and 
1997, and the consolidated results of their operations and their cash flows 
for each of the years in the three-year period ended December 31, 1998, in 
conformity with generally accepted accounting principles.


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

West Peabody, Massachusetts
January 15, 1999


                    SLADE'S FERRY BANCORP AND SUBSIDIARY
                    ------------------------------------

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

                         December 31, 1998 and 1997
                         --------------------------

<TABLE>
<CAPTION>

ASSETS                                                  1998            1997
------                                              ------------    ------------

<S>                                                 <C>             <C>
Cash and due from banks                             $ 15,686,520    $ 13,323,501
Federal funds sold                                    14,500,000       7,000,000
                                                    ------------    ------------
      Cash and cash equivalents                       30,186,520      20,323,501
Interest bearing time deposits with other banks                          106,688
Investments in available-for-sale
 securities (at fair value)                           58,199,292      40,176,218
Investments in held-to-maturity securities (fair
 values of $21,282,941 as of December 31, 1998
 and $17,748,500 as of December 31, 1997)             20,921,254      17,601,536
Federal Home Loan Bank stock                             899,900         890,600
Loans, net                                           213,938,277     209,309,840
Premises and equipment                                 6,687,271       5,718,534
Goodwill                                               2,853,768       3,080,568
Other real estate owned                                1,026,095         159,373
Accrued interest receivable                            1,598,282       1,796,467
Cash surrender value of life insurance                 1,613,517
Other assets                                           2,430,544       2,407,260
                                                    ------------    ------------
      Total assets                                  $340,354,720    $301,570,585
                                                    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Demand deposits                                     $ 48,281,278    $ 44,228,157
Savings and NOW deposits                             100,678,225      95,043,420
Time deposits                                        154,826,362     132,050,673
                                                    ------------    ------------
      Total deposits                                 303,785,865     271,322,250
Note payable                                             847,990         945,308
Advances from Federal Home Loan Bank                   4,475,454         430,000
Other borrowed funds                                      42,329       1,200,000
Due to brokers                                                           255,000
Other liabilities                                      1,495,697         981,601
                                                    ------------    ------------
      Total liabilities                              310,647,335     275,134,159
                                                    ------------    ------------
Stockholders' equity:
  Common stock, par value $.01 per share; 
   authorized 5,000,000 shares; issued and
   outstanding 3,446,413.8 in 1998 and
   3,236,712.7 shares in 1997                             34,464          32,367
  Paid-in capital                                     22,285,220      18,978,598
  Retained earnings                                    7,103,642       7,276,174
  Accumulated other comprehensive income                 284,059         149,287
                                                    ------------    ------------
      Total stockholders' equity                      29,707,385      26,436,426
                                                    ------------    ------------
      Total liabilities and stockholder's equity    $340,354,720    $301,570,585
                                                    ============    ============
</TABLE>


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


                    SLADE'S FERRY BANCORP AND SUBSIDIARY
                    ------------------------------------

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

                Years Ended December 31, 1998, 1997 and 1996
                --------------------------------------------

<TABLE>
<CAPTION>

                                                              1998           1997           1996
                                                           -----------    -----------    -----------

<S>                                                        <C>            <C>            <C>
Interest and dividend income:
  Interest and fees on loans                               $19,754,777    $18,981,050    $15,626,903
  Interest and dividends on securities:
    Taxable                                                  3,491,490      3,251,526      2,810,656
    Tax-exempt                                                 424,661        302,616        266,866
  Other interest                                               635,688        615,267        790,506
                                                           -----------    -----------    -----------
      Total interest and dividend income                    24,306,616     23,150,459     19,494,931
                                                           -----------    -----------    -----------
Interest expense:
  Interest on deposits                                      10,509,873     10,266,135      8,992,244
  Interest on Federal Home Loan Bank advances                   72,213          1,555
  Interest on other borrowed funds                             129,259         52,318         59,688
  Interest on notes payable                                                    92,470         26,139
                                                           -----------    -----------    -----------
      Total interest expense                                10,711,345     10,412,478      9,078,071
                                                           -----------    -----------    -----------
      Net interest and dividend income                      13,595,271     12,737,981     10,416,860
Provision for loan losses                                      600,000        500,000        400,000
                                                           -----------    -----------    -----------
      Net interest and dividend income after
       provision for loan losses                            12,995,271     12,237,981     10,016,860
                                                           -----------    -----------    -----------
Other income:
  Service charges on deposit accounts                          634,129        654,749        628,997
  Overdraft service charges                                    247,835        247,330        220,428
  Securities gains, net                                        382,370        313,844        112,631
  Other income                                                 303,778        346,334        343,441
                                                           -----------    -----------    -----------
      Total other income                                     1,568,112      1,562,257      1,305,497
                                                           -----------    -----------    -----------
Other expense:
  Salaries and employee benefits                             5,480,191      5,317,620      4,328,402
  Occupancy expense                                            684,112        715,094        567,458
  Equipment expense                                            570,518        570,773        504,489
  Stationary and supplies                                      229,344        311,546        243,653
  FDIC deposit insurance premium                                32,353         71,880          6,278
  (Gain) loss on sales of other real estate owned, net         (54,590)        42,457         21,008
  Writedown of other real estate owned                                         67,480         30,000
  Other expense                                              2,042,253      1,936,657      1,678,873
                                                           -----------    -----------    -----------
      Total other expense                                    8,984,181      9,033,507      7,380,161
                                                           -----------    -----------    -----------
      Income before income taxes                             5,579,202      4,766,731      3,942,196
Income taxes                                                 2,216,160      1,920,741      1,564,001
                                                           -----------    -----------    -----------
      Net income                                           $ 3,363,042    $ 2,845,990    $ 2,378,195
                                                           ===========    ===========    ===========

Earnings per common share                                  $       .99    $       .89    $       .82
                                                           ===========    ===========    ===========

Earnings per common share assuming dilution                $       .98    $       .89    $       .82
                                                           ===========    ===========    ===========
</TABLE>


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


                    SLADE'S FERRY BANCORP AND SUBSIDIARY
                    ------------------------------------

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

                Years Ended December 31, 1998, 1997 and 1996
                --------------------------------------------

<TABLE>
<CAPTION>

                                                                                      Accumulated
                                                                                         Other
                                                                                     Comprehensive
                                             Common       Paid-in       Retained        Income
                                              Stock       Capital       Earnings        (Loss)           Total
                                             ------       -------       --------     -------------       -----

