PEOPLES BANCSHARES INC, DEF 14A, 1999-04-16

PEOPLES BANCSHARES INC
DEF 14A, 1999-04-16
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED

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<PAGE> 1

SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]
- --------------------------------------------------------------------------------

Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

People's Bancshares, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number of the
form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE> 2
PEOPLE'S BANCSHARES, INC.
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
TELEPHONE (508) 991-2601

Dear Stockholder:

You are cordially invited to attend the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") of People's Bancshares, Inc. (the "Company")
to be held at The Holiday Inn, 195 Westgate Drive, Brockton, Massachusetts, at
9:00 a.m., local time, on Tuesday, May 18, 1999.

The Annual Meeting has been called for the following purposes:

1. To elect four (4) directors for a three-year term.

2. To transact such other business as may properly come before
the meeting and any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on March 23,
1999, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT AT THE ANNUAL
MEETING YOU VOTE "FOR" PROPOSAL ONE.

Very truly yours,

Richard S. Straczynski
President and Chief Executive Officer

April 16, 1999

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE COMPLETE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL
MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON, YOU MAY DO SO.

<PAGE> 3
PEOPLE'S BANCSHARES, INC.
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
TELEPHONE (508) 991-2601

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999

Notice Is Hereby Given that the Annual Meeting of Stockholders (the
"Annual Meeting") of People's Bancshares, Inc. (the "Company") will be held at
The Holiday Inn, 195 Westgate Drive, Brockton, Massachusetts, at 9:00 a.m.,
local time, on Tuesday, May 18, 1999, for the following purposes:

1. To elect four (4) directors for a three-year term.

2. To transact such other business as may properly come before
the meeting and any adjournments or postponements thereof.

Pursuant to the Company's By-laws, the Board of Directors has fixed the
close of business on March 23, 1999 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting.

The above matters are described in detail in the accompanying Proxy
Statement.

By Order of the Board of Directors,

Terrence Gomes
Clerk

April 16, 1999

<PAGE> 4
PEOPLE'S BANCSHARES, INC.
545 PLEASANT STREET
NEW BEDFORD, MASSACHUSETTS 02740
TELEPHONE (508) 991-2601

----------

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 18, 1999

VOTING, REVOCATION, AND SOLICITATION OF PROXIES

ANNUAL MEETING

This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of People's Bancshares, Inc. (the
"Company") for use at the Annual Meeting of Stockholders of the Company to be
held at The Holiday Inn, 195 Westgate Drive, Brockton, Massachusetts, at 9:00
a.m., local time, on Tuesday, May 18, 1999, and any adjournments or
postponements thereof (the "Annual Meeting"), for the purposes set forth in this
Proxy Statement.

At the Annual Meeting, stockholders of the Company will be asked to
consider and vote upon the following matters:

1. To elect four (4) directors for a three-year term.

2. To transact such other business as may properly come before
the meeting and any adjournments or postponements thereof.

RECORD DATE

This Proxy Statement is first being mailed to stockholders of the
Company on or about April 16, 1999, in connection with the solicitation of
proxies for the Annual Meeting. The Board of Directors (the "Board") has fixed
the close of business on March 23, 1999 as the record date for the determination
of stockholders entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof (the "Record Date"). Only holders of the
Company's Common Stock at that time will be entitled to notice of and to vote at
the Annual Meeting and any adjournments or postponements thereof. As of the
Record Date, there were 3,320,218 shares of Common Stock issued and outstanding
and each such share is entitled to one vote at the Annual Meeting.

PROXIES

Stockholders of the Company are requested to complete, date, sign and
promptly return the accompanying form of proxy in the enclosed envelope. Common
Stock represented by properly executed proxies received by the Company and not
revoked will be voted at the Annual Meeting in accordance with the instructions
contained therein. If instructions are not given therein, properly executed
proxies will be voted FOR the election of the nominees for director listed in
this Proxy Statement. It is not anticipated that any matters other than those
set forth in this Proxy Statement will be presented at the Annual Meeting. If
other matters are presented, proxies will be voted in accordance with the best
judgment of the proxy holders.

<PAGE> 5
Any properly completed proxy may be revoked at any time before it is
voted by filing a written notice of such revocation with, or by delivering a
duly executed proxy bearing a later date to, the Clerk of the Company, or by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not in and of itself constitute revocation of a proxy.

The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, officers and regular employees of the Company,
who will receive no compensation for their services other than their normal
salaries, may solicit proxies personally or by telephone. Brokerage houses,
nominees, fiduciaries, and other custodians are requested to forward soliciting
material to the beneficial owners of shares held of record by them and will be
reimbursed for their expenses.

STOCKHOLDER VOTE REQUIRED

The presence, in person or by proxy, of at least a majority in interest
of the total number of outstanding shares of Common Stock is necessary to
constitute a quorum for transaction of business at the Annual Meeting.
Abstentions and "broker non-votes" will be counted as present for determining
the presence or absence of a quorum for the transaction of business at the
Annual Meeting. A "broker non-vote" is a proxy from a broker or other nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote the shares on a particular matter with
respect to which the broker or other nominee does not have discretionary voting
power.

