<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

       (MARK ONE)
            (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999
                                       OR
           ( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

           For the transition period from _____________ to __________

                         Commission file number 0-14087

                            FIRST COASTAL CORPORATION
             (Exact name of registrant as specified in its charter)

          Delaware                                       06-1177661
 (State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                      Identification No.)

36 Thomas Drive, Westbrook, Maine                                04092
(Address of principal executive offices)                      (Zip Code)

       Registrant's telephone number, including area code: (207) 774-5000

   Securities registered pursuant to Section 12(b) of the Act: Not Applicable

 Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$1.00 par value per share
                                                               (Title of class)

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     Based upon the closing price of the registrant's Common Stock as of March
14, 2000, the aggregate market value of the Common Stock held by nonaffiliates
was $10,805,485.

     As of the close of business on March 14, 2000, there were 1,299,908 shares
of the registrant's Common Stock, par value $1.00 per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 1999, are incorporated by reference in Part II.

     Portions of the definitive proxy statement for the annual meeting of
stockholders to be held May 16, 2000, which the registrant intends to file no
later than 120 days after December 31, 1999 are incorporated by reference in
Part III.
<PAGE>

                                     PART I

ITEM 1. BUSINESS.

GENERAL

First Coastal Corporation

First Coastal Corporation, a Delaware corporation (the "Company"), is a bank
holding company whose sole operating subsidiary is Coastal Bank, a
Maine-chartered stock bank ("Coastal" or the "Bank"). The Company was organized
in January 1987 for the purpose of becoming the parent holding company of
Suffield Bank following Suffield Bank's conversion from mutual to stock form.
The Company acquired Coastal Bancorp, a Maine corporation ("Bancorp"), which was
the bank holding company of Coastal, on April 1, 1987. On September 6, 1991,
Suffield Bank was placed in receivership by the Connecticut Department of
Banking, leaving the Bank as the Company's sole operating subsidiary. On July
26, 1994, Bancorp was dissolved, and the Bank became a direct wholly-owned
subsidiary of the Company.

Coastal Bank

The Bank was formed in 1981 as a Maine-chartered savings bank through the
consolidation of Brunswick Savings Institution and York County Savings Bank,
which were organized in 1858 and 1860, respectively. On July 11, 1984, the Bank
completed its conversion from mutual form to a Maine stock savings bank.

The Bank had total assets of approximately $191 million at December 31, 1999.
The region served by the Bank includes the communities of Portland, Westbrook,
Topsham, Brunswick, Freeport and Saco, Maine.

The principal business of the Bank consists of retail and commercial community
banking, including attracting deposits from the general public and originating
residential mortgage, consumer, commercial and industrial loans, and commercial
real estate mortgage loans. Deposits at the Bank are federally insured up to the
limits provided by law by the Bank Insurance Fund ("BIF"), which is administered
by the Federal Deposit Insurance Corporation ("FDIC").

The principal executive offices of the Company and the Bank are located at 36
Thomas Drive, Westbrook, Maine 04092; telephone (207) 774-5000. Effective on or
about June 1, 2000, the principal executive offices of the Company and the Bank
will be located at 1200 Congress Street, Portland, Maine 04102; telephone (207)
774-5000.

This Annual Report on Form 10-K contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Any
statements with regard to the Company's expectations as to its financial results
and other aspects of its business, including the Company's strategic business
initiatives, net interest margin, deposit growth, interest rates, additional
branches, market and growth opportunities and loan volume, constitute
forward-looking statements. Certain, but not necessarily all, of such
forward-looking statements can be identified by the use of forward-looking
terminology, such as "believes," "expects," "may," "will," "should,"
"estimates," or "anticipates" or the negative thereof or other variations
thereof or comparable terminology. All forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
transactions, results, performance or achievements of the Company to be
materially different from those expressed or implied by such forward-looking
statements. Although the Company has made such statements based on assumptions
which it believes to be reasonable, there can be no assurance that the actual
transactions, results, performance or


                                       2
<PAGE>

achievements will not differ materially from the Company's expectations. For
example, there are a number of important factors with respect to such forward-
looking statements that could materially and adversely affect such forward-
looking statements, such as (i) the impact of changes in market rates of
interest, economic conditions or competitive factors on the Company's deposit
products and loan demand and asset quality; (ii) the possibility that certain
transactions, such as the successful transition to a suitable new headquarters
and operations center, the opening of new branches, the introduction of new
banking products or other planned or contemplated events, may not occur or may
not be initiated with the degree of success contemplated; (iii) the possibility
that operating expenses may be higher than anticipated; (iv) the effect that
changes in the general economic and competitive conditions in markets in which
the Company operates could have on the Company's financial performance and
condition; (v) the Company's ability to control its provision for loan losses,
and to achieve its goals with respect to net interest rate spread and margin;
and (vi) the level of demand for new and existing products. Should one or more
of these risks or other uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in the forward-looking statements. The Company does not intend to
update forward-looking statements.

CERTAIN REGULATORY MATTERS

Satisfaction of the Cross Guaranty Settlement Obligation to FDIC

On July 24, 1996, the Company completed its recapitalization plan whereby the
Company repaid in full its promissory note obligation (the "FDIC Note") to the
FDIC in the amount of $9.7 million ($9.0 million loan principal amount plus
accrued interest) incurred as a result of the January 1995 settlement of the
FDIC cross guaranty claim against the Bank. The cross guaranty claim was the
result of the September 1991 failure of Suffield Bank. In 1994, the Company
incurred a $9.0 million extraordinary charge to earnings resulting from the
issuance of the FDIC Note. Principal and interest under the FDIC Note were
deferred until its maturity date, January 31, 1997. The funds utilized to repay
the FDIC Note came from (i) the sale of 750,000 shares of the Company's common
stock at $5.00 per share by means of a registered public offering; (ii) a
dividend of $3.2 million from the Bank to the Company; and (iii) the borrowing
of $4.0 million from a group of four Maine savings banks (the "Savings Banks"),
pursuant to which the Company issued promissory notes in the aggregate principal
amount of $4.0 million (the "Savings Bank Notes"), collateralized by the pledge
by the Company of 100% of the outstanding common stock of the Bank. The Savings
Bank Notes were amended effective August 4, 1999, whereby the terms were
modified to include, among other things, a reduction in the interest rate, an
extension of the maturity date until August 4, 2004 and to provide the Company
with a line of credit. For further information see "Amended Savings Bank Notes"
below and "Note 9 -- Borrowings" in the Company's 1999 Annual Report to
Stockholders.

Regulatory Capital Requirements

Under applicable federal regulations, the Company and Coastal are each required
to maintain minimum levels of regulatory capital. The Board of Governors of the
Federal Reserve System (the "Federal Reserve") has adopted a leverage-based
capital requirement of a minimum level of tier 1 capital to total assets of 3.0%
for bank holding companies with a composite rating of 1 under the bank holding
company rating system. All other bank holding companies are required to maintain
a minimum ratio of tier 1 capital to total assets of 4.0% to 5.0%. Under the
Federal Reserve's risk-based capital guidelines, bank holding companies also are
required to maintain a minimum ratio of tier 1 capital to risk-weighted assets
of 4.0% and a minimum ratio of qualifying total capital to risk-weighted assets
of 8.0%. The Company's ratios of tier 1 capital to total assets, tier 1 capital
to risk-weighted assets, and qualifying total capital to risk-weighted assets of
8.37%, 14.56%, and 15.82%, respectively, at December 31, 1999 were in compliance
with such guidelines.


                                       3
<PAGE>

The FDIC has also adopted minimum capital requirements for state non-member
banks such as the Bank. Under the minimum leverage capital requirement, insured
state non-member banks must maintain a Tier 1 capital to total assets ratio of
at least 3% to 5% depending on the CAMELS rating of the bank and other factors.
At December 31, 1999, the Bank had a Tier 1 capital to total assets ratio of
9.22%. In addition, under such requirements insured non-member banks must
maintain a minimum ratio of qualifying total capital to risk-weighted assets of
8.0%, and a minimum ratio of Tier 1 capital to risk-weighted assets of 4.0%. At
December 31, 1999, the Bank had a ratio of qualifying total capital to
risk-weighted assets of 17.17% and a ratio of Tier 1 capital to risk-weighted
assets of 15.90%.