<S>                                          <C>        <C>            <C>              <C>           <C>
Balance, December 31, 1995                   $26,172    $13,136,923    $4,630,608       $ 33,022      $17,826,725
Comprehensive income:
  Net income                                                            2,378,195
  Net change in unrealized holding gain
   on available-for-sale securities, net
   of tax effect of $29,704                                                              (35,650)
      Comprehensive income                                                                              2,342,545
Issuance of 5% common stock dividend           1,304      1,124,644    (1,129,308)                         (3,360)
Issuance of common stock from 
 dividend reinvestment plan                      375        312,572                                       312,947
Stock issuance relating to optional 
 cash contribution plan                           40         33,160                                        33,200
Dividends declared ($.23 per share)                                      (664,732)                       (664,732)
                                             -------    -----------    ----------       --------      -----------
Balance, December 31, 1996                    27,891     14,607,299     5,214,763         (2,628)       9,847,325
Comprehensive income:
  Net income                                                            2,845,990
  Net change in unrealized holding loss on
   available-for-sale securities, net of tax
   effect of $103,844                                                                    151,915
      Comprehensive income                                                                              2,997,905
Issuance of common stock from dividend
 reinvestment plan                               308        351,141                                       351,449
Stock issuance relating to optional 
 cash contribution plan                          138        158,017                                       158,155
Net proceeds from stock offering               4,030      3,862,141                                     3,866,171
Dividends declared ($.24 per share)                                      (784,579)                       (784,579)
                                             -------    -----------    ----------       --------      -----------
Balance, December 31, 1997                    32,367     18,978,598     7,276,174        149,287       26,436,426
Comprehensive income:
  Net income                                                            3,363,042
    Total other comprehensive income                                                     134,772
      Comprehensive income                                                                              3,497,814
Issuance of 5% common stock dividend           1,617      2,566,147    (2,575,881)                         (8,117)
Issuance of common stock from dividend
 reinvestment plan                               304        472,938                                       473,242
Stock issuance relating to optional 
 cash contribution plan                          134        215,790                                       215,924
Stock options exercised                           42         37,772                                        37,814
Tax benefit from exercise of stock options                   13,975                                        13,975
Dividends declared ($.28 per share)                                      (959,693)                       (959,693)
                                             -------    -----------    ----------       --------      -----------
Balance, December 31, 1998                   $34,464    $22,285,220    $7,103,642       $284,059      $29,707,385
                                             =======    ===========    ==========       ========      ===========

Reclassification disclosure for the year ended December 31, 1998:

Net unrealized gains on available-for-sale securities                                   $731,683
Less reclassification adjustment for realized gains or losses in net income             (382,370)
                                                                                        --------
  Other comprehensive income before income tax effect                                    349,313
Income tax expense                                                                      (133,656)
                                                                                        --------         $215,657

Minimum pension liability                                                               (146,825)
Income tax benefit                                                                        65,940
                                                                                        --------          (80,885)
                                                                                                         --------
Total other comprehensive income, net of tax                                                             $134,772
                                                                                                         ========
</TABLE>

Accumulated other comprehensive income as of December 31, 1998 consists of 
net unrealized holding gains on available-for-sale securities, net of taxes 
of $364,944 less minimum pension liability adjustment of $80,885 net of 
taxes.  Accumulated other comprehensive income as of December 31, 1997 and 
1996 consists of net unrealized holding gains (losses) on available-for-sale 
securities, net of taxes.


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


                    SLADE'S FERRY BANCORP AND SUBSIDIARY
                    ------------------------------------

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

                Years Ended December 31, 1998, 1997 and 1996
                --------------------------------------------

<TABLE>
<CAPTION>

                                                                     1998           1997           1996
                                                                 -----------    -----------    -----------

<S>                                                              <C>            <C>            <C>
Cash flows from operating activities:
  Net income                                                     $ 3,363,042    $ 2,845,990    $ 2,378,195
  Adjustments to reconcile net income to net cash provided by
   operating activities:
    Amortization of goodwill                                         226,800        226,800         98,000
    Accretion, net of amortization of fair market value
     adjustments                                                      (5,718)        (5,718)        (1,429)
    Gain on sale of fixed assets                                      (2,700)        (4,000)        (8,702)
    Securities gains, net                                           (382,370)      (313,844)      (112,631)
    Depreciation and amortization                                    668,354        653,344        500,378
    Provision for loan losses                                        600,000        500,000        400,000
    Deferred tax (benefit) expense                                   204,267        (90,885)       (92,207)
    Increase (decrease) in taxes payable                            (189,796)       184,331       (103,889)
    Decrease in interest receivable                                  198,185         57,316        384,435
    Decrease in interest payable                                     (13,901)       (12,184)       (49,768)
    Increase in accrued expenses                                     192,315         60,838         88,631
    Increase in prepaid expenses                                      (7,401)       (78,662)      (130,768)
    Increase (decrease) in other liabilities                        (221,286)            29       (139,617)
    (Increase) decrease in other assets                               19,892        345,234       (322,275)
    Accretion, net of amortization of securities                     (96,783)      (220,167)      (430,515)
    Change in unearned income                                          1,080         47,142        115,825
    (Gain) loss on sales of other real estate owned, net             (54,590)        42,457         21,008
    Writedown of other real estate owned                                             67,480         30,000
    Decrease in cash surrender value of life insurance policies       11,483
                                                                 -----------    -----------    -----------
  Net cash provided by operating activities                        4,510,873      4,305,501      2,624,671
                                                                 -----------    -----------    -----------

Cash flows from investing activities:
  Investment in life insurance policies                           (1,625,000)
  Purchases of available-for-sale securities                     (50,687,039)   (18,776,994)   (10,128,087)
  Proceeds from sales of available-for-sale securities             1,098,937      1,171,136        661,644
  Proceeds from maturities of available-for-sale securities       32,262,437     14,786,873     14,859,193
  Purchases of held-to-maturity securities                       (13,283,524)   (14,714,192)   (16,141,095)
  Proceeds from maturities of held-to-maturity securities         10,094,867     17,142,658     19,514,788
  Net (increase) decrease in interest bearing time deposits
   with other banks                                                  106,688         42,910         (7,519)
  Purchases of Federal Home Loan Bank stock                           (9,300)                     (409,400)
  Redemption of Federal Home Loan Bank stock                                                        93,600
  Proceeds from sales of fixed assets                                  2,700          4,000          8,702
  Proceeds from sales of other real estate owned                     136,281        291,293        147,458
  Net increase in loans                                           (6,234,254)   (15,258,154)   (14,971,481)
  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                                            (1,630,689)      (394,602)    (1,085,521)
  Recoveries of loans previously charged off                          67,724         94,405        439,788
                                                                 -----------    -----------    -----------

  Net cash provided by (used in) investing activities            (29,700,172)   (15,610,667)     4,343,377
                                                                 -----------    -----------    -----------