A quorum being present, the vote of a plurality of the votes cast at
the Annual Meeting is necessary to elect each of the nominees for director
(Proposal One). Abstentions and broker non-votes will not be counted as voting
at the Annual Meeting and, therefore, will not have an effect on the outcome of
Proposal One.

ANNUAL REPORT

The Company's Annual Report to Shareholders, including consolidated
financial statements of the Company for the fiscal year ended December 31, 1998,
is being mailed to stockholders of the Company together with this Proxy
Statement. The Annual Report, however, is not part of the proxy soliciting
material. ADDITIONAL COPIES OF THE ANNUAL REPORT AND COPIES OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") (WITHOUT EXHIBITS) ARE
AVAILABLE UPON REQUEST, WITHOUT CHARGE, FROM THE COMPANY. SUCH REQUESTS SHOULD
BE DIRECTED TO PEOPLE'S BANCSHARES, INC., 545 PLEASANT STREET, NEW BEDFORD,
MASSACHUSETTS 02740, ATTENTION: SHAREHOLDER RELATIONS DEPARTMENT.

<PAGE> 6
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of February 1, 1999 certain
information regarding the beneficial ownership of the Common Stock of the
Company by (i) each person known by the Company to own beneficially more than 5%
of the Common Stock, (ii) each director and executive officer of the Company and
(iii) all directors and executive officers as a group (11 persons). Except as
otherwise indicated, each person listed below has sole voting and investment
power over the shares of Common Stock shown as beneficially owned.

<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF COMMON
NAME OF OWNER OF BENEFICIAL OWNERSHIP(1) STOCK(2)
- ------------- -------------------------- --------
<S> <C> <C>

Dearden, Maguire & Weaver 197,543 (3) 5.95
One Tower Bridge, Suite 560
West Conshohocken, PA 19428

Dimensional Fund Advisors Inc. 174,169 (4) 5.24
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401

Tontine Partners, L.P. 201,598 (5) 6.07
200 Park Avenue, Suite 3900
New York, NY 10166

Colin C. Blair 108,100 (6) 3.24
Frederick W. Adami, III 10,266 (7) *
B. Benjamin Cavallo 222,272 (8) 6.68
John R. Eaton 16,996 (9) *
Terrence A. Gomes 4,016(10) *
Dr. Loring C. Johnson 10,391(11) *
Richard D. Matthews 27,278(12) *
Scott W. Ramsay 1,600(13) *
Davis H. Scudder 15,625(14) *
Stanley D. Siskind 13,117(15) *
Richard S. Straczynski 53,000(16) 1.58
All directors and executive officers as
a group (11 persons) 482,661(17) 14.10

</TABLE>

- ----------

* The percentage of shares beneficially owned does not exceed one percent of
the class so owned.

(1) Beneficial ownership for purposes of this Proxy Statement is defined in
accordance with the requirements of Rule 13d-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"), which provides that the
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise, has or shares voting power or investment power with respect
to such security, or has the right to acquire such voting power or
investment power through the exercise of an option, warrant or right
within 60 days.

(2) For purposes of calculating the percentage of the outstanding shares of
Common Stock at February 1, 1999 for each listed person or entity, the
number of shares of Common Stock includes shares that may be acquired by
such person or entity within 60 days of February 1, 1999 through the
exercise of vested stock options under the Company's Amended and Restated
Incentive and Nonqualified Stock Option Plan (the "1986 Employee Option
Plan"), the Company's Amended and Restated Directors' Stock Option Plan
(the "1986 Director Option Plan") and the Company's 1996 Stock Option and
Incentive Plan (the "1996

<PAGE> 7
Option Plan" and collectively the "Stock Option Plans") but does not
include the number of shares underlying such options held by any other
person.

(3) Based solely upon information contained in the 13F quarterly report, filed
December 31, 1998, of equity holdings by institutional investment managers
having equity assets under management of $100 million or more.

(4) Based solely upon information contained in the Schedule 13G filed by
Dimensional Fund Advisors Inc. with the Securities and Exchange Commission
on February 11, 1999.

(5) Based solely upon information contained in the 13F quarterly report, filed
December 31, 1998, of equity holdings by institutional investment managers
having equity assets under management of $100 million or more.

(6) Includes 12,500 shares which Mr. Blair has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Employee Option Plan and 1996 Option Plan. Also
includes approximately 23,675 shares which may be deemed beneficially
owned by Mr. Blair through his interest in the Bank's 401(k) plan, which
invests in the Company's Common Stock.

(7) Includes 8,516 shares which Mr. Adami has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan. Also
includes 1,250 shares owned by Mr. Adami jointly with his wife, and 500
shares owned by Mr. Adami's daughters.

(8) Includes 3,916 shares which Mr. Cavallo has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan. Also
includes 2,112 shares held by Mr. Cavallo's son, 115,514 shares held by
Mr. Cavallo's wife, and 55,060 shares held by a partnership in which Mr.
Cavallo is a partner.