LENDING ACTIVITIES

Loan Portfolio Composition

The following table sets forth the composition of the Company's loan portfolio
at the dates indicated:

<TABLE>
<CAPTION>

                                                                      December 31,
                                          -------------------------------------------------------------------
(dollars in thousands)                        1999           1998         1997          1996            1995
-------------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>          <C>           <C>             <C>
Real estate mortgage loans:

      Residential                         $ 28,460      $  32,555    $  33,251     $  30,981       $  30,966

      Commercial                            66,833         52,747       48,705        48,456          50,797

Real estate construction loans               2,832          1,384        1,955           769              --

Commercial and industrial loans              9,446          5,872        5,166         3,059           2,524

Consumer and other loans                    12,962         13,315       15,227        15,281          16,263
                                          --------      ---------    ---------     ---------       ---------
Total loans                               $120,533      $ 105,873    $ 104,304     $  98,546       $ 100,550
                                          ========      =========    =========     =========       =========
Ratio of loans to:
Deposits                                        86%            71%          91%           86%             80%

Assets                                          63%            55%          71%           67%             69%
</TABLE>


The Bank's loan growth during the period from the late 1980's until the
completion of the 1996 recapitalization was inhibited as a result of the
problems the Bank and the Company experienced during this period. The Bank's
ability to originate commercial and industrial and commercial real estate loans
was particularly impacted by borrower uncertainties with regard to the Bank's
future. The completion of the 1996 recapitalization allowed the Bank to compete
more effectively for new loans. Since that time, and in conjunction with the
Company's strategic plan, significant effort and resources have been focused on
developing higher levels of loan volume. Particular focus has been given to
developing a strong commercial banking team as management believes this is an
area in which the Bank can develop a competitive edge, particularly with regard
to responsive customer service.

During the past three years the attrition previously reflected in the Company's
loan balances has ceased, with modest growth achieved during 1997 and 1998, and
a 13.9% increase in 1999. Commercial real estate loans showed the largest
increase for the year ended December 31, 1999, $14.1 million (26.7%) as compared
to December 31, 1998. The opening of the Bank's downtown Portland branch, the
introduction of commercial cash management products and the introduction of
Internet banking for businesses, all during the first half of 1998, have been
and will continue to be important to the Bank's ability to generate profitable
growth in commercial loans.


                                       4
<PAGE>

Though commercial real estate loans are considered riskier than some other loan
types, and continue to make up a large percentage of the Company's loan
portfolio (55.5% at December 31, 1999), management believes that the combination
of its expertise in this area and its lending practices allows the Company to
manage the risk inherent in this type of lending.

Residential real estate loans declined $4.1 million during 1999, attributable to
a combination of a generally higher interest rate environment in 1999, resulting
in lower than anticipated originations, and competitive pressures resulting in a
higher percentage of the Bank's 1999 originations being secondary market
saleable as opposed to residential mortgage portfolio loans. The Bank has placed
a renewed emphasis on residential lending in 2000 though improved technology and
staffing in order to compete more effectively in this market.

See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Historical Background" - and -- "Loans" in the Company's 1999
Annual Report to Stockholders.

The following table sets forth the maturities of the loan portfolio by loan type
as of December 31, 1999:

<TABLE>
<CAPTION>

                                                      After
                                                     One But
                                            Within    Within    After
                                             Year       Five     Five
(dollars in thousands)                        One      Years     Years      Total
----------------------------------------------------------------------------------
<S>                                       <C>       <C>       <C>        <C>
Real estate mortgage loans:

      Residential loans                   $    10   $   794   $ 27,656   $ 28,460

      Commercial loans                      3,571    29,166     34,096     66,833

Real estate construction loans              2,832        --         --      2,832

Commercial and industrial loans             4,665     3,805        976      9,446

Consumer and other loans                      307     6,155      6,500     12,962
                                          -------   -------   --------   --------
      Total loans                         $11,385   $39,920   $ 69,228   $120,533
                                          =======   =======   ========   ========

Fixed interest rate                       $ 5,640   $25,183   $ 42,661   $ 73,484

Variable/adjustable interest rate           5,745    14,737     26,567     47,049
                                          -------   -------   --------   --------
                                          $11,385   $39,920   $ 69,228   $120,533
                                          =======   =======   ========   ========
</TABLE>

The commercial real estate mortgage portfolio of approximately $66.8 million at
December 31, 1999, as compared to $52.7 million at December 31, 1998, includes
loans collateralized by apartment buildings, mixed use commercial buildings,
retail buildings, office buildings and other income-producing properties.
Substantially all of these loans are collateralized by mortgages on properties
located in Maine. The maturities are set forth in the above table.

At December 31, 1999 and 1998, commercial and industrial loans totaled $9.4
million and $5.9 million, respectively. The Bank makes commercial and industrial
loans collateralized by equipment and other corporate or personal assets,
including accounts receivable, inventory, marketable securities and real estate.
The terms and maturities of commercial loans are negotiated with the borrower,
but generally the loans mature in seven years or less and bear interest at a
fixed or adjustable rate.


                                       5
<PAGE>

Consumer loans originated by the Bank primarily include automobile, mobile home
and boat loans, home improvement loans, loans collateralized by deposits, lines
of credit collateralized by residential real estate and student loans under the
Maine Guaranteed Student Loan Program. The interest on student loans is
partially subsidized, and a minimum of 98% of each loan is guaranteed by the
federal government. As of December 31, 1999, the Bank had approximately $13.0
million in consumer loans, compared to $13.3 million as of December 31, 1998.
All consumer loans originated are reviewed for creditworthiness, adequacy of
collateral and the borrowers' ability to repay.

Loan Originations

Residential mortgage loans originated by the Bank are primarily collateralized
by property located within its existing market area in Maine. The Bank is an
active residential mortgage lender. A significant percentage of loans originated
are 1-4 family residential real estate loans, the majority of which are sold in
the secondary market. In 1998 and years prior, the Bank continued to service
most of the loans it sold in the secondary market. Beginning in 1999 the Bank
began selling these loans on a servicing released basis. Most of the Bank's
residential loans are originated using the Federal National Mortgage Association
("FNMA") underwriting guidelines.

The Bank's residential loan originations decreased 61.6% ($15.0 million) in 1999
as compared to 1998, primarily as a result of the higher interest rate
environment, which resulted in decreased consumer demand to refinance
residential mortgages. Historically the Bank has relied upon the refinance
market for a significant portion of its residential loan originations. The Bank
has developed a plan that it believes will increase residential loan volume by
placing greater emphasis on originating purchase money residential loans as
opposed to refinances. The plan also includes improved utilization of technology
(an automated underwriting system) and increased use of commission based loan
originators, in addition to the Bank's branch-based originations.

Commercial loan originations increased in 1999, as is reflected in the $17.7
million increase (30.1%) in total commercial loan outstandings at December 31,
1999 as compared to December 31, 1998. The Bank currently plans to further
increase its commercial loan originations in 2000, however, the competition for
commercial loans continues to be intense and its ability to do so is affected by
both competitive and economic factors.

The level of residential, consumer and commercial loan originations going
forward will depend upon a number of factors, including the level of interest
rates, general economic conditions, the competitive environment and overall
profitability of these loans.

The following table represents residential real estate and consumer loan
originations for the years ended December 31, 1999, 1998 and 1997.

<TABLE>
<CAPTION>

                                                 For the Year Ended December 31,
                                               ---------------------------------
(in thousands)                                    1999         1998         1997
--------------------------------------------------------------------------------
<S>                                            <C>          <C>          <C>
Originations(1):

      Residential real estate                  $ 9,345      $24,343      $18,216

      Consumer                                   1,813        4,322        3,001
                                               -------      -------      -------
      Total                                    $11,158      $28,665      $21,217
                                               =======      =======      =======
</TABLE>

(1)  Includes refinancing of existing portfolio and off balance sheet serviced
     loans.

For information on Allowance for Loan Losses and Nonperforming Assets, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 1999 Annual Report to Stockholders.


                                       6
<PAGE>

Secondary Market Activity

The Bank is active in secondary market transactions primarily through the sale
of long-term, fixed-rate residential mortgage loans that it originates. The sale
of these loans serves as a means for the Bank to manage its overall interest
rate sensitivity risk (consistent with the Bank's asset liability management
policy), generates fee income and provides additional funds for lending and
liquidity. The Bank generally seeks to originate longer term fixed-rate
mortgages only when commitments to sell these mortgages can readily be obtained.
Due to interest rate fluctuations and the timing between the commitment to the
borrower and the closing and subsequent sale of the loan in the secondary
market, such sales will be made at a premium or discount (depending on the
current interest rate environment) and will result in realized gains or losses
to the Bank on the transaction.

