UNITED STATES
                      SECURITIES AND EXCHANGE COMMISION
                           Washington, D.C. 20549

                                 FORM 10-Q/A

               QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934

For quarter ended September 30, 2004
                  ------------------

Commission file number 000-23904
                       ---------

                           SLADE'S FERRY BANCORP.
          --------------------------------------------------------
          (Exact name of registrant as specified in its character)

Massachusetts                                         04-3061936
-------------------------------                       ----------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification Number)

100 Slade's Ferry Avenue
Somerset, Massachusetts                               02726
----------------------------------------              ----------------------
(Address of principal executive offices)              (Zip code)

                               (508)-675-2121
            ----------------------------------------------------
            (Registrant's telephone number, including area code)


Check 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 
past 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 checkmark whether the registrant is an accelerated filer (as 
defined in Rule 12b-2 of the Act).

      Yes                             No    X
      ------------                    ------------


Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practical date:


   Common stock ($0.01 par value) 4,067,848 shares as of October 31, 2004.
   -----------------------------------------------------------------------


  


                              TABLE OF CONTENTS

                                   Part I

EXPLANATORY NOTE                                                           2

ITEM 1 - Financial Statements of Slade's Ferry Bancorp. and Subsidiary     3

         Condensed Consolidated Balance Sheets - September 30, 2004
          (Unaudited) and December 31, 2003
         Condensed Consolidated Statements of Income and Expense
          (Unaudited) - Nine Months Ended September 30, 2004 and 2003
         Condensed Consolidated Statements of Income and Expense
          (Unaudited) - Three Months Ended September 30, 2004 and 2003
         Condensed Consolidated Statement of Changes in Stockholders'
          Equity (Unaudited) - Nine Months Ended September 30, 2004
          and 2003
         Condensed Consolidated Statements of Cash Flows (Unaudited) - 
          Nine Months Ended September 30, 2004 and 2003
         Notes to Condensed Consolidated Financial Statements (Unaudited)

ITEM 2 - Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                       13

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk       29

ITEM 4 - Controls and Procedures                                          30

                                   Part II


ITEM 1 - Legal Proceedings                                                31

ITEM 2 - Changes in Securities, Use of Proceeds and Issuer Purchases
          of Equity Securities                                            31

ITEM 3 - Defaults upon Senior Securities                                  31

ITEM 4 - Submission of Matters to a Vote of Security Holders              31

ITEM 5 - Other Information                                                31

ITEM 6 - Exhibits                                                         32


  1


                              EXPLANATORY NOTE

We announced in a Form 8-K filed on July 19, 2005, that in May 2005, a 
financial reporting error relating to our pension plan that affects our 
previously filed financial statements was discovered. The pension plan 
commenced on January 1, 1969 and was frozen on December 31, 1997. In May of 
2005, we began exploring alternatives with respect to possibly liquidating 
the pension plan.

At that time, we discovered that the amount of our prepaid benefit cost had 
been overstated (and our pension expense had been cumulatively understated) 
since fiscal year 1996. Such misstatements related to (1) the failure to use 
settlement accounting for significant lump sum distributions, as required by 
FASB Statement No. 88, Employers' Accounting for Settlements and 
Curtailments of Defined Benefit Plans and for Termination Benefit, and (2) 
the understatement of the projected benefit obligation prior to 2003.

This Form 10-Q/A is being filed to amend and restate the financial statements 
and related information contained in our Form 10-Q for the period ended 
September 30, 2004.

The table below shows the cumulative effect of the defined benefit pension 
plan adjustment to retained earnings and accumulated other comprehensive 
income (loss) as of December 31, 2003 and 2002, and the impact on net 
income and earnings per share for the three and nine months ended September 
30, 2004 and 2003.




                                                             At December 31,
                                                       ---------------------------
                                                           2003            2002
                                                       -----------     -----------

                                                                 
Retained earnings, as previously reported              $14,698,595     $13,445,335
Cumulative decrease to retained earnings                  (398,337)       (394,095)
                                                       -----------     -----------
Retained earnings, as restated                         $14,300,258     $13,051,240
                                                       ===========     ===========
Accumulated other comprehensive loss
 as previously reported                                $  (605,619)    $   (10,908)
Cumulative increase (decrease) in accumulated other
 comprehensive loss                                        193,223        (149,918)
                                                       -----------     -----------

Accumulated other comprehensive loss, as restated      $  (412,396)    $  (160,826)
                                                       ===========     ===========





                                                  Three Months Ended           Nine Months Ended
                                                    September 30,                September 30,
                                               -----------------------     -------------------------
                                                  2004          2003          2004           2003
                                               ----------     --------     ----------     ----------

                                                                              
Net income, as previously reported             $1,071,213     $699,345     $2,318,930     $1,616,861
Increase (decrease) to pension expense             (8,877)     (85,743)        54,386        (14,932)
Net deferred tax effect                             3,633       35,095        (22,260)         6,112
                                               ----------     --------     ----------     ----------

(Decrease) increase to net income                   5,244       50,648        (32,126)         8,820
                                               ----------     --------     ----------     ----------

Net income, as restated                        $1,076,457     $749,993     $2,286,804     $1,625,681
                                               ==========     ========     ==========     ==========

Earnings per share, as previously reported:
  Basic                                        $     0.26     $   0.18     $     0.57     $     0.40
  Diluted                                      $     0.26     $   0.17     $     0.57     $     0.41
Earnings per share, as restated:
  Basic                                        $     0.27     $   0.19     $     0.57     $     0.41
  Diluted                                      $     0.26     $   0.19     $     0.56     $     0.41