Cash flows from financing activities:
  Fractional shares paid in cash                                      (8,117)                       (3,360)
  Proceeds from issuance of common stock                             726,980      4,438,376        346,147
  Cost of stock issuance                                                            (62,601)
  Net increase (decrease) in demand deposits, NOW and 
   savings accounts                                                9,687,926         (1,230)     1,912,803
  Net increase (decrease) in time deposits                        22,772,689      3,529,471     (3,191,933)
  Net increase (decrease) in other borrowed funds                 (1,157,671)                      458,227
  Advances from Federal Home Loan Bank                             4,071,600        430,000
  Dividends paid                                                    (914,943)      (734,073)      (658,165)
  Payments on Federal Home Loan Bank advances                        (26,146)
  Payment on notes payable                                          (100,000)      (100,000)      (243,013)
                                                                 -----------    -----------    -----------

  Net cash provided by (used in) financing activities             35,052,318      7,499,943     (1,379,294)
                                                                 -----------    -----------    -----------

Net increase (decrease) in cash and cash equivalents               9,863,019     (3,805,223)     5,588,754
Cash and cash equivalents at beginning of year                    20,323,501     24,128,724     18,539,970
                                                                 -----------    -----------    -----------
Cash and cash equivalents at end of year                         $30,186,520    $20,323,501    $24,128,724
                                                                 ===========    ===========    ===========

Supplemental disclosures:
  Loans transferred to other real estate owned                   $ 1,107,063    $   446,612    $   144,741
  Loans originating from the sales of other real estate owned        158,650        193,600        435,000
  Interest paid                                                   10,725,246     10,424,662      9,127,839
  Income taxes paid                                                2,201,689      1,827,295      1,760,097

  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, 1998, 1997 and 1996
                --------------------------------------------

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 were prepared using the accrual basis of accounting.  The 
significant accounting policies are summarized below to assist the reader in 
better understanding the consolidated financial statements and other data 
contained herein.

      PERVASIVENESS OF ESTIMATES:

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

      BASIS OF PRESENTATION:

      The consolidated financial statements include the accounts of the 
      Company 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.  Slade's Ferry Realty Trust was formed 
      to hold ownership of real estate and Slade's Ferry Securities 
      Corporation was formed to hold securities for tax benefits in 
      Massachusetts.  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 and federal funds 
      sold.

      Cash and due from banks as of December 31, 1998 includes $4,551,000 
      which is subject to withdrawals and usage restrictions to satisfy the 
      reserve requirements of the Federal Reserve Bank.

      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 
      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 LOAN LOSSES:

      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 Company considers a loan to be impaired when, based on current 
      information and events, it is probable that the Company will be unable 
      to collect all amounts due according to the contractual terms of the 
      loan agreement.  The Company measures impaired loans 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 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 cash equivalents approximate those assets' 
      fair values.

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

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

      Accrued interest receivable:  The carrying amount of accrued interest 
      receivable 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.

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

      Note payable and other borrowed funds:  Fair values for the note 
      payable and other borrowed funds are estimated using discounted cash 
      flow analyses based on the Company's current incremental borrowing 
      rates for similar borrowings.

      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 years ended 
      December 31, 1998 and 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 EPS data presented for the year ended December 31, 1996 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 year ended December 31, 1996:

<TABLE>

<S>                                                              <C>
Net interest income after provision for loan losses              $12,077,046
Noninterest income                                                 1,349,224
                                                                 -----------
      Total                                                       13,426,270
Noninterest expense                                                9,251,100
                                                                 -----------
  Income before income taxes                                       4,175,170
Income taxes                                                       1,543,200
                                                                 -----------
  Net income                                                     $ 2,631,970
                                                                 ===========
</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 year of 
1996.  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
                                                            Amortized     Unrealized    Unrealized
                                                              Cost         Holding       Holding         Fair
                                                              Basis         Gains         Losses         Value
                                                           -----------    ----------    ----------    -----------

<S>                                                        <C>             <C>          <C>           <C>
Available-for-sale securities:
  December 31, 1998:
    Debt securities issued by the U.S. Treasury and 
     Other U.S. government corporations and agencies       $44,619,465     $211,625      $ 54,380     $44,776,710
    Mortgage-backed securities                              10,862,100       52,277        22,877      10,891,500
    Asset-backed securities                                    222,479        1,021                       223,500
    Marketable equity securities                             1,918,129      550,951       161,498       2,307,582
                                                           -----------     --------      --------     -----------
                                                           $57,622,173     $815,874      $238,755     $58,199,292
                                                            ===========    ========      ========     ===========

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
                                                            ===========    ========      ========     ===========

Held-to-maturity securities:
  December 31, 1998:
    Debt securities issued by the U.S. Treasury and 
     Other U.S. government corporations and agencies       $ 8,810,623     $116,949      $     12     $ 8,927,560
    Debt securities issued by states of the United 
     States and political subdivisions of the states        11,996,833      256,936        13,334      12,240,435
    Mortgage-backed securities                                 113,798        1,148                       114,946
                                                           -----------     --------      --------     -----------
                                                           $20,921,254     $375,033      $ 13,346     $21,282,941
                                                            ===========    ========      ========     ===========

  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
                                                            ===========    ========      ========     ===========
</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, 1998:

<TABLE>
<CAPTION>

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


<S>                                           <C>            <C>
Debt securities other than mortgage-backed
 and asset backed securities:
  Due within one year                         $ 7,068,393    $ 7,089,356    $   499,698    $   505,312
  Due after one year through five years         7,493,403      7,683,856     23,174,886     23,248,457
  Due after five years through ten years        5,914,397      6,062,008     20,944,881     21,022,941
  Due after ten years                             331,263        332,775
Mortgage-backed securities                        113,798        114,946     10,862,100     10,891,500
Asset-backed securities                                                         222,479        223,500
                                              -----------    -----------    -----------    -----------
                                              $20,921,254    $21,282,941    $55,704,044    $55,891,710
                                              ===========    ===========    ===========    ===========
</TABLE>

During 1998, proceeds from sales of available-for-sale securities amounted 
to $1,098,937.  Gross realized gains on those sales amounted to $382,370.  
There were no gross realized losses during the period.  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.

There were no securities of issuers whose aggregate carrying amount exceeded 
10% of stockholders' equity as of December 31, 1998.

A total carrying amount of $6,139,687 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, 1998.