The Bank is an approved seller and servicer by and for the FNMA. However, on
January 31, 1999, the Bank sold all of its FNMA residential mortgage servicing
portfolio. The Bank currently sells all saleable loans on a servicing released
basis. At December 31, 1999, the Bank was not servicing loans for others as
compared to servicing $44.9 million of loans in its capacity as a subservicer at
December 31, 1998. There was no servicing fee income related to serviced loans
for the year ended December 31, 1999. Servicing fee income is reported as other
income in the consolidated statements of operations, and for the two years ended
December 31, 1998 and 1997, equaled $34,000 and $75,000, respectively.

INVESTMENT ACTIVITIES

The Company's investment portfolio is managed in accordance with a written
investment policy adopted by the Board of Directors and reviewed on an annual
basis. Under this policy, and in accordance with applicable provisions of the
Bank Holding Company Act of 1956, as amended (the "BHCA"), without the prior
approval of the Federal Reserve and the Board of Directors, the Company is
prohibited from directly or indirectly purchasing shares of any company if such
purchase would cause the Company's direct or indirect ownership to equal or
exceed 5% of such company's outstanding shares. The Company's investment policy
provides that all investment purchases of equity securities initiated by the
Bank must receive the advance approval of the Board of Directors of the Bank.
The Bank generally is prohibited by the Federal Deposit Insurance Act from
acquiring or retaining, directly or indirectly, any equity investment of a type
or in an amount that is not permissible for a national bank. The Company's
investment portfolio is comprised primarily of U.S. government and agency
obligations and equity securities. For a summary of investments, see Item 8,
"Financial Statements and Supplementary Data -- Notes 1 and 4."

SOURCES OF FUNDS

General

Deposits and secured borrowings from customers and advances from the Federal
Home Loan Bank ("FHLB") of Boston are the principal sources of Coastal's funds
for use in lending and for other general business purposes. Coastal's deposits
are primarily derived from the areas where its banking offices are located.
Coastal does not actively solicit deposits outside the State of Maine or use
brokers to obtain deposits.

In addition to deposit accounts and advances, Coastal derives funds from loan
repayments, sales of loans and returns on investments. Unscheduled loan
repayments and scheduled amortization have been a substantial source of funds,
while deposit inflows and outflows are significantly influenced by general
interest rates, money market and general economic conditions. FHLB advances may
also be used to compensate for


                                       7
<PAGE>

reductions in normal sources of funds such as deposit inflows at less than
projected levels. The Bank has also been authorized for access to the discount
window of the Federal Reserve Bank in its District; however, to date this
borrowing source has not been utilized.

Deposits

The Bank has a wide variety of deposit programs designed to attract both
short-term and long-term deposits from the general public, primarily from
consumers and businesses. These programs include interest bearing and
non-interest bearing checking accounts, savings accounts, certificates of
deposit, jumbo certificates of deposit and individual retirement accounts.
Deposits at the Bank are federally insured up to the limits provided by law by
the BIF, which is administered by the FDIC.

The following table sets forth the Company's deposit balances at the dates
indicated:
<TABLE>
<CAPTION>

                                                                      December 31,
                                             ----------------------------------------------------------------
(dollars in thousands)                        1999           1998         1997          1996            1995
-------------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>            <C>            <C>
Noninterest bearing demand deposits         $ 11,962       $ 10,447     $  7,599     $  5,790        $  5,128
Interest bearing demand deposits              22,280         21,680       17,117       15,090          15,741
Savings and escrow deposits                   58,775         63,393       34,465       36,445          42,020
Time deposits                                 47,120         53,025       55,810       57,760          62,776
                                            --------       --------     --------     --------        --------
      Total                                 $140,137       $148,545     $114,991     $115,085        $125,665
                                            ========       ========     ========     ========        ========
</TABLE>

Deposits totaled $140.1 million at December 31, 1999, a decrease of $8.4 million
(or 5.7%) from the level of $148.5 million at December 31, 1998. This decrease
is primarily attributable to the sale of the Bank's Kennebunk branch, which
consisted of $12.5 million in deposits at the time of the sale in May 1999. For
further information see Note 8 to the Company's Consolidated Financial
Statements.

Additionally, in April 1996, the Bank sold its branch in Kezar Falls, Maine to
Maine Bank & Trust Company. Included in the sale were all of the branch deposits
totaling $9.9 million.

For the years ended December 31, 1999, 1998 and 1997, Coastal's average deposits
and average rates consisted of the following:
<TABLE>
<CAPTION>

                                                                 For the Year Ended December 31,
                                           --------------------------------------------------------------------
                                                   1999                    1998                     1997
                                           ----------------------  -----------------------  -------------------
                                           Average     Average     Average     Average      Average     Average
(dollars in thousands)                     Amount      Rate        Amount      Rate         Amount      Rate
---------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>         <C>         <C>        <C>          <C>
Noninterest bearing demand deposits        $ 10,198                 $ 7,987                 $  6,483
Interest bearing demand deposits             19,548      2.32%       18,564      2.30%        18,197      2.46%
Savings Deposits                             62,914      3.67        52,750      3.78         34,831      2.71
Time deposits                                48,945      5.05        54,004      5.36         56,801      5.40
                                           --------                --------                 --------
Total                                      $141,605                $133,305                 $116,312
                                           ========                ========                 ========
</TABLE>

                                       8
<PAGE>

At December 31, 1999, the maturities and weighted average interest rates of
certificates of deposits over $100,000 were as follows:

<TABLE>
<CAPTION>
                                                                                        December 31, 1999
                                                                              ----------------------------------
                                                                                                       Weighted
                                                                                     Balance            Average
Maturities (in months)                                                        (in thousands)      Interest Rate
----------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>                <C>
3 months or less                                                                      $  725               4.82%
Over 3 - 6 months                                                                        100               4.50
Over 6 - 12 months                                                                       616               5.37
Over 12 months                                                                           496               5.27
                                                                                      ------
      Total                                                                           $1,937               5.09%
                                                                                      ======
</TABLE>

As of December 31, 1999, Coastal had no brokered deposits.

Borrowings

The following table sets forth the amount of the Company's borrowed funds for
the years ended December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>

                                                                        For the Year Ended December 31,
                                                                  ------------------------------------------
(in thousands)                                                      1999             1998             1997
------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>              <C>
FHLB advances                                                     $ 27,748         $ 22,545         $ 13,294
Savings Bank Notes                                                   2,268            2,600            3,000
Secured borrowings                                                   2,980              967               --
                                                                  --------         --------         --------
                                                                  $ 32,996         $ 26,112         $ 16,294
                                                                  ========         ========         ========
</TABLE>

The following table sets forth information regarding the weighted average
interest expense at December 31 and the highest month end balances of the
Company's total borrowings:

<TABLE>
<CAPTION>
(in thousands)                                                         1999           1998           1997
----------------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>            <C>
Weighted average interest rate of total borrowings                     5.87%          5.95%          5.99%

Highest month end balance of total borrowings                       $36,138        $27,266        $20,887

Average month end balance of total borrowings                       $28,407        $27,150        $16,778
</TABLE>

The Bank also has been approved by the Federal Reserve Bank of Boston to obtain
funds from its discount window for the purpose of maintaining the Bank's
liquidity. At December 31, 1999, the Bank had pledged $10.1 million in 1-4
family residential real estate loans as collateral for future borrowings of up
to $9.1 million from the Federal Reserve. No funds have been obtained from this
source.

The Bank estimates that it has approximately $26.8 million in additional
short-term borrowing capacity with the FHLB as of December 31, 1999. This amount
fluctuates based on qualified collateral.

Federal Home Loan Bank

The Bank uses FHLB advances to expand its lending and investment activities and
to enhance the Bank's mix of rate-sensitive assets and liabilities, e.g., to
extend maturities or to improve liquidity.