  2


                                   PART I

ITEM 1

Financial Statements
--------------------

                    SLADE'S FERRY BANCORP. AND SUBSIDIARY
                    CONDENSED CONSOLIDATED BALANCE SHEETS




                                                                            (Unaudited)
                                                                September 2004    December 31, 2003
                                                                --------------    -----------------

                                                                               
Assets
------
Cash and due from banks                                          $ 20,507,497        $ 18,428,932
Interest bearing demand deposits with other banks                           -             213,438
Money market mutual funds                                                   -              63,539
Federal Home Loan Bank overnight deposit                            1,000,000                   -
Federal funds sold                                                  5,000,000           4,000,000
                                                                 ------------        ------------
      Cash and cash equivalents                                    26,507,497          22,705,909
Interest bearing time deposits with other bank                        100,000             200,000
Investments in available-for-sale securities (at fair value)       84,329,600          47,162,852
Investments in held-to-maturity securities (fair values
 of $41,140,312 as of September 31, 2004 and $11,851,713
 as of December 31, 2003)                                          40,631,411          11,300,402
Federal Home Loan Bank stock                                        4,204,300           3,023,800
Loans, net of allowance for loan losses $4,102,567 at
 September 30, 2004 and $4,154,394 at December 31, 2003           362,389,567         331,496,525
Premises and equipment                                              5,844,940           5,894,736
Goodwill                                                            2,173,368           2,173,368
Accrued interest receivable                                         2,037,264           1,497,104
Cash surrender value of life insurance                             11,473,825          10,980,879
Deferred taxes                                                      2,097,060           2,138,336
Other assets                                                        1,205,078             659,791
                                                                 ------------        ------------
      Total assets                                               $542,993,910        $439,233,702
                                                                 ============        ============

Liabilities and Stockholders' Equity
------------------------------------
Deposits:                                                        $403,454,662        $333,144,817
Federal Home Loan Bank advances                                    80,388,352          60,474,864
Subordinated debentures                                            10,310,000                   -
Other liabilities                                                   3,665,999           3,076,994
                                                                 ------------        ------------
      Total liabilities                                           497,819,013         396,696,675
Stockholders' equity:
  Common stock, par value $.01 per share; authorized
   10,000,000 shares; issued and outstanding 4,060,049
   shares on September 30, 2004 and 3,995,857 shares
   at December 31, 2003                                                40,601              39,959
  Paid-in capital                                                  29,816,333          28,609,206
  Retained earnings                                                15,495,017          14,300,258
  Accumulated other comprehensive income (loss)                      (177,054)           (412,396)
                                                                 ------------        ------------
      Total stockholders' equity                                   45,174,897          42,537,027
                                                                 ------------        ------------
      Total liabilities and stockholders' equity                 $542,993,910        $439,233,702
                                                                 ============        ============


  Investment securities held-to-maturity have a fair market value of 
      $41,140,312 as of September 30, 2004 and $11,851,713 as of December 
      31, 2003.
  Securities classified as available-for-sale are stated at fair value 
      with any unrealized gains or losses reflected as an adjustment in 
      Stockholders' Equity, net of tax effect.



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


  3


                    SLADE'S FERRY BANCORP. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND EXPENSE
                                 (Unaudited)
                       NINE MONTHS ENDED SEPTEMBER 30,




                                                                              2004            2003
                                                                          -----------     -----------

                                                                                    
Interest and dividend income:
  Interest and fees on loans                                              $15,061,034     $12,928,787
  Interest and dividends on investments                                     2,206,021       2,258,138
  Other interest                                                              220,044         135,253
                                                                          -----------     -----------
      Total interest and dividend income                                   17,487,099      15,322,178
Interest expense:
  Interest on deposits                                                      3,726,333       3,538,854
  Interest on Federal Home Loan Bank advances                               1,800,220       1,059,978
  Interest on subordinated debentures                                         236,126               -
                                                                          -----------     -----------
      Total interest expense                                                5,762,679       4,598,832
                                                                          -----------     -----------
      Net interest and dividend income                                     11,724,420      10,723,346
Provision for loan losses                                                     376,215        (539,357)
                                                                          -----------     -----------
      Net interest and dividend income after
       provision for loan losses                                           11,348,205      11,262,703
Noninterest income:
  Service charges on deposit accounts                                         404,129         429,266
  Overdraft service charges                                                   403,602         410,788
  Gain (loss) on sales and calls of available-for-sale securities, net         46,298           1,944
  Gain (loss) on sale of loans                                                195,817        (115,792)
  Increase in cash surrender value of life insurance policies                 357,946         318,405
  Other income                                                                568,355         430,816
                                                                          -----------     -----------
      Total noninterest income                                              1,976,147       1,475,427
Noninterest expense:
  Salaries and employee benefits                                            6,027,104       5,728,779
  Occupancy expense                                                           599,518         710,580
  Equipment expense                                                           417,887         398,971
  Stationary and supplies                                                     176,783         164,337
  Professional fees                                                           779,085         780,640
  Marketing expense                                                           409,637         310,058
  Other expense                                                             1,484,305       1,391,228
                                                                          -----------     -----------
      Total noninterest expense                                             9,894,319       9,484,593
                                                                          -----------     -----------
      Income before income taxes                                            3,430,033       3,253,537
Income taxes                                                                1,143,229       1,627,856
                                                                          -----------     -----------
      Net income (1)                                                      $ 2,286,804     $ 1,625,681
                                                                          ===========     ===========
Earnings per common share - basic                                         $      0.57     $      0.41
                                                                          ===========     ===========
Earnings per common share - diluted                                       $      0.56     $      0.41
                                                                          ===========     ===========
Average common shares outstanding - basic                                   4,038,499       3,963,167
                                                                          ===========     ===========
Average common shares outstanding - diluted                                 4,086,415       3,994,511
                                                                          ===========     ===========
Dividend declared per share                                               $      0.27     $      0.27
                                                                          ===========     ===========
Comprehensive income (2)                                                  $ 2,522,147     $ 1,317,965
                                                                          ===========     ===========