NOTE 5 - LOANS
--------------

Loans consisted of the following as of December 31:

<TABLE>
<CAPTION>

                                                         1998            1997
                                                     ------------    ------------

<S>                                                  <C>             <C>
Commercial, financial and agricultural               $ 43,776,923    $ 36,640,703
Real estate - construction and land development         3,773,286       6,677,684
Real estate - residential                              51,219,684      55,477,271
Real estate - commercial                              112,912,865     108,007,972
Consumer                                                6,476,963       6,746,866
Obligations of states and political subdivisions            2,700           9,372
Other                                                      67,616         176,635
                                                     ------------    ------------
                                                      218,230,037     213,736,503
Allowance for loan losses                              (3,569,282)     (3,693,865)
Unearned income                                          (691,128)       (690,048)
Unamortized adjustment to fair value                      (31,350)        (42,750)
                                                     ------------    ------------
      Net loans, carrying amount                     $213,938,277    $209,309,840
                                                     ============    ============
</TABLE>

Certain directors and executive officers of the Company and companies in 
which they have significant ownership interest were customers of the Bank 
during 1998.  Total loans to such persons and their companies amounted to 
$3,878,974 as of December 31, 1998.  During the year ended December 31, 
1998, $2,902,306 of advances were made and repayments totaled $3,435,863.

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

<TABLE>
<CAPTION>

                                                 1998          1997          1996
                                              ----------    ----------    ----------

<S>                                           <C>           <C>           <C>
Balance at beginning of period                $3,693,865    $3,354,311    $2,497,774
Loans charged off                               (792,307)     (254,851)     (439,229)
Provision for loan losses                        600,000       500,000       400,000
Recoveries of loans previously charged off        67,724        94,405       439,788
Transfer of Fairbank, Inc.'s allowance 
 to Slade's Ferry Trust Company                                              455,978
                                              ----------    ----------    ----------
Balance at end of period                      $3,569,282    $3,693,865    $3,354,311
                                              ==========    ==========    ==========
</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>

                                                                             1998                         1997
                                                                  -------------------------    -------------------------
                                                                  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    $1,284,340      $324,887     $1,776,557      $623,570

Loans for which there is no related allowance for credit losses    3,875,975                    3,792,560
                                                                  ----------      --------     ----------      --------

      Totals                                                      $5,160,315      $324,887     $5,569,117      $623,570
                                                                  ==========      ========     ==========      ========

Average recorded investment in impaired loans during 
 the year ended December 31                                       $5,773,697                   $6,173,640
                                                                  ==========                   ==========

Related amount of interest income recognized during the
 time, in the year ended December 31, that the loans 
 were impaired

      Total recognized                                            $   97,448                   $   79,340
                                                                  ==========                   ==========
      Amount recognized using a cash-basis method 
       of accounting                                              $        0                   $        0
                                                                  ==========                   ==========
</TABLE>

NOTE 6 - PREMISES AND EQUIPMENT
-------------------------------

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

<TABLE>
<CAPTION>

                                                 1998           1997
                                             -----------    -----------

<S>                                          <C>            <C>
Land                                         $ 1,760,948    $ 1,145,368
Buildings                                      5,104,082      4,456,550
Furniture and equipment                        3,405,848      3,050,179
Leasehold improvements                         1,376,689      1,376,689
                                             -----------    -----------
                                              11,647,567     10,028,786
Accumulated depreciation and amortization     (4,960,296)    (4,310,252)
                                             -----------    -----------
                                             $ 6,687,271    $ 5,718,534
                                             ===========    ===========
</TABLE>

NOTE 7 - DEPOSITS
-----------------

The aggregate amount of time deposit accounts (including CDs), each with a 
minimum denomination of $100,000, was approximately $26,007,313 and 
$23,111,663 as of December 31, 1998 and 1997, respectively.

For time deposits as of December 31, 1998, the aggregate amount of 
maturities for each of the following three years ended December 31, are:

<TABLE>

         <S>                                            <C>
         1999                                           $122,343,417
         2000                                             18,836,059
         2001                                             13,649,136
         Less:  Unamortized adjustment to fair value          (2,250)
                                                        ------------
                                                        $154,826,362
                                                        ============
</TABLE>

NOTE 8 - 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 9 - NOTE PAYABLE
---------------------

Note payable consisted of the following as of December 31, 1998:

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.

NOTE 10 - ADVANCES FROM FEDERAL HOME LOAN BANK OF BOSTON
--------------------------------------------------------

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

Maturities of advances from the Federal Home Loan Bank of Boston for the 
five fiscal years ending after December 31, 1998 and thereafter are 
summarized as follows:

<TABLE>
<CAPTION>

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

         <S>              <C>                 <C>
         1999             5.89% - 6.15%       $   97,289
         2000             5.89% - 6.15%          103,656
         2001             5.89% - 6.15%          109,572
         2002             5.89% - 6.15%          118,417
         2003             5.89% - 6.15%          125,728
         Thereafter       5.66% - 6.15%        3,920,792
                                              ----------
                                              $4,475,454
                                              ==========
</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 11 - INCOME TAXES
----------------------

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

<TABLE>
<CAPTION>

                                   1998          1997          1996
                                ----------    ----------    ----------

<S>                             <C>           <C>           <C>
Current:
  Federal                       $1,544,874    $1,463,401    $1,204,212
  State                            467,019       548,225       451,996
                                ----------    ----------    ----------
                                 2,011,893     2,011,626     1,656,208
                                ----------    ----------    ----------
Deferred:
  Federal                          120,677       (71,848)      (51,722)
  State                             83,590       (19,037)      (40,485)
                                ----------    ----------    ----------
                                   204,267       (90,885)      (92,207)
                                ----------    ----------    ----------
    Total income tax expense    $2,216,160    $1,920,741    $1,564,001
                                ==========    ==========    ==========
</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>

                                               1998      1997      1996
                                              ------    ------    -------
                                               % 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                           (2.9)     (2.2)     (2.3)
  Dividends received deduction                           (.2)      (.3)
  Unallowable expenses                          .7        .5        .6
  Amortization of goodwill                     1.4       1.6        .8
State tax, net of federal tax benefit          6.5       6.6       6.9
                                              ----      ----      ----
                                              39.7%     40.3%     39.7%
                                              ====      ====      ====
</TABLE>

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

<TABLE>
<CAPTION>

                                                                     1998          1997
                                                                  ----------    ----------

<S>                                                               <C>           <C>
Deferred tax assets:
  Operating loss carryover                                        $    4,884    $  173,663
  Allowance for loan losses                                        1,226,287     1,309,659
  Deferred loan fees                                                 224,960       256,635
  Interest on non-performing loans                                   225,480       211,491
  Accrued employee benefits                                          220,626       153,011
  Other real estate owned valuation                                                    985
  Minimum pension liability adjustment                                65,940
  Other adjustments                                                   17,573         3,317
                                                                  ----------    ----------
    Gross deferred tax assets                                      1,985,750     2,108,761
                                                                  ----------    ----------
Deferred tax liabilities:
  Accelerated depreciation                                          (242,049)     (232,613)
  Prepaid pensions                                                   (68,269)      (63,341)
  Discount accretion                                                  (2,091)       (1,139)
  Net unrealized holding gain on available-for-sale securities      (212,175)      (78,520)
                                                                  ----------    ----------
    Gross deferred tax liabilities                                  (524,584)     (375,613)
                                                                  ----------    ----------
Net deferred tax assets                                           $1,461,166    $1,733,148
                                                                  ==========    ==========
</TABLE>

Deferred tax assets as of December 31, 1998 and 1997 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, 1998, the Company had approximately $14,000 in operating 
loss carryovers for tax purposes which expire in 2010.