                                       9
<PAGE>

At December 31, 1999, the Bank had outstanding $27.7 million in borrowings with
a weighted average interest rate of 5.62% from the FHLB of Boston, maturing as
follows:

<TABLE>
<CAPTION>
                                                                      Amount                                Weighted
                                                                   Maturting                                 Average
           Due Date                                           (in thousands)              Rates        Interest Rate
--------------------------------------------------------------------------------------------------------------------
           <S>                                                        <C>           <C>                     <C>
           2000                                                       $8,000        5.74-5.79%               5.76%
           2001                                                        6,748        6.05-6.25                6.20
           2003                                                        3,000             4.99                4.99
           2004                                                        3,000             5.79                5.79
           2005                                                        4,000             5.06                5.06
           2008                                                        3,000             5.16                5.16
                                                                     -------
                                                                     $27,748                                 5.62%
                                                                     =======

</TABLE>

Amended Savings Bank Notes

On August 4, 1999, the Company entered into the First Amendment to Loan
Agreement (the "First Amendment to Loan Agreement") amending the terms of the
Loan Agreement, dated as of July 24, 1996 (the "Loan Agreement"), between the
Company and a group of four Maine savings banks (the "Four Savings Banks").
Pursuant to the Loan Agreement, the Company borrowed a total of $4.0 million
evidenced by promissory notes (the "Savings Bank Notes") in the amount of $1.0
million to each of the Four Savings Banks. Prior to the effective date of such
modification to the Loan Agreement, the Savings Bank Notes bore interest,
payable quarterly, at an annual rate of 10.85%, with semi-annual principal
payments of $200,000 beginning in June 1998. The original maturity date was
December 31, 2001. Pursuant to the First Amendment to Loan Agreement and the
amended Savings Bank Notes (the "Amended Savings Bank Notes"), the term loan
(balance $2.4 million at the time of refinance) bears interest at an annual rate
of 8.0% until August 4, 2002, at which time the interest rate will convert to
the Prime Rate as published in THE WALL STREET JOURNAL (the "WSJ"), adjustable
daily, until the new maturity date of August 4, 2004. In addition, the Company
is entitled to draw against a working capital line of credit up to a combined
aggregate limit, including the balance outstanding at any time on the term loan,
of $4.0 million. The interest rate on the line of credit is equal to the Prime
Rate as published in the WSJ, adjusted daily and the maturity date is August 4,
2004.

In addition to reducing the interest rate, extending the maturity date, and
providing the Company with a line of credit, the First Amendment to Loan
Agreement modified or eliminated certain covenants and conditions contained in
the Loan Agreement including, among other things: (i) limitations on borrowings
by the Company and the Bank; (ii) prohibitions on transfers of assets of the
Company or any subsidiary; (iii) prohibition of capital expenditures over
$500,000 in any fiscal year; and (iv) certain provisions providing that it was a
default by the Company should it fail to make certain reports or payments within
specified time frames, which provisions have been made generally less
restrictive as to time or amount. In addition, the First Amendment to Loan
Agreement modified the prohibition on the payment of cash dividends by the
Company contained in the Loan Agreement when the Company's debt-to-equity ratio
on a parent only-basis exceeds 30% to increase the permissible ratio threshold
to 50%.

In connection with the Amended Savings Bank Notes, one of the Four Savings Banks
notes was purchased by one of the remaining three lenders. There is no
prepayment penalty associated with the Amended Savings Bank Notes. Other terms
and conditions, including the pledge of all of the Company's stock in the Bank
as collateral, were affirmed and remain in effect.


                                       10
<PAGE>

Secured Borrowings

In May 1998, the Bank introduced a new cash management program for businesses.
The program represents secured borrowings, which include agreements similar to
repurchase agreements that are not FDIC insured. At December 31, 1999 and 1998
these secured borrowings totaled approximately $3.0 million and $1.0 million,
respectively, and were collateralized by approximately $3.0 million and $1.0
million, respectively, in Bank owned investment securities.

For additional information on Borrowings, see "Note 9 -- Borrowings" in the
Company's 1999 Annual Report to Stockholders.

EMPLOYEES

As of December 31, 1999, the Company and its subsidiary had 79 full-time
equivalent employees.

COMPETITION

The Bank is a full service bank with seven banking offices in the southern Maine
communities of Portland, Westbrook, Brunswick, Topsham, Freeport and Saco.
Competition among financial institutions in the Bank's market area is intense
and the Bank competes in obtaining funds and in making loans with other state
and national banks, savings and loan associations, consumer financial companies,
credit unions and other financial institutions which have far greater financial
resources than those available to the Bank. The Bank also faces competition for
deposits from money market funds and other securities funds offered by brokerage
firms and other similar financial institutions. Competition among financial
institutions is based upon interest rates and other credit and service charges,
the quality of services rendered, the convenience of banking facilities and in
the case of loans to larger commercial borrowers, relative lending limits.

REGULATION

Federal Bank Holding Company Regulation

The Company is a bank holding company within the meaning of the BHCA. The
Company is required to file periodic reports and other information with the
Federal Reserve. The Federal Reserve may also conduct examinations of the
Company and the Bank.

Federal Reserve approval is required for any action that causes a bank or other
company to become a bank holding company and for any action that causes a bank
to become a subsidiary of a bank holding company. Federal Reserve approval must
be obtained prior to a bank holding company acquiring direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will own or control directly or indirectly
more than 5% of the voting stock of such bank unless it already owns a majority
of the voting stock of such bank. Federal Reserve approval also must be obtained
before a bank holding company acquires all or substantially all of the assets of
a bank or merges or consolidates with another bank holding company.

A bank holding company generally is prohibited from acquiring direct or indirect
ownership or control of more than 5% of the voting shares of any company that is
not a bank or bank holding company, and from engaging directly or indirectly in
activities other than those of banking, managing or controlling banks, or
furnishing services to its subsidiaries. A bank holding company may, however,
subject to the approval of the Federal Reserve, engage in, or acquire shares of
companies engaged in, activities that are deemed by the


                                       11
<PAGE>

Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto.

Legislation enacted in 1996 and the Federal Reserve's 1997 comprehensive
revisions to its bank holding company regulations streamlined certain
applications to the Federal Reserve for approval to acquire a bank or nonbanking
company or to engage in nonbanking activities that are set forth in the rules
and regulations of the Federal Reserve, provided that the holding company is
well-capitalized, well-managed, and meets certain other criteria specified in
the legislation. In order to qualify as a well-capitalized bank holding company,
its lead depository institution must be well-capitalized under the standards set
forth under the prompt corrective action regulations of the appropriate federal
banking agency and well-capitalized institutions also must control at least 80%
of the total risk-weighted assets held by the bank holding company. In order to
qualify as well-managed, no institution controlled by the bank holding company
can receive the two lowest composite examination ratings as of their most recent
examination. Currently, the Company qualifies as well-capitalized and
well-managed. At this time, however, the Company has no plans to acquire any
bank or nonbanking company or to engage in any new nonbanking activities.

On November 12, 1999, President Clinton signed legislation to reform the U.S.
banking laws, including the BHCA. The changes made to the BHCA by this
legislation, referred to as the Gramm-Leach-Bliley Act, became effective on
March 11, 2000, and expanded the permissible activities of bank holding
companies like the Company. In order to engage in the expanded activities, the
Company would have to file a notice to become a financial holding company. As a
financial holding company, the Company would be permitted to own and control
depository institutions and to engage in activities that are financial in nature
or incidental to financial activities, or activities that are complementary to a
financial activity and do not pose a substantial risk to the safety and
soundness of depository institutions or the financial system generally. The
legislation identifies certain activities that are deemed to be financial in
nature, including nonbanking activities currently permissible for bank holding
companies to engage in both within and outside the United States, as well as
insurance and securities underwriting and merchant banking activities. The
Federal Reserve is authorized under the legislation to identify additional
activities that are permissible financial activities.

In order to become a financial holding company and take advantage of this new
authority, the Company's depository institution subsidiaries, currently the
Bank, must be well-capitalized and well-managed and have at least a satisfactory
record of performance under the Community Reinvestment Act. No prior notice to
the Federal Reserve would be required from a financial holding company to
acquire a company engaged in nonbanking activities or to commence these
activities directly or indirectly through a subsidiary. Although the Company
could qualify to become a financial holding company, it has no present plan to
change its status under the BHCA since it has no plans to acquire a nonbanking
company or engage in any new nonbanking activities.

Under the Change in Bank Control Act, persons who intend to acquire control of a
bank holding company, acting directly or indirectly, or through or in concert
with one or more persons, generally must give 60 days prior written notice to
the Federal Reserve. "Control" exists when an acquiring party directly or
indirectly has voting control of at least 25% of the bank holding company's
voting securities or the power to direct the management or policies of the
company. Under Federal Reserve regulations, a rebuttable presumption of control
arises with respect to an acquisition where, after the transaction, the
acquiring party has ownership, control or the power to vote at least 10% (but
less than 25%) of any class of a company's voting securities if (i) the company
has securities registered under Section 12 of the Securities Exchange Act of
1934 or (ii) immediately after the transaction no other person will own a
greater proportion of that class of voting securities. The Federal Reserve may
disapprove a proposed acquisition of control by a person on certain specified
grounds.