--------------------
  The year to date results of operations for the period ended September 
      30, 2003 have been revised from that previously reported to remove the 
      extraordinary item. The extraordinary item treatment previously 
      presented was revised, and its individual components were reclassed to 
      income tax expense in the amount of $529,191, and included in other 
      expense is interest of $128,977. See Footnote 20 to the Company's 
      audited consolidated financial statements included in the Company's 
      annual report on Form 10-K for the year ended December 31, 2003 filed 
      with the U.S. Securities and Exchange Commission. 
  Calculated using the change in accumulated other comprehensive income 
      (loss) for the period and net income for the period.




  4


                    SLADE'S FERRY BANCORP. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND EXPENSE
                                 (Unaudited)

                      THREE MONTHS ENDED SEPTEMBER 30,




                                                                              2004            2003
                                                                          -----------     -----------

                                                                                    
Interest and dividend income:
  Interest and fees on loans                                              $ 5,194,000     $ 4,419,503
  Interest and dividends on investments                                       998,496         671,857
  Other interest                                                               57,509          26,873
                                                                          -----------     -----------
      Total interest and dividend income                                    6,250,005       5,118,233
Interest expense:
  Interest on deposits                                                      1,279,272       1,090,910
  Interest on Federal Home Loan Bank advances                                 627,084         408,772
  Interest on subordinated debentures                                         118,203               -
                                                                          -----------     -----------
      Total interest expense                                                2,024,559       1,499,682
                                                                          -----------     -----------
      Net interest and dividend income                                      4,225,446       3,618,551
Provision for loan losses                                                           -               -
                                                                          -----------     -----------
      Net interest and dividend income after
       provision for loan losses                                            4,225,446       3,618,551
Noninterest income:
  Service charges on deposit accounts                                         132,295         151,072
  Overdraft service charges                                                   148,815         147,662
  Gain (loss) on sales and calls of available-for-sale securities, net          6,994          42,862
  Gain (loss) on sale of loans                                                195,817         (12,258)
  Increase in cash surrender value of life insurance policies                 100,183         102,065
  Other income                                                                228,628         137,763
                                                                          -----------     -----------
      Total noninterest income                                                812,732         569,166
Noninterest expense:
  Salaries and employee benefits                                            1,944,972       1,919,939
  Occupancy expense                                                           179,326         225,567
  Stationary and supplies                                                     138,190         143,949
  Equipment expense                                                            66,975          50,055
  Professional fees                                                           302,470         238,964
  Marketing expense                                                           211,169          80,441
  Other expense                                                               618,461         424,376
                                                                          -----------     -----------
      Total noninterest expense                                             3,461,563       3,083,291
                                                                          -----------     -----------
      Income before income taxes                                            1,576,615       1,104,426
Income taxes                                                                  500,158         354,433
                                                                          -----------     -----------
      Net income                                                          $ 1,076,457     $   749,993
                                                                          ===========     ===========
Earnings per common share - basic                                         $      0.27     $      0.19
                                                                          ===========     ===========
Earnings per common share - diluted                                       $      0.26     $      0.19
                                                                          ===========     ===========
Average common shares outstanding - basic                                   4,058,086       3,976,557
                                                                          ===========     ===========
Average common shares outstanding - diluted                                 4,101,223       4,022,804
                                                                          ===========     ===========
Dividend declared per share                                               $      0.09     $      0.09
                                                                          ===========     ===========
Comprehensive income (1)                                                  $ 1,821,723     $   228,627
                                                                          ===========     ===========


--------------------
  Calculated using the change in accumulated other comprehensive income 
      (loss) for the period and net income (loss) for the period.



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


  5


                    SLADE'S FERRY BANCORP. AND SUBSIDIARY
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                 (Unaudited)




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

                                                                                     
Balance, December 31, 2003,
 as previously reported                $39,959     $28,609,206     $14,698,595       $(605,619)     $42,742,141
Cumulative effect relating
 to pension plan adjustment                  -               -        (398,337)        193,223         (205,114)
                                       ------------------------------------------------------------------------
Balance, December 31, 2003,
 as restated                            39,959      28,609,206      14,300,258        (412,396)      42,537,027
Comprehensive income:
  Net income                                 -               -       2,286,804
  Other comprehensive income                                                           235,342
    Comprehensive income                                                                              2,522,146
Issuance of common stock from
 dividend reinvestment plan                210         461,770               -               -          461,980
Stock issuance relating to optional
 cash contribution plan                     44          88,920               -               -           88,964
Stock options exercised                    422         531,510               -               -          531,932
Tax benefit of stock options                 -         157,261               -               -          157,261
Retirement of 3,412 shares
 of common stock                           (34)        (32,334)              -               -          (32,368)
Dividends declared ($.09 per share)          -               -      (1,092,045)              -       (1,092,045)
                                       ------------------------------------------------------------------------
Balance, September 30, 2004            $40,601     $29,816,333     $15,495,017       $(177,054)     $45,174,897
                                       ========================================================================