NOTE 12 - 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.  As of December 31, 1998 the 
Bank has suspended the plan so that employees no longer earn additional 
defined benefits for future service.

The following tables set forth information about the plan as of December 31 
and the years then ended:

<TABLE>
<CAPTION>

                                                                             1998          1997
                                                                          ----------    ----------

<S>                                                                       <C>           <C>
Change in projected benefit obligation:
  Benefit obligation at beginning of year                                 $1,424,299    $  875,433
  Service cost                                                                 3,150        97,214
  Interest cost                                                              148,243       104,822
  Change in assumptions                                                      307,199
  Actuarial loss                                                             193,463       370,702
  Benefits paid                                                              (82,847)      (23,872)
  Effect of plan curtailment                                                (382,792)
                                                                          ----------    ----------
    Benefit obligation at end of year                                      1,610,715     1,424,299
                                                                          ----------    ----------

Change in plan assets:
  Plan assets at estimated fair value at beginning of year                 1,131,394       916,360
  Actual return on plan assets                                               159,422        95,773
  Expense paid from plan assets                                              (35,805)      (32,367)
  Employer contribution                                                      191,672       175,500
  Benefits paid                                                              (82,847)      (23,872)
                                                                          ----------    ----------
    Fair value of plan assets at end of year                               1,363,836     1,131,394
                                                                          ----------    ----------

Funded status                                                               (246,879)     (292,905)
Unrecognized net actuarial loss                                              404,042       656,570
Unrecognized prior service cost                                              (18,339)     (338,714)
Unamortized net obligation existing at date of adoption of SFAS No. 87       118,393       126,400
                                                                          ----------    ----------
    Net amount recognized                                                 $  257,217    $  151,351
                                                                          ==========    ==========

Amounts recognized in the balance sheet consist of:
  Prepaid benefit cost                                                    $  257,217    $  151,351
  Accrued benefit liability                                                 (246,879)
  Intangible asset                                                           100,054
  Accumulated other comprehensive                                            146,825
                                                                          ----------    ----------
    Net amount recognized                                                 $  257,217    $  151,351
                                                                          ==========    ==========
</TABLE>

The weighted-average discount rate used in determining the actuarial present 
value of the projected benefit obligation was 7.0% for 1998 and 8.5% for 
1997 and 1996, respectively.  The weighted-average expected long-term rate 
of return on assets was 7.0% for 1998, and 8.5% for 1997 and 1996, 
respectively.

Components of net periodic benefit cost:

<TABLE>
<CAPTION>

                                               1998        1997        1996
                                             --------    --------    -------

<S>                                          <C>         <C>         <C>
Service cost                                 $  3,150    $ 97,214    $92,434
Interest cost on benefit obligation           148,243     104,822     65,745
Expected return on assets                     (90,331)    (83,382)   (70,423)
Amortization of net transition obligation       8,007       8,007      8,007
Amortization of prior service cost            (13,176)    (27,002)   (27,022)
Recognized actuarial loss                      29,913      52,188     13,316
                                             --------    --------    -------
    Net periodic benefit cost                $ 85,806    $151,847    $82,057
                                             ========    ========    =======
</TABLE>

Securities of the Company included in plan assets as of December 31, 1998 
and 1997 consist of 3,553 and 3,385 shares, respectively, of Slade's Ferry 
Bancorp stock.

The Company has a 401K plan for eligible employees who attain age 21 and 
complete one year of service.  The Company 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 Company charged 
to employee benefit expense amounted to $9,750, $9,500 and $7,000 for the 
years ended December 31, 1998, 1997 and 1996, respectively.

The Company adopted a profit-sharing plan, ("Plan") effective October 1, 
1998.  The Company contributes amounts to the plan at the Company's 
discretion.

Cost recognized by the Company for the profit-sharing plan amounted to 
$80,000 for the year ended December 31, 1998.

NOTE 13 - COMMITMENTS AND CONTINGENT LIABILITIES
------------------------------------------------

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

The Company is obligated under 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, 1998:

<TABLE>

         <S>                                 <C>
         1999                                $104,111
         2000                                  99,875
         2001                                  92,952
         2002                                  87,354
         2003                                  75,501
         Thereafter                           224,448
                                             --------
             Total minimum lease payments    $684,241
                                             ========
</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 $114,848 for 
1998, $90,210 for 1997 and $66,223 for 1996.

NOTE 14 - 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, 1998, $199,880 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>

                                                                 1998                            1997
                                                     ----------------------------    ----------------------------
                                                       Carrying          Fair           Carrying         Fair
                                                        Amount           Value           Amount          Value
                                                     ------------    ------------    ------------    ------------

<S>                                                  <C>             <C>             <C>             <C>
Financial assets:
  Cash and cash equivalents                          $ 30,186,520    $ 30,186,520    $ 20,323,501    $ 20,323,501
  Interest bearing time deposits with other banks                                         106,688         106,688
  Available-for-sale securities                        58,199,292      58,199,292      40,176,218      40,176,218
  Held-to-maturity securities                          20,921,254      21,282,941      17,601,536      17,748,500
  Federal Home Loan Bank stock                            899,900         899,900         890,600         890,600
  Loans                                               213,938,277     214,366,000     209,309,840     209,036,000
  Accrued interest receivable                           1,598,282       1,598,282       1,796,467       1,796,467

Financial liabilities:
  Note payable                                            847,990         847,990         945,308         945,340
  Other borrowed funds                                     42,329          42,329       1,200,000       1,200,000
  Advances from Federal Home Loan Bank                  4,475,454       4,558,000         430,000         396,000
  Deposits                                            303,785,865     304,672,000     271,322,250     271,637,000
</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>

                                                                        1998           1997
                                                                    -----------    -----------

<S>                                                                 <C>            <C>
Commitments to originate loans                                      $ 5,379,456    $10,148,013
Standby letters of credit                                             2,307,880      2,356,380
Unadvanced portions of loans:
  Consumer loans (including credit card loans and student loans)      2,924,220      3,396,496
  Commercial real estate loans                                          145,251        851,935
  Home equity loans                                                   1,235,275      1,501,126
  Commercial loans                                                   15,273,024     14,182,074
  Construction loans                                                  6,428,943      2,768,196
                                                                    -----------    -----------
                                                                    $33,694,049    $35,204,220
                                                                    ===========    ===========
</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 9.

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

Most of the Bank'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 Bank's loan portfolio is 
comprised of loans collateralized by real estate located in the state of 
Massachusetts.