                                       12
<PAGE>

As a bank holding company, the Company is subject to capital adequacy guidelines
of the Federal Reserve. The guidelines apply on a consolidated basis to bank
holding companies with consolidated assets of $150 million or more. Under
current Federal Reserve capital adequacy guidelines, bank holding companies
generally must maintain a ratio of tier 1 capital to total assets of 4.0% to
5.0%. The minimum ratio is 3.0% for the most highly rated bank holding
companies. The Federal Reserve's capital adequacy guidelines also require bank
holding companies to maintain a minimum ratio of qualifying total capital to
risk-weighted assets of 8.0%, including a minimum ratio of tier 1 capital to
risk-weighted assets of 4.0%. The Company's ratios of tier 1 capital to total
assets, tier 1 capital to risk-weighted assets, and qualifying total capital to
risk-weighted assets of 8.37%, 14.56%, and 15.82%, respectively, at December 31,
1999 were in compliance with such guidelines.

A bank holding company's ability to pay dividends to its stockholders and expand
its line of business through the acquisition of new banking subsidiaries can be
restricted if its capital falls below levels established by the Federal
Reserve's guidelines. In addition, any bank holding company whose capital falls
below levels specified in the guidelines can be required to implement a plan to
increase capital.

The Federal Reserve is empowered to initiate cease and desist proceedings and
other supervisory actions for violations of the BHCA, or its regulations, orders
or notices issued thereunder. Under Federal Reserve regulations, banks and bank
holding companies which do not meet minimum capital adequacy guidelines are
considered to be undercapitalized and are required to submit an acceptable plan
for achieving capital adequacy.

Maine Bank Holding Company Regulation

Maine state law also regulates bank holding companies. The state law is designed
to conform with the registration, application and reporting requirements of the
Federal Reserve to the maximum extent feasible. As a holding company, the
Company must register with the Maine Superintendent of Banking (the
"Superintendent"), and must notify the Superintendent whenever there is a
"material" change in the ownership of the Company. Any person or company that
directly or indirectly acquires control of 5% or more of the Company's stock
must similarly notify the Superintendent. If 5% or more of the stock in the
Company or the Bank is to be acquired by a financial institution or by a
financial institution holding company, the transaction would be subject to the
prior approval of the Superintendent. Similarly, other transactions require
advance approval by the Superintendent including, among other things, the
acquisition of control of the Company or the Bank, the acquisition by the
Company or the Bank of 5% or more of the stock of another financial institution
and the engagement of the Company, Bank or a subsidiary thereof in a new
activity closely related to banking.

Bank Regulation

As a BIF-insured savings bank, the Bank is subject to regulation, supervision
and examination by the FDIC. The Bank also is subject to regulation, supervision
and examination by the Maine Bureau of Banking.

The Maine Bureau of Banking, under the Superintendent, administers the Maine
statutes which regulate the Bank's internal organization as well as its deposit,
lending and investment activities. The Maine Bureau of Banking must approve any
changes in the Bank's articles of incorporation, branch offices and major
transactions, and must receive prior notice of any changes to the Bank's bylaws.
Maine law also governs the Bank's ability to engage in nonbanking activities.
The Maine Bureau of Banking conducts periodic examinations of the Bank as part
of its supervision. Maine law requires the Bank to maintain capital levels in
accordance with rules adopted by the Superintendent. Such capital requirements
can be no less stringent


                                       13
<PAGE>

than the capital requirements imposed by federal banking regulators on federally
chartered institutions. If the Bank's capital becomes impaired, the
Superintendent may order the Bank's Board of Directors to take the necessary
steps to restore the deficiency. Maine law permits interstate branching in
accordance with the provisions of federal law. Maine law also permits the
establishment of de novo branches in Maine by out-of-state financial
institutions on a reciprocal basis. Such provisions create enhanced competition
for the Bank.

As a BIF-insured savings bank, the Bank is subject to certain FDIC requirements
designed to maintain the safety and soundness of individual banks and the
banking system. The FDIC has prescribed safety and soundness guidelines relating
to (i) internal controls, information systems and internal audit systems; (ii)
loan documentation; (iii) credit underwriting; (iv) interest rate exposure; (v)
asset growth; and (vi) compensation and benefit standards for officers,
directors, employees and principal stockholders. Such guidelines impose
standards based upon an institution's asset quality and earnings. The guidelines
are intended to set out standards that the agencies will use to identify and
address problems at institutions before capital becomes impaired. Institutions
are required to establish and maintain a system to identify problem assets and
prevent deterioration of those assets in a manner commensurate with its size and
the nature and scope of its operations. Furthermore, institutions must establish
and maintain a system to evaluate and monitor earnings and ensure that earnings
are sufficient to maintain adequate capital and reserves in a manner
commensurate with their size and the nature and scope of their operation.

Under the guidelines, an institution not meeting one or more of the safety and
soundness guidelines is required to file a compliance plan with the FDIC. In the
event that an institution, such as the Bank, were to fail to submit an
acceptable compliance plan or fail in any material respect to implement an
accepted compliance plan within the time allowed by the FDIC, the institution
would be required to correct the deficiency and the appropriate federal agency
would also be authorized to: (i) restrict asset growth; (ii) require the
institution to increase its ratio of tangible equity to assets; (iii) restrict
the rates of interest that the institution may pay; or (iv) take any other
action that would better carry out the purpose of the corrective action. The
Bank believes it was in compliance with all such safety and soundness guidelines
as of December 31, 1999.

The FDIC, in conjunction with the Superintendent, periodically conducts
examinations of insured institutions and, based upon evaluations, may require a
revaluation of assets of an insured institution and may require the
establishment of specific reserves in amounts equal to the difference between
such revaluation and the book value of the assets.

The FDIC also has adopted minimum capital regulations for insured state
nonmember banks. Although there are some differences between the capital
adequacy guidelines adopted by the Federal Reserve with respect to the Company
and the FDIC with respect to the Bank, the primary elements of each are
generally identical. Under the minimum leverage-based capital requirement
adopted by the FDIC, insured state nonmember banks must maintain a ratio of Tier
1 capital to total assets of at least 3% to 5% depending on the Bank's CAMELS
rating. Under such regulations, state nonmember banks must maintain a minimum
ratio of qualifying total capital to risk-weighted assets of 8.0%, including a
minimum ratio of Tier 1 capital to risk-weighted assets of 4.0%. At December 31,
1999, the Bank had a ratio of qualifying total capital to risk-weighted assets
of 17.17%, a ratio of Tier 1 capital to risk-weighted assets of 15.90%, and a
leverage ratio of 9.22%.

Capital requirements higher than the generally applicable minimum requirements
may be established for a particular bank if the FDIC determines that the bank's
capital is, or may become, inadequate in view of its particular circumstances.
Individual minimum capital requirements may be appropriate if a bank is
receiving


                                       14
<PAGE>

special supervisory attention, has a high degree of exposure to interest rate
risk or poses other safety and soundness concerns. The Bank currently is not
subject to any imposed minimum capital requirements.

Under FDIC prompt corrective action regulations, insured institutions will be
considered (i) "well capitalized" if the institution has a total risk-based
capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or
greater, and a leverage ratio of 5% or greater (provided that the institution is
not subject to an order, written agreement, capital directive or prompt
corrective action directive to meet and maintain a specified capital level for
any capital measure), (ii) "adequately capitalized" if the institution has a
total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital
ratio of 4% or greater and a leverage ratio of 4% or greater (3% or greater if
the institution is rated composite CAMELS 1 in its most recent report of
examination and is not experiencing or anticipating significant growth), (iii)
"undercapitalized" if the institution has a total risk-based capital ratio that
is less than 8%, or a Tier 1 risk-based ratio of less than 4% and has a leverage
ratio that is less than 4% (3% if the institution is rated composite CAMELS 1 in
its most recent report of examination and is not experiencing or anticipating
significant growth), (iv) "significantly undercapitalized" if the institution
has a total risk-based capital ratio that is less than 6%, a Tier 1 capital
risk-based capital to total adjusted assets that is less than 3% or a leverage
ratio to adjusted total assets that is less than 3% and (v) "critically
undercapitalized" if the institution has a ratio of tangible equity to total
assets that is less than or equal to 2%. At December 31, 1999, the Bank was
classified as a "well capitalized" institution. The FDIC and the Federal Reserve
can impose severe restrictions upon undercapitalized institutions and their
holding companies.