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

                                                                                     
Balance, December 31, 2002,
 as previously reported                $39,378     $27,693,199     $13,445,335       $ (10,908)     $41,167,004
Cumulative effect relating
 to pension plan adjustment                                           (394,095)       (149,918)        (544,013)
                                       ------------------------------------------------------------------------
Balance, December 31, 2002,
 as restated                            39,378      27,693,199      13,051,240        (160,826)      40,622,991
Comprehensive income:
  Net income                                                         1,625,681
  Other comprehensive income                                                          (307,716)
    Comprehensive income                                                                              1,317,965
Issuance of common stock from
 dividend reinvestment plan                338         509,423                                          509,761
Stock issuance relating to optional
 cash contribution plan                     70         104,444                                          104,514
Stock options exercised                     10           9,490                                            9,500
Dividends declared ($.09 per share)                                 (1,071,017)                      (1,071,017)
                                       ------------------------------------------------------------------------
Balance, September 30, 2003            $39,796     $28,316,556     $13,605,904       $(468,542)     $41,493,715
                                       ========================================================================


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


  6


                    SLADE'S FERRY BANCORP. AND SUBSIDIARY
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       NINE MONTHS ENDED SEPTEMBER 30,
                                 (Unaudited)




                                                                             2004             2003
                                                                         -----------------------------

                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                               $  2,286,804     $  1,625,681
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Amortization, net of accretion of securities                                122,013          156,662
  Gains on sales of available-for-sale securities, net                        (46,298)          (1,944)
  (Gains)losses on sale of loans                                             (195,817)         115,792
  Change in unearned income                                                   170,038           35,935
  Provision (benefit) for loan losses                                         376,215         (539,357)
  Depreciation and amortization                                               482,745          473,251
  Increase in cash surrender value of life insurance policies                (357,946)        (318,405)
  Decrease in taxes receivable                                                 57,986          215,024
  Deferred tax (benefit) expense                                              (25,323)          59,053
  (Increase) decrease in other assets                                        (501,688)          47,739
  Increase in prepaid expenses                                                (20,214)         (39,605)
  Increase in interest receivable                                            (540,160)         (18,907)
  Increase (decrease) in other liabilities                                    363,928          (13,265)
  Increase in accrued expenses                                                 96,433          120,183
  Increase in interest payable                                                 41,439           11,111
  Increase in community investment fund                                       (10,069)               0
  Decrease in minority interest                                                     0           (3,500)
                                                                         -----------------------------
      Net cash provided by operating activities                             2,300,086        1,925,448
                                                                         -----------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturities of interest-bearing
   time deposits with other banks                                             100,000                0
  Purchases of available-for-sale securities                              (48,903,948)     (29,246,394)
  Proceeds from sales of available-for-sale securities                        624,977                0
  Proceeds from maturities and calls of available-for-sale securities      11,348,091       41,882,767
  Purchases of held-to-maturity securities                                (31,428,123)      (4,926,305)
  Proceeds from maturities of held-to-maturity securities                   2,097,540        6,463,543
  Purchase of Federal Home Loan Bank stock                                 (1,180,500)      (1,092,000)
  Loan originations and principal collections, net                        (39,533,350)     (53,473,842)
  Recoveries of loans previously charged off                                   91,609           90,927
  Proceeds from sales of loans                                              8,198,263        1,862,319
  Capital expenditures                                                       (432,949)        (396,642)
  Investment in life insurance policies                                      (135,000)        (950,500)
                                                                         -----------------------------
      Net cash used in investing activities                               (99,153,390)     (39,786,127)
                                                                         -----------------------------


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


  7


                    SLADE'S FERRY BANCORP. AND SUBSIDIARY
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                       NINE MONTHS ENDED SEPTEMBER 30,
                       -------------------------------
                                 (Unaudited)
                                 (Continued)




                                                                             2004             2003
                                                                         -----------------------------

                                                                                    
CASH FLOWS FROM FINANCING ACTIVITIES:

  Net increase in demand deposits, NOW,
   and savings accounts                                                    53,411,595       18,164,159
  Net increase (decrease) in time deposits                                 16,898,250       (7,567,685)
  Proceeds from long term Federal Home Loan Bank advances                  24,000,000       22,920,823
  Payments on Federal Home Loan Bank long-term advances                      (262,512)               0
  Net change in short-term advances from Federal Home Loan Bank            (3,824,000)               0
  Proceeds from issuance of subordinated debentures                        10,310,000                0
  Proceeds from issuance of common stock                                      550,947          623,775
  Stock options exercised                                                     689,190                0
  Retired common stock shares                                                 (32,368)               0
  Dividends paid                                                           (1,086,210)      (1,067,257)
                                                                         -----------------------------
    Net cash provided by financing activities                             100,654,892       33,073,815
                                                                         -----------------------------
    Net increase (decrease) in cash and cash equivalents                    3,801,588       (4,786,864)
    Cash and cash equivalents at beginning of year                         22,705,909       34,716,536
                                                                         -----------------------------
    Cash and cash equivalents at the end of period                       $ 26,507,497     $ 29,929,672
                                                                         =============================

SUPPLEMENTAL DISCLOSURES:

Interest paid                                                            $  5,721,240     $  4,587,721

Income taxes paid (received)                                             $  1,104,441     $    824,588


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


  8


                    SLADE'S FERRY BANCORP. AND SUBSIDIARY
            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)
                             September 30, 2004

Note A - Basis of Presentation
------------------------------

The accompanying unaudited condensed consolidated financial statements have 
been prepared in accordance with accounting principles generally accepted in 
the United States of America (GAAP) for interim financial information and 
the instructions to Form 10-Q and, accordingly, do not include all of the 
information and footnotes required by GAAP for complete financial 
statements. In the opinion of the management of Slade's Ferry Bancorp. (the 
"Company"), all adjustments (consisting of normal recurring accruals) 
considered necessary for a fair presentation have been included. Operating 
results for the nine and three month periods ended September 30, 2004 are 
not necessarily indicative of the results that may be expected for the year 
ending December 31, 2004.