(9) Includes 8,516 shares which Mr. Eaton has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan. Also
includes 7,980 shares owned by Mr. Eaton jointly with his wife.

(10) Includes 3,916 shares which Mr. Gomes has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan.

(11) Includes 8,516 shares which Dr. Johnson has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan.

(12) Includes 8,516 shares which Mr. Matthews has the right to acquire within
60 days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan. Also
includes 4,871 shares owned by Mr. Matthews jointly with his wife.

(13) Includes 1,000 shares which Mr. Ramsay has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan and 600
shares owned by Mr. Ramsay jointly with his wife.

(14) Includes 8,516 shares which Mr. Scudder has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996

<PAGE> 8
Option Plan. Also includes 340 shares owned by members of Mr. Scudder's
immediate family and 2,555 shares owned by Scudder Bros. Fuel Company,
Inc., of which Mr. Scudder is a principal.

(15) Includes 3,916 shares which Mr. Siskind has the right to acquire within 60
days of February 1, 1999, through the exercise of vested stock options
granted under the 1986 Director Option Plan and 1996 Option Plan.

(16) Includes 34,500 shares which Mr. Straczynski has the right to acquire
within 60 days of February 1, 1999, through the exercise of vested stock
options granted under the 1996 Option Plan.

(17) Includes 102,328 shares which directors and executive officers have the
right to acquire within 60 days of February 1, 1999, through the exercise
of vested stock options granted under one or more of the Stock Option
Plans.

PROPOSAL ONE

ELECTION OF DIRECTORS

The By-laws provide that the Board of Directors shall consist of not less
than three (3) individuals, to be divided into three classes as nearly equal in
size as possible, with the directors in each class serving a term of three years
and until their successors are duly elected and qualified. The Board of
Directors currently consists of ten directors. In March 1999, Mr. Gerald R.
Rodman, a director, passed away. Also in March 1999, Ms. Virginia M. Burke, a
director, resigned from the Board of Directors for health reasons. The Board of
Directors may appoint interim directors to fill the vacancies created by these
events.

At the Annual Meeting, stockholders will be asked to vote on the election
of Class I Directors (Proposal One). The Nominating Committee of the Board of
Directors has nominated Frederick W. Adami, III, Richard D. Matthews, Davis H.
Scudder, and Richard S. Straczynski for election as Class I Directors at the
Annual Meeting. Although it is anticipated that all of the nominees for director
will be available to serve as directors if elected, should any one or more of
them be unable to serve, the proxies may be voted for the election of substitute
nominees.

THE AFFIRMATIVE VOTE OF THE HOLDERS OF A PLURALITY OF THE SHARES OF COMMON
STOCK PRESENT OR REPRESENTED BY PROXY AND VOTING AT THE ANNUAL MEETING WILL BE
REQUIRED TO ELECT THE NOMINEES AS DIRECTORS.

RECOMMENDATION OF DIRECTORS

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE ELECTION OF THE FOUR NOMINEES PROPOSED BY MANAGEMENT AS DIRECTORS
OF THE COMPANY.

<PAGE> 9

DIRECTORS OF THE COMPANY

The directors of the Company, their positions with the Company and their
ages as of April 15, 1999 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>

NOMINEES FOR ELECTION AT
THIS ANNUAL MEETING:

CLASS I (TERM EXPIRES IN 1999):

Frederick W. Adami, III.................... 54 Director
Richard D. Matthews........................ 66 Director
Davis H. Scudder........................... 68 Director
Richard S. Straczynski..................... 52 Director, President & CEO

CONTINUING DIRECTORS:

CLASS II (TERM EXPIRES IN 2000):

John R. Eaton ......................... 63 Director
Dr. Loring C. Johnson...................... 67 Director
Scott W. Ramsay............................ 52 Director

CLASS III (TERM EXPIRES IN 2001):

B. Benjamin Cavallo........................ 71 Director
Terrence Gomes ......................... 53 Director
Stanley D. Siskind......................... 68 Director

</TABLE>

BIOGRAPHICAL INFORMATION

Frederick W. Adami, III. Mr. Adami has been a director since 1975. Mr.
Adami has been an attorney in the law firm of Reed, Adami & Kaiser in Brockton,
Massachusetts since 1988.

B. Benjamin Cavallo. Mr. Cavallo has been a director since 1995. Mr.
Cavallo has been an insurance broker since 1959 and is a partner at Cavallo &
Signoriello Insurance Agency, Mansfield, Massachusetts.

John R. Eaton. Mr. Eaton has been a director since 1975. From 1965-1997,
Mr. Eaton was a Vice President and the President of Thompson, Eaton & Boyden
Insurance Agency, Inc., Brockton, Massachusetts. Since 1997, Mr. Eaton has been
Executive Vice President of A.L. Cushman & Son, Inc., Brockton, Massachusetts.

Terrence Gomes. Mr. Gomes has been a director since 1995. Mr. Gomes has
been on the faculty of Massasoit Community College, Brockton, Massachusetts
since 1982, and is currently a Vice President of the college.