An insured state bank, such as the Bank, may not engage as principal in any
activity that is not permissible for a national bank, unless the FDIC determines
that the activity would pose no significant risk to the BIF and the state bank
is in compliance with applicable capital standards. Activities of subsidiaries
of insured state banks are similarly restricted to those activities permissible
for subsidiaries of national banks, unless the FDIC determines that the activity
would pose no significant risk to the BIF and the state bank is in compliance
with applicable capital standards. An insured state bank may not, directly or
indirectly, acquire or retain any equity investment of a type that is not
permissible for a national bank except for a majority-owned subsidiary and
certain investments in qualified housing projects. Provisions of the
Gramm-Leach-Bliley Act permit national banks to establish financial subsidiaries
that may engage in the activities noted above that will be permissible for
financial holding companies, other than insurance underwriting, merchant banking
and real estate development and investment activities. In order to exercise this
authority, a bank and its depository institution affiliates must be
well-capitalized, well-managed and have CRA ratings of at least "satisfactory."
For a state bank, such activities also must be permissible under relevant state
law. Under Maine law, the Bank may engage in any activity that national banks
may engage in under federal law.

Transactions between the Bank and its affiliates are subject to certain
quantitative and qualitative limitations as set forth in Sections 23A and 23B of
the Federal Reserve Act, which is administered by the FDIC. For purposes of
these sections, the term "affiliate" with respect to the Bank refers to the
Company. A transaction is deemed to be one with an affiliate if the proceeds of
the transaction are transferred to, or used for the benefit of, an affiliate.
Under sections 23A and 23B, transactions between banks and their affiliates are
generally limited in the following ways: First, the aggregate amount of all
"covered transactions" (which include, among other things, loans or other
extensions of credit to or on behalf of an affiliate, purchases of assets from
an affiliate or investments in the securities of an affiliate) between a bank
(and its subsidiaries) and any one affiliate may not exceed 10% of the capital
stock and surplus of the bank, and the aggregate amount of covered transactions
between a bank (and its subsidiaries) and all affiliates may not exceed 20% of
the capital stock and surplus of the bank. Second, any loan or extension of
credit to, or guarantee, acceptance or letter of credit issued on behalf of an
affiliate by a bank or any of its subsidiaries must at all times be secured by
collateral having a market value equal to from 100% to 130% of the outstanding
balance


                                       15
<PAGE>

of the extension of credit, depending upon the nature of the collateral.
Third, neither low quality assets or securities issued by an affiliate may be
accepted by a bank as collateral for an extension of credit issued to or on
behalf of any affiliate. Fourth, a bank and its subsidiaries are prohibited from
purchasing a low-quality asset from an affiliate unless the bank or any such
subsidiary, pursuant to an independent credit evaluation, committed itself to
purchase the asset prior to the time the asset was acquired by the affiliate.

Transactions between the Bank and its subsidiaries or affiliates, including the
Company, generally must be on terms and conditions, including credit standards,
that are substantially the same or at least as favorable to the Bank as those
prevailing at the time for comparable transactions with or involving
unaffiliated parties or, in the absence of comparable transactions, on terms or
under circumstances, including credit standards, that in good faith would be
offered or would apply to unaffiliated parties. Section 23B imposes additional
restrictions on the ability of a bank and its subsidiaries (i) when acting in a
fiduciary capacity, to purchase securities or assets from an affiliate, and (ii)
whether acting as principal or fiduciary, to purchase or acquire, during the
existence of any underwriting or selling syndicate, any security if a principal
underwriter of the security is an affiliate of the bank.

The Gramm-Leach-Bliley Act imposes certain obligations on financial
institutions, including state-chartered savings banks like the Bank, to develop
privacy policies, restrict the sharing of nonpublic customer data with
nonaffiliated parties at the customer's request, and establish procedures and
practices to protect and secure customer data. These privacy provisions will be
implemented by regulations that will take effect on or after November 12, 2000.

Insurance of Deposits

The Bank's deposit accounts are insured up to the limits provided by law by the
BIF. The Bank is required to make quarterly payments on semiannual insurance
premium assessments for its FDIC deposit insurance.

The FDIC implements a risk-based deposit insurance assessment system. Deposit
insurance assessment rates currently are within a range of $0.00 to $0.27 per
$100 of insured deposits, depending on the assessment risk classification
assigned to each institution. The FDIC places each institution into one of nine
assessment risk classifications based on an institution's capital and
supervisory classification. Assessment rates are periodically reviewed by the
FDIC and set at a level sufficient to maintain the BIF's reserve ratio of 1.25%
of insured deposits. The FDIC considers BIF revenue and expense levels, the BIF
reserve ratio and BIF borrowings in establishing assessment rate ranges.
Accordingly, the deposit insurance premiums imposed by the FDIC are subject to
change.

FDIC insurance of deposits may be terminated by the FDIC, after notice and
hearing, upon a finding by the FDIC that the insured bank has engaged or is
engaging in unsafe or unsound practices, or is in an unsafe or unsound condition
to continue operations as an insured bank, or has violated any applicable law,
regulation, rule or order of, or condition imposed by the FDIC. Additionally, if
insurance termination proceedings are initiated against a bank, the FDIC may
temporarily suspend insurance on new deposits received by the institution under
certain circumstances.

Federal Home Loan Bank System

The Bank is a member of the FHLB of Boston, one of the 12 regional banks of the
FHLB System. The FHLB System provides a central credit facility for member
institutions. The Bank has the ability to borrow funds from the FHLB of Boston
in order to maintain its liquidity. As a member of the FHLB of Boston, the Bank
is required to own shares of capital stock in the FHLB of Boston in an amount at
least equal to the


                                       16
<PAGE>

greater of 1% of the aggregate principal amount of unpaid residential mortgage
loans, home purchase contracts and similar obligations at the beginning of each
year, or 5% of its advances (borrowings) from the FHLB of Boston, whichever is
greater. The Bank was in compliance with this requirement with an investment at
December 31, 1999 of $1.4 million.

Under applicable regulations, member banks are required to maintain at all times
an amount of qualified collateral that is at least sufficient to satisfy the
collateral maintenance level established by the FHLB. See "Business -- Sources
of Funds -- Borrowings."

Federal Reserve System

The Federal Reserve has adopted regulations that require, among other things,
that insured depository institutions maintain nonearning reserves against their
transaction accounts (primarily NOW and regular checking accounts) and
nonpersonal time deposits (those which are transferable or held by a person
other than a natural person) with an original maturity of less than 18 months.
At December 31, 1999, the Bank was in compliance with these requirements.

Various proposals have been introduced in Congress to permit the payment of
interest on required reserve balances, and to permit regulated financial
institutions to pay interest on business demand accounts. While this legislation
appears to have strong support from many constituencies, the Company and the
Bank are unable to predict whether such legislation will be enacted.

The Bank has the ability to borrow funds from the "discount window" of the
Federal Reserve Bank of Boston in order to maintain liquidity. However, the
Federal Reserve Bank of Boston is prohibited from extending advances to
undercapitalized or critically undercapitalized depository institutions, and
generally cannot have advances outstanding to an undercapitalized institution
for more than 60 days in any 120-day period.

TAXATION

Federal

The Company files a consolidated federal income tax return with the Bank using
the accrual method of accounting.

Internal Revenue Service ("IRS") guidance dealing with the tax consequences of
federal financial assistance (e.g., cash) provided by the FDIC requires all
federal financial assistance provided to an acquiring bank to be taxable to the
bank that has been seized. Accordingly, all federal financial assistance
provided to the acquiror of Suffield Bank's assets and liabilities may be
taxable income included in the consolidated federal income tax return of the
Company. This income may generally be offset by tax losses resulting from the
sale of assets sold by the FDIC. Although management has been informed by the
FDIC that there will be no net taxable income resulting from the seizure of
Suffield Bank, management has not been able to obtain written confirmation from
the FDIC at this time. Accordingly, income taxes disclosed in the Consolidated
Financial Statements do not take into account adjustments, if any, which may
result from the seizure of Suffield Bank.

The Company recognized an income tax benefit in 1996 of $4,859,000. Of this
amount, $4,811,000 was attributable to a reduction in the amount of the
valuation allowance previously established against the Company's deferred tax
asset (having an effective tax rate of 34%). In addition, the Company received
$48,000 in interest applicable to a 1992 carryback refund.