The year-end condensed consolidated balance sheet data was derived from 
audited financial statements, but does not include all disclosures required 
by GAAP.

Note B - Accounting Policies
----------------------------

The accounting principles followed by Slade's Ferry Bancorp. and subsidiary 
and the methods of applying these principles which materially affect the 
determination of financial position, results of operations, or changes in 
financial position are consistent with those used for the year ended 
December 31, 2003.

The consolidated financial statements of Slade's Ferry Bancorp. include its 
wholly-owned subsidiary, Slade's Ferry Trust Company, and its subsidiaries, 
Slade's Ferry Realty Trust, Slade's Ferry Securities Corporation, Slade's 
Ferry Securities Corporation II and Slade's Ferry Loan Company. All 
significant intercompany balances have been eliminated.

Note C - Stock Based Compensation
---------------------------------

At September 30, 2004, the Company has a stock-based employee compensation 
plan. The Company accounts for the plan under the recognition and 
measurement principles of APB Opinion No. 25, "Accounting for Stock Issued 
to Employees," and related Interpretations. No stock-based employee 
compensation cost is reflected in net income (except for appreciation from 
options surrendered), as all options granted under this plan had an exercise 
price equal to the market value of the underlying common stock on the date 
of grant. The following table illustrates the effect on net income and 
earnings per share if the Company had applied the fair value recognition 
provisions of SFAS Statement No. 123, "Accounting for Stock-Based 
Compensation," to stock-based employee compensation.




                                                     3 Months Ended September 30,    9 Months Ended September 30,
                                                           2004         2003              2004          2003
                                                     ------------------------------------------------------------

                                                                                         
Net income, as reported                                 $1,076,457    $749,993         $2,286,804   $1,625,681
Deduct: Total stock-based employee compensation
 expense determined under fair value based method
 for all awards, net of related tax effects                      0           0             87,438        55,967
                                                        -------------------------------------------------------
Pro forma net income                                    $1,076,457    $749,993         $2,199,366   $1,569,714
                                                        =======================================================
Earnings per share:
  Basic - as reported                                   $     0.27    $   0.19         $     0.57    $     0.41
  Basic - pro forma                                     $     0.27    $   0.19         $     0.54    $     0.40
  Diluted - as reported                                 $     0.26    $   0.19         $     0.56    $     0.41
  Diluted - pro forma                                   $     0.26    $   0.19         $     0.54    $     0.39



  9


Note D - Pension Benefits
-------------------------

The net periodic benefit cost is summarized below:




                                        Nine months ended September 30,    Three months ended September 30,
                                               2004         2003                  2004         2003
                                        -------------------------------------------------------------------

                                                                                 
Interest cost                                $ 79,158     $ 80,643              $ 26,386     $ 26,881
Expected return on plan assets                (80,724)     (35,901)              (26,908)     (11,967)
Settlement charge                              98,250      105,047                39,968            -
Recognized net actuarial (gain) loss           31,761       25,404                10,587        8,468

Net periodic benefit cost (income)           $128,445     $175,193              $ 50,033     $ 23,382
                                             ========================================================


The Company previously disclosed in its consolidated financial statements 
for the year ended December 31, 2003 that it expected employer pension plan 
contributions to be $150,000 in 2004. This contribution was made in 
September 2004.

Note E - Impact of New Accounting Standards
-------------------------------------------

The initial recognition and initial measurement provisions of FIN 45 are 
applicable on a prospective basis to guarantees issued or modified after 
December 31, 2002. The disclosure requirements in FIN 45 are effective for 
financial statements of interim or annual periods ending after December 15, 
2002. The Company adopted the initial recognition and initial measurement 
provisions of FIN 45 effective as of January 1, 2003 and adopted the 
disclosure requirements effective as of December 31, 2002. The adoption of 
this interpretation did not have a material effect on the Company's 
financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement No. 133 
on Derivative Instruments and Hedging Activities" ("SFAS No. 149"), which 
amends and clarifies financial accounting and reporting for derivative 
instruments, including certain derivative instruments embedded in other 
contracts and for hedging activities under SFAS No. 133, "Accounting for 
Derivative Instruments and Hedging Activities." This Statement (a) clarifies 
under what circumstances a contract with an initial net investment meets the 
characteristic of a derivative, (b) clarifies when a derivative contains a 
financing component, (c) amends the definition of an underlying to conform 
to language used in FASB Interpretation No. 45, "Guarantor's Accounting and 
Disclosure Requirements for Guarantees, Including Indirect Guarantees of 
Indebtedness of Others," and (d) amends certain other existing 
pronouncements. The provisions of SFAS No. 149 are effective for contracts 
entered into or modified after September 30, 2003. There was no substantial 
impact on the Company's consolidated financial statements on adoption of 
this Statement.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial 
Instruments with Characteristics of both Liabilities and Equity" ("SFAS No. 
150"). This Statement establishes standards for the classification and 
measurement of certain financial instruments with characteristics of both 
liabilities and equity. SFAS No. 150 requires that certain financial 
instruments that were previously classified as equity must be classified as 
a liability. Most of the guidance in SFAS No. 150 is effective for financial 
instruments entered into or modified after May 31, 2003, and otherwise is 
effective at the beginning of the first interim period beginning after June 
15, 2003. This Statement did not have any material effect on the Company's 
consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of 
Variable Interest Entities" ("FIN 46"), in an effort to expand upon and 
strengthen existing accounting guidance that addresses when a company should 
include in its financial statements the assets, liabilities and activities 
of another entity. In December 2003, the FASB revised Interpretation No. 46, 
also referred to as Interpretation 46 (R) ("FIN 46(R)"). The