Dr. Loring C. Johnson. Dr. Johnson has been a director since 1984. Dr.
Johnson has been an orthodontist since 1966 and is currently practicing in
Easton, Massachusetts.

<PAGE> 10

Richard D. Matthews. Mr. Matthews has been a director since 1993. Mr.
Matthews is President and Treasurer of R.D. Matthews Construction Company, Inc.,
Hanover, Massachusetts and has been a real estate developer and building
contractor since 1959.

Scott W. Ramsay. Mr. Ramsay has been a director since 1997. Mr. Ramsay has
been Senior Vice President of Shaw's Supermarkets, Inc. since 1991, and is
currently the Executive Vice President of Finance, Systems & Strategic Planning.

Davis H. Scudder. Mr. Scudder has been a director since 1974. Mr. Scudder
is President of Scudder Bros. Fuel Company, Inc., Brockton, Massachusetts.

Stanley D. Siskind. Mr. Siskind has been a director since 1972. Mr.
Siskind was formerly Executive Vice President at Rix-Dunnington, Inc., a retail
pharmacy chain, where he worked from 1956 to 1992.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors of the People's Savings Bank of Brockton, the
Company's wholly-owned bank subsidiary (the "Bank") held 13 meetings during the
fiscal year ended December 31, 1998. During 1998, each of the incumbent
directors attended more than 75% of the total number of meetings of the Bank's
Board and of the committees on which such director served.

The Board of Directors of the Company held 19 meetings during the fiscal
year ended December 31, 1998. During 1998, each of the incumbent directors
attended more than 75% of the total number of meetings of the Company's Board
and of the committees on which such director served.

The following is a description of the Executive Committee, the Auditing
Committee, the Nominating Committee and the Option Committee of the Board of
Directors of the Company and the Compensation Committee of the Board of
Directors of the Bank.

Executive Committee. The Executive Committee has broad authority to
transact such business as might otherwise come before the full Board of
Directors. The Executive Committee is composed of Messrs. Adami, Cavallo, Gomes,
and Johnson. The Executive Committee held 27 meetings during 1998.

Auditing Committee. The Auditing Committee has authority to nominate the
Company's independent certified public accountants, make the annual audit of the
Company and its subsidiaries, present its audit report to the Board of
Directors, report to the Board of Directors on its review of the Treasurer's
report of the Company's financial position and results of operations, and review
the general policies and procedures utilized by the Company and its subsidiaries
with respect to internal accounting and financial controls and accounting and
reporting principles and practices applied by the Company. The Auditing
Committee consists of Messrs. Eaton, Matthews, Ramsay, and Siskind. The Auditing
Committee met four times during 1998.

Nominating Committee. The Nominating Committee recommends to the Board of
Directors candidates for membership on the Board of Directors. The Nominating
Committee will consider nominees recommended by stockholders, but only if such
recommendations are received by the Company not more than 90 days and not less
than 60 days prior to the anniversary date of the previous annual meeting, and
if such other requirements as are specified in the By-laws are followed. The
Nominating Committee consists of Messrs. Adami, Cavallo, Eaton, Gomes, and
Siskind. The Nominating Committee met three times during 1998.

Option Committee. The Option Committee administers the Stock Option Plans.
The Option Committee consists of Messrs. Cavallo and Scudder. The Option
Committee met 2 times during 1998.

<PAGE> 11
Compensation Committee. The Compensation Committee of the Bank is
responsible for reviewing the performance and administering the salaries and
cash incentives of senior management, approving broad personnel policies and
overseeing the Bank's compensation and benefit programs, with the exception of
the administration of the Stock Option Plans. The Compensation Committee
consists of Messrs. Scudder, Cavallo, and Ramsay. The Compensation Committee met
three times during 1998.

Each of the members of the Company's Executive Committee, Auditing
Committee and Nominating Committee also serves as a member of the equivalent
committee of the Bank. The Bank's CRA Committee currently consists of Mr. Eaton.
The Bank's Investment Committee consists of Messrs. Adami, Eaton, Matthews, and
Siskind.

COMPENSATION OF DIRECTORS

Given that each director is a member of the Board of Directors of the
Company and of the Board of Directors of the Bank and the fact that the Company
currently conducts no business other than the business of the Bank, directors of
the Company currently receive no compensation in their capacities as directors
of the Company. Directors of the Bank received $600 for each meeting of the
Board of Directors of the Bank they attended in 1998. The Clerk received an
additional $300 for each meeting of the Board of Directors that he attended in
1998. Directors received a $5,000 annual retainer for being on the Board of the
Directors of the Bank in 1998. Members of the Bank's Executive Committee
received an annual fee of $14,400. Members of the Bank's Auditing Committee,
Nominating Committee, CRA Committee and Compensation Committee received $600 for
each committee meeting they attended in 1998. The Chairman of the Board of
Directors received an annual fee of $11,000 in 1998 and $100 per Board meeting.
The Chairmen of the Bank's Audit Committee, Nominating Committee and
Compensation Committee received an additional $100 for each of the meetings they
attended in 1998. No such fees were paid to directors or committee members who
are also officers of the Bank. The Clerk is not considered an officer for these
purposes.