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

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

Earnings per share as previously stated has been reduced to reflect the 
issuance of a 5% stock dividend in February of 1998, as follows.  EPS in 
1997 was reduced by $.05 and EPS in 1996 was reduced by $.04.  Dividends per 
share was reduced by $.01 for both 1997 and 1996.

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, 1998
  Basic EPS
    Net income and income available to common stockholders     $3,363,042      3,402,218         $.99
    Effect of dilutive securities, options                                        14,007
                                                               ----------      ---------
  Diluted EPS
    Income available to common stockholders and assumed 
     conversions                                               $3,363,042      3,416,225         $.98
                                                               ==========      =========

Year ended December 31, 1997
  Basic EPS
    Net income and income available to common stockholders     $2,845,990      3,184,857         $.89
    Effect of dilutive securities, options                                         5,230
                                                               ----------      ---------
  Diluted EPS
    Income available to common stockholders and assumed 
     conversions                                               $2,845,990      3,190,087         $.89
                                                               ==========      =========

Year ended December 31, 1996
  Basic EPS
    Net income and income available to common stockholders     $2,378,195      2,903,131         $.82
    Effect of dilutive securities, options                                             0
                                                               ----------      ---------
    Diluted EPS
      Income available to common stockholders and assumed 
       conversion                                              $2,378,195      2,903,131         $.82
                                                               ==========      =========
</TABLE>

NOTE 17 - 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, 1998, that the Company and the Bank meet all capital adequacy 
requirements to which they are subject.

As of December 31, 1998, the most recent notification from the Federal 
Deposit Insurance Corporation categorized the Bank as well capitalized under 
the regulatory framework for prompt corrective action.  To be categorized as 
well capitalized the Bank must maintain minimum total risk-based, Tier 1 
risk-based and Tier 1 leverage ratios as set forth in the table.  There are 
no conditions or events since that notification that management believes 
have changed the Bank's category.

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

<TABLE>
<CAPTION>

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

<S>                                           <C>        <C>       <C>        <C>        <C>        <C>
As of December 31, 1998:
  Total Capital (to Risk Weighted Assets):
    Consolidated                              $29,647    12.80%    $18,536    >/=8.0%        N/A
    Slade's Ferry Trust Company                27,034    11.69      18,500    >/=8.0     $23,124    >/=10.0%

  Tier 1 Capital (to Risk Weighted Assets):
    Consolidated                               26,569    11.47       9,268    >/=4.0         N/A
    Slade's Ferry Trust Company                23,961    10.36       9,250    >/=4.0      13,875    >/= 6.0

  Tier 1 Capital (to Average Assets):
    Consolidated                               26,569     8.12      13,081    >/=4.0         N/A
    Slade's Ferry Trust Company                23,961     7.38      12,989    >/=4.0      16,236    >/= 5.0

As of December 31, 1997:
  Total Capital (to Risk Weighted Assets):
    Consolidated                              $25,907    12.04%    $17,210    >/=8.0%        N/A
    Slade's Ferry Trust Company                24,022    11.18      17,183    >/=8.0     $21,479    >/=10.0%

  Tier 1 Capital (to Risk Weighted Assets):
    Consolidated                              23,206     10.74       8,645    >/=4.0         N/A
    Slade's Ferry Trust Company               21,325      9.88       8,631    >/=4.0      12,947    >/= 6.0

  Tier 1 Capital (to Average Assets):
    Consolidated                              23,206      7.79      11,910    >/=4.0         N/A
    Slade's Ferry Trust Company               21,325      7.18      11,876    >/=4.0      14,845    >/= 5.0

</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, 1998 the Company would be restricted from declaring 
dividends in an amount greater than $29,707,385 as such declaration would 
render the corporation insolvent.  As of December 31, 1998 the Bank would be 
restricted from declaring dividends in an amount greater than approximately 
$8,534,000 as such declaration would decrease capital below the Bank's 
required minimum level of regulatory capital.

NOTE 18 - 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 262,500 shares and the maximum aggregate number of shares issuable 
under both programs in any plan year may not exceed 52,500 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 occurance 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.  In 1998 the 
Board voted to amend the plan so that each option under the Automatic Grant 
Program will be immediately vested.

The Company applies APB Opinion 25 and related Interpretations in accounting 
for its plan.  Accordingly, no compensation cost has been recognized for its 
stock option plan.  Had compensation cost for the Company's stock-based 
compensation plan been determined based on the fair value at the grant dates 
for awards under those plans consistent with the method of FASB Statement 
123, the Company's net income and earnings per share for the years ended 
December 31, 1998 and 1997 would have been reduced to the pro forma amounts 
indicated below:

<TABLE>
<CAPTION>

                                                1998          1997
                                             ----------    ----------

<S>                           <C>            <C>           <C>
Net income                    As reported    $3,363,042    $2,845,990
                              Pro forma      $3,298,016    $2,807,466

Basic earnings per share      As reported          $.99          $.89
                              Pro forma            $.97          $.88

Diluted earnings per share    As reported          $.98          $.89
                              Pro forma            $.97          $.88

</TABLE>

The fair value of each option grant is estimated on the date of grant using 
the Black-Scholes option-pricing model with the following weighted-average 
assumptions used for grants in the years ended December 31, 1998 and 1997:  
dividend yield of 2 percent; expected volatility of 13 percent, risk-free 
interest rate of 5.7 percent and 6.7 percent, respectively; and expected 
lives of 4 years.

A summary of the status of the Company's stock option plan as of December 
31, 1998 and 1997 and changes during the years then ending are presented 
below:

<TABLE>
<CAPTION>

                                               1998                          1997
                                    --------------------------    --------------------------
                                              Weighted-Average              Weighted-Average
            Options                 Shares    Exercise Price      Shares    Exercise Price
--------------------------------    ------    ----------------    ------    ----------------

<S>                                 <C>           <C>             <C>             <C>
Outstanding at beginning of year    32,550        $ 8.90               0
Granted                             32,250         17.00          32,550          $8.90
Exercised                           (4,250)         8.90               0
Forfeited                                0                             0
                                    ------                        ------
Outstanding at end of year          60,550         13.21          32,550          $8.90
                                    ======                        ======

Options exercisable at year-end     60,550                        32,550
Weighted-average fair value of
 options granted during the year     $2.78                         $1.65

</TABLE>

The following table summarizes information about fixed stock options 
outstanding at December 31, 1998:

<TABLE>
<CAPTION>

                       Options Outstanding and Exercisable
      ---------------------------------------------------------------------
                                       Weighted-Average
                           Number          Remaining       Weighted-Average
      Exercise Price    Outstanding    Contractual Life    Exercise Price
      --------------    -----------    ----------------    ----------------

          <S>              <C>             <C>                  <C>
          $ 8.90           28,300          3.7 years            $ 8.90
           17.00           32,250          4.7 years             17.00
           13.21           60,550          4.2 years             13.21

</TABLE>

Exercise prices and options outstanding have been adjusted to reflect the 5% 
stock dividend declared in February of 1998.