  10


objective of this interpretation is not to restrict the use of variable 
interest entities but to improve financial reporting by companies involved 
with variable interest entities. Until now, one company generally has 
included another entity in its consolidated financial statements only if it 
controlled the entity through voting interests. This interpretation changes 
that, by requiring a variable interest entity to be consolidated by a 
company only if that company is subject to a majority of the risk of loss 
from the variable interest entity's activities or entitled to receive a 
majority of the entity's residual returns or both. The Company is required 
to apply FIN 46, as revised, to all entities subject to it no later than the 
end of the first reporting period ending after March 15, 2004. However, 
prior to the required application of FIN 46, as revised, the Company shall 
apply FIN 46 or FIN 46 (R) to those entities that are considered to be 
special-purpose entities as of the end of the first fiscal year or interim 
period ending after December 15, 2003. The adoption of this interpretation 
did not have a material effect on the Company's consolidated financial 
statements.

In December 2003, the FASB issued SFAS No. 132 (revised 2003), "Employers' 
Disclosures about Pensions and Other Postretirement Benefits - an amendment 
of SFAS No. 87, SFAS No. 88 and SFAS No. 106" ("SFAS No. 132 (revised 
2003)"). This Statement revises employers' disclosures about pension plans 
and other postretirement benefit plans. It does not change the measurement 
or recognition of those plans required by SFAS No. 87, "Employers' 
Accounting for Pensions," SFAS No. 88, "Employers' Accounting for 
Settlements and Curtailments of Defined Benefit Pension Plans and for 
Termination Benefits," and SFAS No. 106, "Employers' Accounting for 
Postretirement Benefits Other Than Pensions." This Statement retains the 
disclosure requirements contained in SFAS No. 132, "Employers' Disclosures 
About Pensions and Other Postretirement Benefits," which it replaces. It 
requires additional disclosures to those in the original Statement 132 about 
assets, obligations, cash flows and net periodic benefit cost of defined 
benefit pension plans and other defined benefit postretirement plans. This 
Statement is effective for financial statements with fiscal years ending 
after December 15, 2003 and interim periods beginning after December 15, 
2003. Adoption of this Statement did not have a material impact on the 
Company's consolidated financial statements.

In December 2003, the American Institute of Certified Public Accountants 
("AICPA") issued Statement of Position 03-3 ("SOP 03-3") "Accounting for 
Certain Loans or Debt Securities Acquired in a Transfer." SOP03-3 requires 
loans acquired through a transfer, such as a business combination, where 
there are differences in expected cash flows and contractual cash flows due 
in part to credit quality be recognized at their fair value. The excess of 
contractual cash flows over expected cash flows is not to be recognized as 
an adjustment of yield, loss accrual, or valuation allowance. Valuation 
allowances cannot be created nor "carried over" in the initial accounting 
for loans acquired in a transfer on loans subject to SFAS 114, "Accounting 
by Creditors for Impairment of a Loan." This SOP is effective for loans 
acquired in fiscal years beginning after December 15, 2004, with early 
adoption encouraged. The Bank/Company/Corporation does not believe the 
adoption of SOP 03-3 will have a material impact on the 
Bank's/Company's/Corporation's financial position or results of operations. 

On March 9, 2004, the SEC issued Staff Accounting Bulletin 105, "Application 
of Accounting Principles to Loan Commitments," ("SAB 105") to inform 
registrants of the Staff's view that the fair value of the recorded loan 
commitments should not consider the expected future cash flows related to 
the associated servicing of the future loan. The provisions of SAB 105 must 
be applied to loan commitments accounted for as derivatives that are entered 
into after March 31, 2004. The Staff will not object to the application of 
existing accounting practices to loan commitments accounted for as 
derivatives that are entered into on or before March 31, 2004, with 
appropriate disclosures. The Company records the value of its mortgage loan 
commitments at fair market value for mortgages it intends to sell, and does 
not currently include, and was not including, the value of mortgage 
servicing or any other internally-developed intangible assets in the 
valuation of its mortgage loan commitments. Therefore, the adoption of SAB 
105 did not have an impact on the Company's financial condition or results 
of operations. 

At its March 2004 meetings, the Emerging Issues Task force ("EITF") 
revisited EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary 
Impairment and its Application to Certain Investments" (EITF No. 03-1). 


  11


Effective with reporting periods beginning after June 15, 2004, companies 
carrying certain types of debt and equity securities whose amortized cost is 
higher than the securities' fair values will have to use more detailed 
criteria to evaluate whether to record a loss and will have to disclose 
additional information about unrealized losses. The Company has reviewed the 
revised EITF No. 03-1 and plans to implement these additional procedures 
effective with the quarter beginning on July 1, 2004. Even though as of June 
30, 2004 most of the unrealized losses on the Company's investments and 
mortgage-backed securities were deemed temporary, at this time the Company 
can not determine whether the adoption of this new issuance will have an 
impact on the Company's financial position and results of operations, as the 
extent of any impact will vary due to the fact that the model calls for many 
judgements and additional evidence gathering at each securities valuation 
date.