Non-employee directors receive automatic grants of stock options annually
and upon their joining the Board of Directors pursuant to a formula contained in
the 1996 Option Plan.

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company, their positions with the Company
and their ages as of April 15, 1999 are as follows:

NAME AGE POSITION
---- --- --------

Richard S. Straczynski............... 52 President and Chief Executive
Officer

Colin C. Blair ................... 48 Chief Financial Officer and
Treasurer

- ----------

Richard S. Straczynski. Mr. Straczynski was appointed President and Chief
Executive Officer effective April 7, 1997. Mr. Straczynski served as President
and Chief Operating Officer of the Hibernia Savings Bank of Quincy,
Massachusetts from 1995 until 1997. Prior to that he served as a Regional
President of Citizens Bank of Massachusetts, as a Regional President for the
Bank of New England and its successor Fleet Bank of Massachusetts, N.A., and as
an Executive Vice President for the Bank of New England.

Colin C. Blair. Mr. Blair has served as Chief Financial Officer of the
Bank since 1993. Mr. Blair was previously employed from 1991 to 1993 by Coopers
& Lybrand, a public accounting firm, where he worked for the Chairman of its
National Banking Group as a consultant. Prior to that time, he was employed for
10

<PAGE> 12
years by KPMG Peat Marwick, a public accounting firm, as a Certified Public
Accountant specializing in providing services to financial institutions.

REPORT ON EXECUTIVE COMPENSATION

The executive compensation program of the Company and its subsidiaries has
three primary components: base salary, cash incentive compensation, and stock
options. The Compensation Committee of the Bank is responsible for reviewing the
performance and administering the salaries and cash incentives of senior
management, approving broad personnel policies and overseeing the Bank's
compensation and benefit programs, with the exception of the administration of
the Stock Option Plans, which is the responsibility of the Option Committee of
the Company. The composition of these committees is identical and includes the
outside directors of the Company and the Bank over whose names this report has
been made. The Committees strive to balance short-term and long-term objectives
in establishing performance criteria. The Committees evaluate performance
against such criteria before determining changes in salary, cash incentive
payments, and option awards.

In early 1995, the Compensation Committee engaged KPMG Peat Marwick to
review the salary structure for the Bank's Chief Executive Officer and Chief
Financial Officer to help develop an incentive-based compensation plan to ensure
their retention and tie their compensation more closely to quantifiable
performance objectives. The resulting plan recognized that the Bank had restored
its financial health and would continue to pursue profitable growth
opportunities. Thus since 1996, incentive compensation has been primarily based
upon the Company's return on average equity compared to its peers, upon the
Company's growth in pre-tax revenues, and upon individual performance
objectives. The Compensation Committee uses various industry salary surveys to
establish salary ranges for the other senior executives of the Company's
subsidiaries based upon its evaluation of their effectiveness. Management then
uses such surveys to establish salary ranges for most officer positions.

The key components of Mr. Straczynski compensation in 1998 were salary,
cash incentive compensation and stock options. In determining the level of
compensation for Mr. Straczynski for 1998, the Committees reviewed the Bank's
compensation package compared to those of industry peers. The evaluation of Mr.
Straczynski's 1997 performance included an evaluation of his progress in
increasing the Company's return on average stockholders' equity and earnings,
streamlining existing branch locations, improving the Company's marketing and
image, growing the commercial lending function, improving our community
visibility, and retaining key personnel during a period of rapid change. Based
upon this review, the salary paid to Mr. Straczynski was increased effective
January 1, 1998.

The evaluation of Mr. Blair's 1997 performance included an evaluation of
his progress in increasing return on average shareholders' equity and earnings,
integrating the Company's operations, growing and improving the profitability of
its mortgage banking operations, improving the profitability of its investment
portfolio, upgrading its technology and developing other new sources of revenue.
The review of the CFO's performance was initiated in Compensation Committee
meetings of June and December 1997. Based upon this review, the salary paid to
Mr. Blair was increased effective January 1, 1998.

Stock options granted to Messrs. Straczynski and Blair during 1998 were
granted at the market price of the common stock of the Company on the grant
date. Grants made to these officers were based upon assessments of individual
performance as well as comparison to peer group compensation packages.