NOTE 19 - 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 is $250,000 to settle the 
case.  The case is presently scheduled for trial in February 1999.  The 
Company estimates its potential liability to be less than $250,000 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.

NOTE 20 - RECLASSIFICATION
--------------------------

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

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.


                            SLADE'S FERRY BANCORP
                            ---------------------
                            (Parent Company Only)

                       CONDENSED FINANCIAL STATEMENTS
                       ------------------------------

<TABLE>
<CAPTION>

Balance sheets                                                               December 31,
                                                                          1998           1997
                                                                      -----------    -----------
ASSETS
------

<S>                                                                   <C>            <C>
Cash                                                                  $   489,437    $   319,437
Investments in available-for-sale securities (at fair value)            1,949,984      1,446,722
Investments in held-to-maturity securities (fair value of $295,873
 as of December 31, 1998 and $246,917 as of December 31, 1997)            295,763        247,465
Investment in subsidiary, Slade's Ferry Trust Company                  27,098,674     24,557,163
Premises and equipment                                                     22,355
Accrued interest receivable                                                28,357          5,977
Other assets                                                               38,003         38,539
                                                                      -----------    -----------
                                                                      $29,922,573    $26,615,303
                                                                      ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Other liabilities                                                     $   215,188    $   178,877
                                                                      -----------    -----------
              Total liabilities                                           215,188        178,877
                                                                      -----------    -----------
Stockholders' equity:
  Common stock, par value $.01 per share; authorized 5,000,000
   shares; issued and outstanding 3,446,413.80 shares in 1998
   and 3,236,712.7 shares in 1997                                          34,464         32,367
  Paid-in capital                                                      22,285,220     18,978,598
  Retained earnings                                                     7,103,642      7,276,174
  Accumulated other comprehensive income                                  284,059        149,287
                                                                      -----------    -----------
      Total stockholders' equity                                       29,707,385     26,436,426
                                                                      -----------    -----------
                                                                      $29,922,573    $26,615,303
                                                                      ===========    ===========
</TABLE>

Statements of income and comprehensive income

<TABLE>
<CAPTION>

                                                                    Years Ended December 31,
                                                             --------------------------------------
                                                                1998          1997          1996
                                                             ----------    ----------    ----------

<S>                                                          <C>           <C>           <C>
Dividends from subsidiary                                    $  950,000    $  475,000    $  360,000
Interest and dividends on securities:
  Taxable                                                       111,127        40,199
Other interest income                                             6,111         4,267         2,474
Management fee income from subsidiary                           432,002       438,479       415,904
Other income                                                                    4,000
                                                             ----------    ----------    ----------
      Total income                                            1,499,240       961,945       778,378
                                                             ----------    ----------    ----------
Salaries and employee benefits                                  376,940       333,410       311,038
Equipment expense                                                   379         4,449        20,596
Other expense                                                   146,641       124,676        96,872
                                                             ----------    ----------    ----------
      Total expense                                             523,960       462,535       428,506
                                                             ----------    ----------    ----------
Income before income taxes (benefit) and equity
 in undistributed net income of subsidiary                      975,280       499,410       349,872
Income taxes (benefit)                                           20,384        16,754        (2,400)
                                                             ----------    ----------    ----------
Income before equity in undistributed net income
 of subsidiary                                                  954,896       482,656       352,272
Equity in undistributed net income of subsidiary              2,408,146     2,363,334     2,025,923
                                                             ----------    ----------    ----------
Net income                                                    3,363,042     2,845,990     2,378,195
                                                             ----------    ----------    ----------
Other comprehensive income, net of tax
  Unrealized holding gains (losses) on available-for-sale
   securities, parent company only                                1,408        (1,792)
  Unrealized holding gains (losses) on available-for-sale
   securities, subsidiary                                       214,249       153,707       (35,650)
  Minimum pension liability adjustment, net of tax effect       (80,885)
                                                             ----------    ----------    ----------
      Total other comprehensive income, net of tax              134,772       151,915       (35,650)
                                                             ----------    ----------    ----------
        Comprehensive income                                 $3,497,814    $2,997,905    $2,342,545
                                                             ==========    ==========    ==========

</TABLE>

                            SLADE'S FERRY BANCORP
                            ---------------------
                            (Parent Company Only)

                Years Ended December 31, 1998, 1997 and 1996
                --------------------------------------------

Statements of cash flows

<TABLE>
<CAPTION>

                                                                  1998          1997          1996
                                                               ----------    ----------    ----------

<S>                                                            <C>           <C>           <C>
Cash flows from operating activities:
  Net income                                                   $3,363,042    $2,845,990    $2,378,195
  Adjustments to reconcile net income to net cash 
   provided by operating activities:
    Undistributed net income of subsidiary                     (2,408,146)   (2,363,334)   (2,025,923)
    Accretion, net of amortization of securities                   (8,159)      (34,220)
    Depreciation and amortization                                     379         4,448        10,677
    Increase (decrease) in taxes payable                           12,686         5,007        (5,668)
    Increase in accrued expenses                                    2,888           775           910
    (Increase) decrease in prepaid expenses                         4,748       (13,223)         (210)
    Increase in interest receivable                               (22,380)       (5,977)
    (Increase) decrease in other assets                            (7,450)       13,639       (14,785)
    Increase (decrease) in other liabilities                       (7,750)        6,988          (636)
                                                               ----------    ----------    ----------

  Net cash provided by operating activities                       929,858       460,093       342,560
                                                               ----------    ----------    ----------

Cash flows from investing activities:
  Additional investment in subsidiary bank                                   (2,300,000)
  Capital expenditures                                            (22,734)
  Purchases of held-to-maturity securities                       (590,583)   (2,613,316)
  Proceeds from maturities of held-to-maturity securities         550,000     2,400,000
  Proceeds from maturities of available-for-sale securities     2,350,000
  Purchases of available-for-sale securities                   (2,850,461)   (1,449,649)
                                                               ----------    ----------    ----------

  Net cash used in investing activities                          (563,778)   (3,962,965)
                                                               ----------    ----------    ----------

Cash flows from financing activities:
  Fractional shares paid in cash                                   (8,117)                     (3,360)
  Dividends paid                                                 (914,943)     (734,073)     (658,165)
  Net proceeds from issuance of common stock                      726,980     4,375,775       346,147
                                                               ----------    ----------    ----------

  Net cash provided by (used in) financing activities            (196,080)    3,641,702      (315,378)
                                                               ----------    ----------    ----------

Net increase in cash and cash equivalents                         170,000       138,830        27,182
Cash and cash equivalents at beginning of year                    319,437       180,607       153,425
                                                               ----------    ----------    ----------
Cash and cash equivalents at end of year                       $  489,437    $  319,437    $  180,607
                                                               ==========    ==========    ==========

Supplemental disclosure:
  Income taxes paid                                            $    7,698    $   11,747    $    3,268

</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, 1998, 1997 and 1996, and therefore are not 
reprinted here.