  12


ITEM 2

Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------

This Form 10-Q/A contains certain forward-looking statements within the 
meaning of the Private Securities Litigation Reform Act of 1995, including 
statements regarding the strength of the company's capital and asset 
quality. Such statements may be identified by words such as "believes," 
"will," "expects," "project," "may," "developments," "strategic," 
"launching," "opportunities," "anticipates," "estimates," "intends," 
"plans," "targets" and similar expressions. These statements are based upon 
the current beliefs and expectations of Slade's Ferry Bancorp.'s management 
and are subject to significant risks and uncertainties. Actual results may 
differ materially from those set forth in the forward-looking statements as 
a result of numerous factors.

The following factors, among others, could cause actual results to differ 
materially from the anticipated results or other expectations expressed in 
our forward-looking statements: (1) enactment of adverse government 
regulation; (2) competitive pressures among depository and other financial 
institutions may increase significantly and have an effect on pricing, 
spending, third-party relationships and revenues; (3) the strength of the 
United States economy in general and specifically the strength of the New 
England economies may be different than expected, resulting in, among other 
things, a deterioration in overall credit quality and borrowers' ability to 
service and repay loans, or a reduced demand for credit, including the 
resultant effect on the Bank's loan portfolio, levels of charge-offs and 
non-performing loans and allowance for loan losses; (4) changes in the 
interest rate environment may reduce interest margins and adversely impact 
net interest income; and (5) changes in assumptions used in making such 
forward-looking statements. Should one or more of these risks materialize or 
should underlying beliefs or assumptions prove incorrect, Slade's Ferry 
Bancorp.'s actual results could differ materially from those discussed. All 
subsequent written and oral forward-looking statements attributable to 
Slade's Ferry Bancorp. or any person acting on its behalf are expressly 
qualified in their entirety by the cautionary statements set forth above. 
Slade's Ferry Bancorp. does not intend or undertake any obligation to update 
any forward-looking statement to reflect circumstances or events that occur 
after the date the forward-looking statements are made.

Slade's Ferry Bancorp. (the "Company," "us," or "we"), a business 
corporation organized under the laws of the Commonwealth of Massachusetts, 
serves as the holding company for Slade's Ferry Trust Company (the "Bank") 
and its subsidiaries. Our common stock is quoted on the Nasdaq Small Cap 
Market under the symbol "SFBC." Unless the context otherwise requires, all 
references herein to the Company include the Company, the Bank and its 
subsidiaries on a consolidated basis.

Critical Accounting Policies

Our significant accounting policies are described in Note 2 to our 
Consolidated Financial Statements filed within form 10-K for the year ended 
December 31, 2003. In preparing financial information, management is 
required to make significant judgements, estimates, and assumptions that 
impact the reported amounts of certain assets, liabilities, revenues and 
expenses. The accounting principles followed by us and the methods of 
applying these principles conform to accounting principles generally 
accepted in the United States, and general banking practices. We consider 
the following to be our critical accounting policies: allowance for loan 
losses, goodwill and other intangible assets, other than temporary 
impairment of investments, and deferred taxes.

Allowance for loan losses. Establishing an appropriate level of allowance 
for loan losses involves a high degree of judgement. The allowance for loan 
losses is established through a charge or credit to the provision for loan 
losses, and is based on our projection of the adequate level of the 
allowance in relation to the inherent loss exposure in the loan portfolio. 
On a monthly basis, management evaluates the adequacy of the allowance. Such 
evaluation includes a formal analysis that considers, among other factors, 
business and economic conditions and industry trends, the size and 
characteristics of the loan portfolio, delinquency trends, charge-off 
experience, loan growth, nonaccrual loan trends, and portfolio migration 
information. Although we use


  13


available information to project the appropriate level of the allowance 
which is based on factors and risk identification procedures discussed in 
"Item I Business - Summary of Loan Loss Experience," the use of judgements 
and projections may change in the future. Changes in factors or assumptions 
used by us to determine the adequacy of the allowance or the availability of 
new information could cause the allowance for loan losses to be increased or 
decreased in future periods. In addition, bank regulatory agencies, as part 
of their examination process, may require the Company to recognize 
adjustments to the allowance based on their judgements and projections.

Accounting for Acquisitions and Review of Goodwill. The Bank completed an 
acquisition in 1996 and used the purchase method of accounting. For 
acquisitions under this method, assets acquired and liabilities assumed were 
recorded at their estimated fair value, which in some instances involves 
estimates based on internal and third party pressures, or other valuation 
techniques. In addition, this purchase acquisition resulted in goodwill, 
which is subject to ongoing periodic impairment tests, and is evaluated 
using fair value techniques that contain estimates. If the estimated fair 
value is less than the carrying amount, a loss due to impairment would be 
recognized to reduce the carrying value to fair value.

Other than temporary impairment. Management records an impairment charge 
when it believes an investment security experiences a decrease in value that 
is "other than temporary". In making a decision whether an investment is 
permanently impaired, management reviews current and forecasted information 
about the underlying investment that is available, applicable industry data, 
and analyst reports. When an investment is deemed to be impaired on an 
"other than temporary" basis, it is written down to current fair market 
value. Future adverse changes in economic and market conditions, 
deterioration in credit quality, and continued poor financial results of 
underlying investments or other factors could result in further losses that 
may not be reflected in an investment's current book value that could result 
in future writedown charges due to impairment.

Deferred tax estimates. Management utilizes the asset and liability method 
for accounting for income taxes. Under this method, deferred tax assets and 
liabilities are recognized for the future tax attributable to differences 
between the financial statement carrying amounts of assets and liabilities 
and their respective tax basis. We must also assess the probability that 
deferred tax assets will be recovered from future taxable income, and 
establish a valuation allowance for any assets determined not likely to be 
recovered. Management exercises judgement in evaluating the amount and 
timing of recognition of the resulting deferred tax assets and liabilities, 
including projections of future taxable income. These judgements are 
estimates and assumptions and are reviewed on a continuing basis.