Submitted by:

Davis H. Scudder, Chairman
B. Benjamin Cavallo
Scott Ramsay

<PAGE> 13
EXECUTIVE COMPENSATION

Summary Compensation. Executive officers of the Company currently receive
no compensation in their capacities as executive officers of the Company but are
compensated as employees of the Bank. The following summary compensation table
sets forth information concerning compensation during the years ended December
31, 1998, 1997 and 1996 for services rendered in all capacities awarded to,
earned by or paid to the Bank's Chief Executive Officer and Chief Financial
Officer.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
SECURITIES ALL
NAME AND UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY(2)(3) BONUS OPTIONS COMPENSATION(4)
------------------ ---- ----------- ----- ---------- --------------
<S> <C> <C> <C> <C> <C>

Richard S. Straczynski(1).......... 1998 $209,800 $84,000 10,000 $4,750
President and Chief 1997 $123,322 $67,200 20,000 $ --
Executive Officer 1996 -- -- -- --

Colin C. Blair..................... 1998 $148,600 $42,000 7,500 $4,750
Chief Financial Officer 1997 $139,650 $39,375 5,000 $3,750
and Treasurer 1996 133,400 37,500 13,600 $1,250

</TABLE>
- ----------

(1) Richard S. Straczynski was appointed President and Chief Executive Officer
effective on April 7, 1997.

(2) In 1998 the Bank provided Mr. Straczynski and Mr. Blair with $800 and $700
per month automobile allowances, respectively. The Bank reimbursed all
officers for business-related expenses incurred, and, in addition, paid
membership dues for its principal officers to certain organizations. The
Company is unable to state with certainty the amount of these items that
may be attributable to personal use. However, the Company believes that
the amount that may be so attributable is less than $50,000 and is less
than 10% of the compensation reported in this table with respect to each
named executive officer.

(3) The amount of contributions by the Bank to the Savings Banks Employees
Retirement Association defined benefit retirement plan with respect to any
one officer or group of officers is not and cannot readily be separately
or individually calculated by the regular actuaries for the retirement
plan.

(4) Consists of employer contributions to 401(k) plan.

Special Termination Agreements. The Bank and the Company have entered
into special termination agreements with Mr. Straczynski and Mr. Blair that
provide severance benefits to Mr. Straczynski and Mr. Blair if their employment
is terminated under certain circumstances following a change of control. The
agreements generally provide that a "change in control" has occurred if (i)
there has occurred a change in control within the meaning of Item 1 of Form 8-K
promulgated under the Exchange Act; (ii) any person becomes a beneficial owner,
directly or indirectly, of securities of either employer, representing
twenty-five percent (25%) or more of the total number of votes that may be cast
for the election of directors of such employer; (iii) during any period of two
consecutive years, individuals who are Continuing Directors (as defined in the
special termination agreements) cease for any reason to constitute at least a
majority of the Board of Directors of either the Bank or the Company; or (iv)
the stockholders of either employer approve certain mergers or consolidations of
such employer with any other corporation, a plan of complete liquidation of such
employer, or an agreement for the sale or disposition of all or substantially
all of the assets of such employer.

<PAGE> 14

If a "terminating event" occurs within three years after there is a
change of control, each of Mr. Straczynski and Mr. Blair will be generally
entitled under his special termination agreement to a lump sum cash payment
equal to three times his average annual compensation over the five most recent
years of his employment with the Company or the Bank, as the case may be. A
"terminating event" includes termination of employment by either employer for
any reason other than death, deliberate dishonesty, or conviction of certain
crimes. A "terminating event" also includes resignation of the officer following
a significant change in the officer's responsibilities, a decrease in the
officer's annual compensation, or certain relocations of the offices of either
employer. The Bank is a party to similar agreements with several other officers
of the Bank. People's Mortgage Corporation, a wholly-owned subsidiary of the
Bank, has entered into employment agreements with four of its officers that
provide for severance benefits upon termination following a change of control of
People's Mortgage Corporation.

Stock Option Grants. The following table sets forth information
concerning individual grants of stock options made during the year ended
December 31, 1998 to each of the named executive officers.

<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION
NUMBER OF GRANTED TO EXERCISE FOR OPTION TERM
SECURITIES UNDERLYING EMPLOYEES IN OR BASE EXPIRATION ---------------------
NAME OPTIONS GRANTED(#) FISCAL YEAR PRICE DATE 5% 10%
- ---- --------------------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>

Richard S. Straczynski 10,000 14.0% $24.00 5/22/08 $150,935 $382,498
President and Chief
Executive Officer

Colin C. Blair 7,500 10.5% $24.00 5/22/08 $113,201 $286,874
Chief Financial Officer
and Treasurer

</TABLE>

- ----------

Aggregated Option Exercises and Fiscal Year-End Option Values. The
following table sets forth exercises of stock options during the year ended
December 31, 1998 by each of the named executive officers and the fiscal
year-end value of unexercised options.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED REALIZED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME ON EXERCISE (#) ($) (#)(1) ($)
- ---- ----------------- ---------- -------------------------- --------------------
<S> <C> <C> <C> <C>

Richard S. Straczynski 3,000 $ 27,375 34,500 $150,875
President and Chief
Executive Officer

Colin C. Blair 13,600 $212,500 12,500 $ 2,900
Chief Financial Officer
and Treasurer

</TABLE>

- ----------

(1) All options are currently exercisable.