                                       17
<PAGE>

The deferred tax asset and offsetting valuation allowance as of September 30,
1996 and prior periods were principally the result of the Company's accumulation
of net operating loss carryforwards. The deferred tax asset represents the
estimated amount of future deductions for tax reporting purposes previously
expensed for financial reporting purposes, and the estimated benefit from future
income taxes the Company will not have to pay as a result of the net operating
loss carryforwards. Prior to the fourth quarter of 1996, a 100% valuation
allowance was maintained against the deferred tax asset as there were
significant uncertainties regarding the Company's future and its ability to
utilize its net operating loss carryforwards through sustained, profitable
operations. Management believes that the completion of the July 1996
recapitalization, the payoff of the FDIC Note and the improved financial
condition of the Company have reduced the uncertainties relating to the
Company's ability to realize the benefits of the deferred tax asset. As a
result, in accordance with Financial Accounting Standards Board Statement of
Financial Accounting Standard No. 109, the valuation allowance against the
deferred tax asset was reduced by $4,811,000 in the fourth quarter of 1996.

In order to assist the Company in maintaining the benefit of the deferred tax
asset, the Company amended its Restated Certificate of Incorporation in June
1996 to provide that absent approval by the Company's Board of Directors no
person shall become or make an offer to become a beneficial owner of five
percent or more of the Company's voting stock for a three year period, which
provision expired June 11, 1999. For additional information relating to income
taxes, refer to Note 12 to the Company's Consolidated Financial Statements.

The federal income tax returns of the Company have been examined and audited or
closed without audit by the IRS for tax years through 1996 and such years are
not subject to further IRS audit except with respect to carrybacks to those
years.

State

The State of Maine imposes a franchise tax on financial institutions such as the
Bank equal to 1% of Maine net income and $0.08 per $1,000 of the Bank's year-end
assets. Maine net income equals the Bank's net income or loss as reported on its
federal income tax return and apportioned to Maine. The Maine franchise tax may
be reduced by a credit in the event of a book net operating loss for a
particular taxable year. The credit equals the book net operating loss
multiplied by the 1% franchise tax rate. Any unused credit may be carried
forward for up to five years. The Maine franchise tax is deductible in
determining federal taxable income.


                                       18
<PAGE>

ITEM 2.  PROPERTIES.

The Company primarily utilizes the premises, equipment and furniture of the Bank
without direct payment of any rental or other fees to the Bank. The Bank's
executive offices and operations center are located at 36 Thomas Drive,
Westbrook, Maine. Effective on or about June 1, 2000, the Bank's executive
offices and operations center will be located at 1200 Congress Street, Portland,
Maine. The Bank currently maintains eight branches as listed below.
<TABLE>
<CAPTION>

Location                     Address                              Leased/Owned              Lease Expiration
--------------------------   ----------------------------------   -----------------------   ------------------------
<S>                          <C>                                  <C>                      <C>
Brunswick                    83 Maine Street                      Owned                     n/a
                             Brunswick, ME

Brunswick                    14 Gurnet Road                       Owned                     n/a
                             Brunswick, ME

Freeport                     8 Mallet Drive                       Owned                     n/a
                             Freeport, ME

Portland                     120 Exchange Street                  Leased                    December 2002
                             Portland, ME

Portland                     1200 Congress Street                 Leased                    April 2010
                             Portland, ME

Saco                         Suite 32                             Leased                    January 2001
                             4 Scammon Drive                                                (currently negotiating
                             Saco, ME                                                       renewal)

Topsham                      47 Topsham Fair Mall Road            Building Owned            n/a
                             Topsham, ME                          Land Leased               June 2000
                                                                                            (lease provides for up
                                                                                            to five 5-year renewal
                                                                                            options)

Westbrook                    36 Thomas Drive                      Leased                    July 2000
                             Westbrook, ME
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS.

As of December 31, 1999, there were various claims and lawsuits pending against
the Company incidental to the ordinary course of business. In the opinion of
management, after consultation with legal counsel, resolution of these matters
is not expected to have a material effect on the consolidated financial position
or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of the Company's stockholders during the
fourth quarter of the fiscal year ended December 31, 1999.



                                       19
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Information required by this Item is set forth under the caption "Market for
Registrant's Common Equity and Related Stockholder Matters" on page 27 of the
Annual Report to Stockholders for the year ended December 31, 1999, which
information is hereby incorporated herein by reference and specifically made a
part hereof.

ITEM 6.  SELECTED FINANCIAL DATA.

Information required by this Item is set forth under the caption "Selected
Financial Data" on pages 5 to 6 of the Annual Report to Stockholders for the
year ended December 31, 1999, which information is hereby incorporated herein by
reference and specifically made a part hereof.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

Information required by this Item, other than new accounting standards and
accounting standards adopted, is set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 7 to 27 of the Annual Report to Stockholders for the year ended December
31, 1999, which information is hereby incorporated herein by reference and
specifically made a part hereof. Information with regard to new accounting
standards and accounting standards adopted, is set forth under Note 1 to the
Company's Consolidated Financial Statements of the Annual Report to Stockholders
for the year ended December 31, 1999, which information is hereby incorporated
herein by reference and specifically made a part hereof.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Information required by this Item and the auditor's report thereon are set forth
on pages 28 to 52 of the Annual Report to Stockholders for the year ended
December 31, 1999, which information is hereby incorporated herein by reference
and specifically made a part hereof.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

Not applicable.


                                       20
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information required by this Item will be set forth under the captions "Election
of Directors," "Executive Officers" and "Executive Compensation -- Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's definitive proxy
statement for the Company's 2000 annual meeting of stockholders. Such
information is hereby incorporated herein by reference and specifically made a
part hereof.

ITEM 11. EXECUTIVE COMPENSATION.

Information required by this Item will be set forth under the caption "Executive
Compensation" in the Company's definitive proxy statement for the Company's 2000
annual meeting of stockholders. Such information is hereby incorporated herein
by reference and specifically made a part hereof.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information required by this Item will be set forth under the caption "Stock
Owned by Management" in the Company's definitive proxy statement for the
Company's 2000 annual meeting of stockholders. Such information is hereby
incorporated herein by reference and specifically made a part hereof.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information required by this Item will be set forth under the caption "Executive
Compensation -- Certain Transactions" in the Company's definitive proxy
statement for the Company's 2000 annual meeting of stockholders. Such
information is hereby incorporated herein by reference and specifically made a
part hereof.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a)(1) The following consolidated financial statements of First Coastal
Corporation and Subsidiary, included in the Annual Report of the Registrant for
the year ended December 31, 1999, are incorporated herein by reference in Item
8. The remaining information appearing in the Annual Report to Stockholders is
not deemed to be filed as part of this Report, except as expressly provided
herein.

Consolidated Balance Sheets as of December 31, 1999 and 1998

Consolidated Statements of Operations for each of the three years in the period
ended December 31, 1999

Consolidated Statements of Stockholders' Equity for each of the three years in
the period ended December 31, 1999

Consolidated Statements of Cash Flows for each of the three years in the period
ended December 31, 1999


                                       21
<PAGE>

Consolidated Statements of Comprehensive Income for each of the three years in
the period ended December 31, 1999

Notes to Consolidated Financial Statements--December 31, 1999

Report of Independent Accountants

     (a)(2) All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions as either not applicable or required information
is presented elsewhere.

     (a)(3) Exhibits. The following exhibits are either filed herewith or are
incorporated herein by reference:

Exhibit No. 3 Articles of Incorporation and Bylaws

     3.1(i) Restated Certificate of Incorporation (filed as Exhibit 3.1(i) to
Annual Report on Form 10-K for the year ended December 31, 1997, File No.
0-14087 ("1997 Form 10-K"), and incorporated herein by reference).

     3.1(ii) Amended and Restated Bylaws (filed as Exhibit 3.1(ii) to 1997 Form
10-K, and incorporated herein by reference).

Exhibit No. 10 Material Contracts

     10.1 First Coastal Corporation Director's Deferred Compensation Plan (filed
as Exhibit 10.13 to Annual Report on Form 10-K for the year ended December 31,
1993, File No. 0-14087, and incorporated herein by reference).

     10.2 Agreement for Data Processing Services, dated February 28, 1996,
between Coastal Savings Bank and Data Dimensions Inc. (filed as Exhibit 10.12 to
Annual Report on Form 10-K for the year ended December 31, 1995, File No.
0-14087, and incorporated herein by reference).

     10.3 First Coastal Corporation 1996 Stock Option and Equity Incentive Plan
(filed as Exhibit 10.13 to Amendment No. 3 to Annual Report on Form 10-K on Form
10-K/A for the year ended December 31, 1995, File No. 0-14087, and incorporated
herein by reference).