<TABLE>

<S>                                         <C>                                   <C>
Board of Directors                          Officers                              Peter G. Collias
Slade's Ferry Bancorp-                      Slade's Ferry Bancorp                 Corporate Secretary
Slade's Ferry Trust Company                 ---------------------
---------------------------
                                            Donald T. Corrigan                    Sandra Curtis
Thomas B. Almy                              Chairman of the Board                 Compliance Review Officer
Architect - I.T. Almy Associates
                                            Kenneth R. Rezendes                   Luisa DiManno
James D. Carey                              President                             Assistant Treasurer
Executive Vice President of Bancorp         Chief Executive Officer
President of Bank                                                                 William E. Diskin
Chief Executive Officer of Bank             James D. Carey                        Vice President
                                            Executive Vice President
Peter G. Collias, Esquire                                                         Raymond L. Foster
Clerk/Secretary of Bancorp and Bank         Ralph S. Borges                       Vice President
                                            Treasurer
Donald T. Corrigan                                                                Joseph J. Ganem
Chairman of the Board of Bancorp            Executive Management                  Vice President
Chairman of the Board of Bank               Slade's Ferry Trust Company
                                            ---------------------------           Joseph Gesualdo
Melvyn A. Holland                           James D. Carey                        Vice President
Managing Partner                            President
Rosenfield, Holland & Raymon PC             Chief Executive Officer               Russell F. Godin
Certified Public Accountants                                                      Vice President
                                            Ralph S. Borges
William Q. MacLean, Jr.                     Executive Vice President/Treasurer    Elaine M. Guillemette
Vice President                                                                    Assistant Vice President
Cornish & Co. Inc. Insurance                Susan R. Hajder
                                            Senior Vice President                 Sandra Medeiros
Francis A. Macomber                                                               Assistant Treasurer
President - LeComtes All Star Dairy Inc.    Charlene J. Jarest
                                            Vice President                        Charlotte C. Nadeau
                                                                                  Assistant Vice President
Majed Mouded MD                             Carol A. Martin
Physician                                   Senior Vice President                 Cecelia M. Machado
                                                                                  Vice President
Shaun O'Hearn, Sr.                          Manuel J. Tavares 
President - Bolger & O'Hearn Inc.           Senior Vice President                 Jeannine M. Paliotti
                                                                                  Vice President
Lawrence J. Oliveira DDS                    Officers 
Orthodontist                                Slade's Ferry Trust Company           Janice R. Partridge
                                            ---------------------------           Vice President
Peter Paskowski                             James H. Anctil
Past President of Bank                      Vice President                        Fatima M. Rapoza
                                                                                  Assistant Vice President
Kenneth R. Rezendes                         Isola A. Anctil
President/CEO of Bancorp                    Assistant Vice President              Michelle Rivera
President - K.R. Rezendes, Inc.             Assistant Clerk/Secretary             Assistant Treasurer

William J. Sullivan                         Cherie Ashton                         Deborah A. Silvia
President - Sullivan Funeral Homes          Assistant Vice President              Assistant Treasurer

Charles Veloza                              Maria C. Barbosa                      Eduardo F. Sousa
President - Charlie's Oil Co., Inc.         Vice President                        Assistant Treasurer

David F. Westgate                           Edward Bernardo Jr.                   Nancy E. Stokes
President                                   Vice President                        Vice President
Quequechan Management Corp.
                                            Catherine Blakey                      Mary M. Sullivan
Honorary Directors                          Assistant Vice President              Vice President
------------------
Edward S. Machado                           Noelia M. Brum                        Doreen Teixeira
Past President of Bank                      Assistant Treasurer                   Assistant Treasurer

Bernard T. Shuman                           Michelle Caron                        Richard Van Blarcom
Past President/Treasurer                    Assistant Treasurer                   Vice President
Priscilla Dress Corp.

Corporate Headquarters                      General Counsels                      Shareholder Services
Slade's Ferry Bancorp                       Atty. Peter G. Collias                Slade's Ferry Bancorp
100 Slade's Ferry Avenue                    84 North Main Street                  100 Slade's Ferry Avenue
Somerset, Massachusetts 02726               Fall River, Massachusetts 02720       Somerset, Massachusetts 02726
Tel. (508) 675-2121                         Tel. (508) 675-7894                   Tel. (508) 675-2121
Fax  (508) 675-1751
                                            Thomas H. Tucker, Esq.                Annual Meeting
                                            459 Washington St., Suite 27          The Annual Meeting of Stockholders
BRANCH LOCATIONS                            Duxbury, MA 02332                     of Slade's Ferry Bancorp will be
                                            Tel. (781) 934-8200                   held at 7:30 p.m. on April 12, 1999
Fairhaven, MA                                                                     at the Venus de Milo Restaurant,
75 Huttleston Avenue                        Independent Certified                 75 GAR Highway
                                            Public Accountants                    Swansea, Massachusetts.
Fall River, MA                              Shatswell MacLeod & Company PC
249 Linden Street                           Certified Public Accountants          Dividend Reinvestment Plan
855 Brayton Avenue                          83 Pine Street                        The Plan provides for:
1601 South Main Street                      West Peabody, Massachusetts 01960     *  Reinvestment of all of the
                                            Tel. (978) 535-0206                      dividends
New Bedford, MA                                                                   *  Voluntary cash contributions
838 Pleasant Street                         Form 10-KSB                              of up to $5,000 annually,
833 Ashley Boulevard                        A copy of the Annual Report on           minimum $100.
                                            Form 10-KSB for Slade's Ferry         *  No service fees or
Seekonk, MA                                 Bancorp as filed with the                commissions
1400 Fall River Avenue (Rte.6)              Securities and Exchange
                                            Commission will be forwarded          Information may be obtained by
Somerset, MA                                without charge to any stockholder     contacting Shareholder Services
100 Slade's Ferry Avenue                    upon written request to:              at (508) 675-2121
2722 County Street
Somerset High School                        Ralph S. Borges, Treasurer            Stock Trading
                                            Slade's Ferry Bancorp                 The common stock of Slade's
Swansea, MA                                 100 Slade's Ferry Avenue              Ferry Bancorp is listed on the
Swansea Mall                                Somerset, MA 02726                    NASDAQ Small Cap Market
2388 G.A.R. Highway                                                               under the symbol SFBC.

</TABLE>