<PAGE> 15

PENSION PLAN

The Bank provides a tax-qualified, defined benefit retirement plan (the
"Pension Plan") for all eligible employees through the Savings Banks Employees
Retirement Association, an unincorporated association comprised of savings banks
operating within Massachusetts and other organizations providing services to or
for savings banks. Each employee of the Bank automatically becomes a participant
in the Pension Plan once he or she has attained age 21 and has completed at
least one full year of service, consisting of at least 1,000 hours, beginning
with his or her initial date of employment with the Bank.

The Bank-funded retirement benefits provided to each participant at age
65 under the Pension Plan are based on the average of the participant's highest
three consecutive years of compensation during his or her last ten years at the
Bank (his "Average Compensation"). Compensation is defined as wages that would
be reported on the participant's Form W-2, except that bonuses are not included
under compensation where they would cause compensation to exceed the amount
specified in Section 414(q) of the Code. The participant's retirement benefits
will be equal to 1.25% of the participant's Average Compensation for each year
of service with the Bank up to a maximum of 25 years, plus 0.6% of the excess of
the participant's Average Compensation over the amount of his or her Covered
Compensation at age 65 for each year of service with the Bank up to a maximum of
25 years. Covered Compensation is calculated based on the average of 35 years of
Social Security taxable wages up to and including the participant's projected
retirement age. Normal retirement age under the Pension Plan is 65. However, a
reduced early retirement benefit is payable under certain conditions to a
participant who retires between the ages of 50 and 65.

The following table illustrates annual pension benefits for retirement
at age 65 under the most advantageous provisions of the Pension Plan available
for various levels of compensation and years of service. The figures in this
table are based upon the assumption that the Pension Plan continues in its
present form and certain other assumptions regarding social security benefits
and compensation trends.

<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------
REMUNERATION(1) 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C>

$ 20,000........................ $ 2,500 $ 3,750 $ 5,000 $ 6,250 $ 6,250 $ 6,250
40,000........................ 5,941 8,912 11,883 14,853 14,853 14,853
60,000........................ 9,641 14,462 19,283 24,103 24,103 24,103
80,000........................ 13,341 20,012 26,683 33,353 33,353 33,353
100,000........................ 17,041 25,562 34,083 42,603 42,603 42,603
120,000........................ 20,741 31,112 41,483 51,853 51,853 51,853
125,000........................ 21,666 32,499 43,333 54,166 54,166 54,166
150,000(2)..................... 26,291 39,437 52,583 65,728 65,728 65,728

</TABLE>

- ----------

(1) Based on age 65 retirement in 1998 (plan year 11/01/98 - 10/31/99). The
annual pension benefit is computed on the basis of a straight-life
annuity.

(2) Federal law does not permit defined benefit pension plans to recognize
compensation in excess of $150,000 for plan years beginning in 1994.

The estimated credited years of service at December 31, 1998, was five
years for Mr. Blair and two years for Mr. Straczynski.

<PAGE> 16
If a participant makes any voluntary contributions, the participant's
retirement benefits will be increased to reflect such contributions and any
earnings or losses to the Pension Plan on such contributions.

The Pension Plan provides that death benefits shall be paid to the
beneficiary or beneficiaries of any participant who dies before he retires. The
death benefit payable will be equal to the value of the deceased participant's
voluntary contributions (adjusted to reflect any earnings or losses) plus the
present value of his accrued benefit under the Pension Plan as funded by Company
contributions.

<PAGE> 17
PERFORMANCE GRAPH

The following graph provides a comparison of cumulative total
stockholder return for the period from December 31, 1993 through December 31,
1998, among the common stock of the Company (before February 8, 1996, the Bank),
the Nasdaq Stock Market-US Companies Index (the "Nasdaq (US Companies) Index")
and the Nasdaq Stock Market-Banks Index (the "Nasdaq (Banks) Index"). These
indices are prepared for Nasdaq by the Center for Research in Security Prices
(CRSP) at the University of Chicago. The Performance Graph assumes an investment
of $100 in each of the common stock of the Company (before February 8, 1996, the
Bank) and the two indices, and the reinvestment of any dividends. The historical
information set forth below is not necessarily indicative of future performance
of the Common Stock.

[Performance Graph]

People's $100.0 $118.8 $263.5 $273.4 $587.0 $545.3
Nasdaq (Banks) Index $100.0 $99.6 $148.4 $195.9 $328.0 $324.9
Nasdaq (US Companies) Index $100.0 $97.8 $138.3 $170.0 $208.6 $293.2

</TABLE>

<PAGE> 18

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to Section 16(a) of the Exchange Act and SEC regulations, the
Company's executive officers and directors must file reports of ownership and
changes in ownership with the SEC and the Nasdaq Stock Market, Inc. and furnish
the Company with copies of all Section 16(a) reports they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company, Messrs. Blair, Straczynski, Eaton and Ramsay each failed to file one
report on Form 4 during 1998, in each case regarding a single transaction.