     10.4 Loan Agreement, dated as of July 24, 1996, among First Coastal
Corporation and Androscoggin Savings Bank, Bangor Savings Bank, Machias Savings
Bank and Norway Savings Bank (collectively, the "Lenders") and Machias Savings
Bank, as agent (filed as Exhibit 10.9 to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, File No. 0-14087 ("June 1996 Form 10-Q"), and
incorporated herein by reference).

     10.5 Stock Pledge Agreement, dated as of July 24, 1996, between First
Coastal Corporation and Machias Savings Bank, for itself and as agent for the
Lenders (filed as Exhibit 10.10 to June 1996 Form 10-Q, and incorporated herein
by reference).


                                       22
<PAGE>

     10.6 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Androscoggin Savings Bank (filed as Exhibit 10.11 to June 1996
Form 10-Q, and incorporated herein by reference).

     10.7 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Bangor Savings Bank (filed as Exhibit 10.12 to June 1996 Form
10-Q, and incorporated herein by reference).

     10.8 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Machias Savings Bank (filed as Exhibit 10.13 to June 1996 Form
10-Q, and incorporated herein by reference).

     10.9 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Norway Savings Bank (filed as Exhibit 10.14 to June 1996 Form
10-Q, and incorporated herein by reference).

     10.10 Rights Agreement, dated as of February 25, 1998, between First
Coastal Corporation and ChaseMellon Shareholder Services, L.L.C. (filed as
Exhibit No. 1 to Current Report on Form 8-K, filed March 3, 1998, and
incorporated herein by reference).

     10.11 Agreement of Purchase and Sale, dated August 18, 1998, between
Coastal Bank and SYSCO Food Services of Northern New England, Inc. (filed as
Exhibit No. 99(a) to Current Report on Form 8-K, filed August 31, 1998, and
incorporated herein by reference).

     10.12 Employment Agreement, dated as of September 4, 1998, among Coastal
Bank, First Coastal Corporation and Dennis D. Byrd (filed as Exhibit No. 10.12
to Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, File
No. 0-14087 ("September 1998 Form 10-Q"), and incorporated herein by reference).

     10.13 Employment Agreement, dated as of September 4, 1998, among Coastal
Bank, First Coastal Corporation and Gregory T. Caswell (filed as Exhibit No.
10.13 to September 1998 Form 10-Q, and incorporated herein by reference).

     10.14 Amendment No. 1 to Rights Agreement, dated as of October 15, 1998,
between First Coastal Corporation and ChaseMellon Shareholder Services, L.L.C.
(filed as Exhibit No. 99(a) to Current Report on Form 8-K, filed October 22,
1998, and incorporated herein by reference).

     10.15 Purchase and Assumption Agreement, dated February 22, 1999, between
Coastal Bank and Kennebunk Savings Bank (filed as Exhibit No. 10.15 to Annual
Report on Form 10-K for the year ended December 31, 1998, File No. 0-14087, and
incorporated herein by reference).

     10.16 First Coastal Corporation 1996 Stock Option and Equity Incentive
Plan, as Amended, dated May 18, 1999 (filed herewith).

     10.17 First Amendment to Loan Agreement, dated as of August 4, 1999, among
First Coastal Corporation and Androscoggin Savings Bank, Machias Savings Bank
and Norway Savings Bank (collectively, the "Lenders") and Machias Savings Bank,
as agent (filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999, File No. 0-14087 ("June 1999 Form 10-Q"), and incorporated
herein by reference).


                                       23
<PAGE>

     10.18 Acknowledgment and Agreement, dated as of August 4, 1999, among First
Coastal Corporation and the Lenders (filed as Exhibit 10.2 to June 1999 Form
10-Q, and incorporated herein by reference).

     10.19 Note Modification Agreement (Machias Note #1), dated as of August 4,
1999 for the benefit of Machias Savings Bank (filed as Exhibit 10.3 to June 1999
Form 10-Q, and incorporated herein by reference).

     10.20 Note Modification Agreement (Machias Note #2), dated as of August 4,
1999 for the benefit of Machias Savings Bank (filed as Exhibit 10.4 to June 1999
Form 10-Q, and incorporated herein by reference).

     10.21 Note Modification Agreement (Androscoggin Note), dated as of August
4, 1999 for the benefit of Androscoggin Savings Bank (filed as Exhibit 10.5 to
June 1999 Form 10-Q, and incorporated herein by reference).

     10.22 Note Modification Agreement (Norway Note), dated as of August 4, 1999
for the benefit of Norway Savings Bank (filed as Exhibit 10.6 to June 1999 Form
10-Q, and incorporated herein by reference).

     10.23 Lease Agreement, dated as of October 26, 1999, between Coastal Bank
and Olympia Equity Investors III, L.P. (filed as Exhibit 10.1 to Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999, File No. 0-14087,
and incorporated herein by reference).

Exhibit No. 13 Annual Report to Security Holders

First Coastal Corporation 1999 Annual Report (filed herewith). Portions of the
First Coastal Corporation 1999 Annual Report have been incorporated by reference
into this Annual Report on Form 10-K.

Exhibit No. 21  Subsidiary of the Registrant

Subsidiary of the Company (filed herewith).

Exhibit No. 23 Consents of Experts and Counsel

Consent of PricewaterhouseCoopers LLP to incorporation by reference of its
report dated February 8 , 2000 into the Company's Registration Statements on
Form S-8 (No. 333-08631 and 333-79475) filed with the Securities and Exchange
Commission on July 23, 1996 and May 27, 1999 (filed herewith).

Exhibit No. 27 Financial Data Schedule

     27.1 Financial Data Schedule for the year ended December 31, 1999 (filed
herewith).

14(b) No Reports on Form 8-K were filed by the Company's during the fourth
quarter of 1999.

14(c) Exhibits to this Annual Report on Form 10-K are attached or incorporated
herein by reference as stated above.

14(d)  Not applicable.



                                       24
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                            FIRST COASTAL CORPORATION

March 29, 2000                              By:  /s/ Gregory T. Caswell
                                                 ----------------------
                                                 Gregory T. Caswell
                                                 President and Chief
                                                 Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

March 29, 2000                              By:  /s/ Gregory T. Caswell
                                                 -------------------------------
                                                 Gregory T. Caswell
                                                 President and Chief Executive
                                                 Officer (Principal Executive
                                                 Officer)

March 29, 2000                              By:  /s/ Dennis D. Byrd
                                                 -------------------------------
                                                 Dennis D. Byrd
                                                 Vice President and Treasurer
                                                 (Principal Financial and
                                                 Accounting Officer)

And by a majority of the Board of Directors of the Registrant.

March 29, 2000                              By:  /s/ David B. Hawkes, Sr.
                                                 -------------------------------
                                                 David B. Hawkes, Sr.
                                                 Chairman of the Board
                                                 and Director

March 29, 2000                              By:  /s/ Gregory T. Caswell
                                                 -------------------------------
                                                 Gregory T. Caswell, Director

March 29, 2000                              By:  /s/ Dennis D. Byrd
                                                 -------------------------------
                                                 Dennis D. Byrd, Director

March 29, 2000                              By:  /s/ MaryEllen FitzGerald
                                                 -------------------------------
                                                 MaryEllen FitzGerald, Director

March 29, 2000                              By:  /s/ Roger E. Klein
                                                 -------------------------------
                                                 Roger E. Klein, Director

March 29, 2000                              By:  /s/ Normand E. Simard
                                                 -------------------------------
                                                 Normand E. Simard

March 29, 2000                              By:  /s/ Edward K. Simensky
                                                 -------------------------------
                                                 Edward K. Simensky, Director

March 29, 2000                              By:  /s/ Charles A. Stewart III
                                                 -------------------------------
                                                Charles A. Stewart III, Director



                                       25
<PAGE>

<TABLE>
<CAPTION>

                                  EXHIBIT INDEX


Exhibit No.       Description
-----------       -----------
<S>               <C>

10.16             First Coastal Corporation 1996 Stock Option and Equity Incentive Plan, as Amended, dated May
                  18, 1999.

13                First Coastal Corporation 1999 Annual Report.

21                Subsidiary of the Company.

23                Consent of PricewaterhouseCoopers LLP to incorporation by reference of its report dated
                  February 8, 2000 into the Company's Registration Statements on Form S-8 (No. 333-08631 and
                  333-79475) filed with the Securities and Exchange Commission on July 23, 1996 and May 27, 1999.

27.1              Financial Data Schedule for the year ended December 31, 1999.
</TABLE>