CERTAIN TRANSACTIONS

Certain directors and officers of the Company and the Bank and members
of their immediate families are at present, as in the past, customers of the
Bank and have transactions with the Bank in the ordinary course of business. In
addition, certain of the directors are at present, as in the past, also
directors, officers or shareholders of corporations or members of partnerships
which are customers of the Bank and which have transactions with the Bank in the
ordinary course of business. Such transactions with directors and officers of
the Company and the Bank and with such corporations and partnerships are on
terms comparable to those charged to other customers of the Bank. Included in
such transactions are loans to directors and officers and their associates which
were made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and which did not involve more than
the normal risk of collectibility or present other features unfavorable to the
Bank. The outstanding principal balance of such loans to directors and officers
and their associates totaled $1,141,011, or 3.29% of the Company's stockholders'
equity, at December 31, 1998.

Mr. Adami's law firm was retained by the Bank to provide certain
services in 1998. In 1998, the Bank paid $64,000 to Mr. Adami's law firm for
such services.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The firm of Wolf & Company, P.C. ("Wolf & Co.") has served as the
Company's independent certified public accountants for the fiscal year ending
December 31, 1998. Wolf & Co. has no direct or indirect financial interest in
the Company, nor has it had any connection with the Company in the capacity of
promoter, underwriter, voting trustee, director, officer or employee. Before
services are rendered by Wolf & Co., they are approved by, and the possible
effect on the independence of the accountants is considered by, the Auditing
Committee.

A representative of Wolf & Co. will be present at the Annual Meeting
and will be available to respond to appropriate questions and may make a
statement if he or she so desires.

STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders of the Company must be received in writing by the
Company at its principal office on or before December 16, 1999, for inclusion in
its proxy statement and form of proxy relating to the meeting. Pursuant to the
By-laws of the Company, for the 2000 Annual Meeting of Stockholders, any
director nominations and new business submitted by stockholders must be
delivered to, or mailed to and received by, the Company at its principal
executive office not less than 60 days nor more than 90 days prior to May 18,
2000; provided, however, that in the event the Annual Meeting is scheduled to be
held on a date more than 30 days before May 18, 2000 or more than 60 days after
May 18, 2000, a stockholder's notice shall be timely if delivered to, or mailed
to and received by, the Company at its principal executive office not later than
the close of business on the later of (A) the 60th day prior to the scheduled
date of such Annual Meeting or (B) the 10th day following the day on which
public announcement of the date of such Annual

<PAGE> 19

Meeting is first made by the Company. Any such proposal should be mailed to:
Clerk, People's Bancshares, Inc., 545 Pleasant Street, New Bedford,
Massachusetts 02740. The Company's ability to exercise discretionary voting
authority with respect to shareholder proposals will be subject to certain
requirements of the Securities and Exchange Commission.

OTHER MATTERS

At the time of the preparation of this proxy material, the Board of
Directors of the Company does not know of any other matter to be presented for
action at the Annual Meeting. If any other matters should come before the
meeting, proxy holders have discretionary authority to vote their shares
according to their best judgment.

By Order of the Board of Directors,

Terrence Gomes
Clerk

April 16, 1999

<PAGE> 20

PSBCM-PS-99

<PAGE> 21

[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- ----------------------------------------------------------- 1. Election of Directors.
PEOPLE'S BANCSHARES, INC. For All With- For All
- ----------------------------------------------------------- Nominees hold Except
Frederick w. Adami, III [ ] [ ] [ ]
Richard D. Matthews
Davis H. Scudder
Richard S. Straczynski
Mark box at right if an address change or comment [ ]
has been noted on the reverse side of this card. If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s)
of the nominee(s). Your shares will be voted for the remaining
nominee(s).
CONTROL NUMBER:
RECORD DATE SHARES:
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.

------------ The undersigned stockholder(s) authorize(s) the proxies to vote
Please be sure to sign and date this Proxy. Date on the above matter as indicated and to vote, in their discretion,
- ----------------------------------------------------------- upon such other matters as may properly come before the Annual
Meeting or any adjournments thereof.
- --- Stockholder sign here ------- Co-owner sign here-------

DETACH CARD DETACH CARD

</TABLE>

<PAGE> 22

PEOPLE'S BANCSHARES, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of People's Bancshares, Inc. (the "Company")
hereby appoints George M. Cuslodio and Maureen A. Gregory, or either of them
acting singly, as proxies to cast all votes which the undersigned stockholder
is entitled to cast at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 9:00 a.m., local time, on Tuesday, May 18, 1999 at The
Holiday Inn, 195 Westgate Drive, Brockton, Massachusetts 02401, and at any
adjournments or postponements thereof. The undersigned stockholder hereby
revokes any proxy or proxies heretofore given.

This proxy will be voted as directed by the undersigned stockholder. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1 AND IN ACCORDANCE WITH THE DETERMINATION OF THE
PROXY HOLDERS AS TO OTHER MATTERS. The undersigned stockholder hereby
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement.

The undersigned stockholder may revoke this proxy at any time prior to its
exercise by filing a written notice of revocation with, or by delivering a
duly executed proxy bearing a later date to the Clerk of the Company or by
attending the Annual Meeting of Stockholders.

- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his of her title.
- --------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
___________________________________ ____________________________________

___________________________________ ____________________________________