Comparison of Financial Condition at September 30, 2004 and December 31, 2003

Total Assets. Total assets increased by $103.8 million, or 23.6%, from 
$439.2 million at December 31, 2003 to $543.0 million at September 30, 2004. 
Net loans increased from $331.5 million at December 31, 2003 to $362.4 
million at September 30, 2004, while investments increased from $57.7 
million to $125.1 million during the same time period. Asset growth was 
funded predominantly by deposit growth of $70.3 million. In addition, the 
Bank participated in a trust preferred offering which raised gross proceeds 
in the amount of $10.3 million in March 2004, providing the Company with 
additional regulatory capital that will be used to fund continued growth of 
the institution. The remainder of the growth was funded by the net increase 
in advances from the Federal Home Loan Bank of Boston (the "FHLB"), totaling 
$19.9 million. These advances were made in accordance with the Bank's 
strategic initiatives.

Cash and Cash Equivalents. Cash and cash equivalents increased by $3.8 
million, from $22.7 million as of year-end 2003 to $26.5 million at 
September 30, 2004. Cash and cash equivalents, for purposes of reporting 
cash flows, includes cash, amounts due from banks, interest-bearing demand 
deposits with other banks, federal funds sold, overnight deposit with the 
FHLB and money market mutual funds.


  14


Investments. Total investments, excluding FHLB stock and interest-bearing 
time deposits with other banks, increased by $66.5 million from $58.6 
million at December 31, 2003 to $125.0 million at September 30, 2004. 
Investments in both the "Held to Maturity" and Available for Sale portfolios 
increased with the inflow of funds from deposits and borrowed funds. Certain 
of these securities are viewed as temporary, with the funds waiting to be 
deployed as loans.

The main objectives of the investment portfolio are (1) to provide adequate 
liquidity to meet reasonable declines in deposits and any anticipated 
increases in the loan portfolio; (2) to provide safety of principal and 
interest; (3) to generate earnings adequate to provide a stable income; and 
(4) to fit within the overall asset/liability management objectives of the 
Company. The Company has not purchased investments with off-balance sheet 
characteristics, such as swaps, options, futures, and other hedging 
activities; nor has it purchased collateral mortgage obligations.

In accordance with Statement of Financial Accounting Standards No. 115, 
entitled "Accounting for Certain Investments in Debt and Equity Securities" 
("SFAS No. 115"), the investment portfolio is segregated into a "Held-to-
Maturity" category and an "Available-for-Sale" category as defined by SFAS 
No. 115. The designation is determined at the time of purchase. Neither the 
Company nor the Bank maintains any securities as "Held for Trading".

The Held-to-Maturity category consists of securities issued by states and 
municipalities of the United States and political subdivisions of states and 
mortgage-backed securities issued by federal agencies. The Company has the 
positive intent and ability to hold these securities to maturity. In 
managing the Held-to-Maturity portfolio, the Company seeks to maximize its 
return and maintain consistency to meet short and long term liquidity 
forecasts by purchasing securities with maturities laddered within a short-
term period of 1-3 years, a mid-term period of 3-5 years, and mortgage-
backed securities with weighted average lives of up to 71/2 years.

Investment Securities Held-to-Maturity are carried at amortized cost on the 
balance sheet, and are summarized as follows as of September 30, 2004:




                                             Amortized     Gross Unrealized    Gross Unrealized
(Dollars In Thousands)                       Cost Basis      Holding Gains      Holding Losses     Fair Value
-------------------------------------------------------------------------------------------------------------

                                                                                         
U. S. Treasury securities and obligations
 of U. S. Government Corporations 
 and Agencies                                  $ 9,195           $407                $  0            $ 9,602
Mortgage-backed securities                      30,105            102                   0             30,207
Other debt securities                            1,331              0                   0              1,331
------------------------------------------------------------------------------------------------------------
Total                                          $40,631           $509                $  0            $41,140
============================================================================================================


Securities in the Available-for-Sale category are securities that the 
Company intends to hold for an indefinite period of time, but not 
necessarily to maturity. These securities may be sold in response to 
interest rate changes, liquidity needs or other factors. Any unrealized gain 
or loss, net of taxes, for the Available-for-Sale securities is reflected in 
Stockholders' Equity as a separate component.


  15


Investments in Available-for-Sale securities are carried at fair value on 
the balance sheet and are summarized as follows as of September 30, 2004:




                                                      Gains in         Losses in
                                                      Accumulated      Accumulated
                                                      Other            Other
                                        Amortized     Comprehensive    Comprehensive
(Dollars In Thousands)                  Cost Basis    Income           Income           Fair Value
--------------------------------------------------------------------------------------------------

                                                                              
Debt Securities issued by the U. S.
 Treasury and other U. S. Government
 Corporations and Agencies                $40,993         $  187            $229          $40,951
Marketable Equity Securities                3,936            218             415            3,739
Mortgage-backed Securities                 29,522            607             110           30,019
Corporate Debt Securities                   9,488            133               0            9,621
-------------------------------------------------------------------------------------------------
Total                                     $83,939         $1,145            $754          $84,330
=================================================================================================


Securities of the U.S. Treasury, U.S. Government corporations and agencies, 
and mortgage-backed securities have little or no credit risk, other than 
being sensitive to changes in interest rates, and if held-to-maturity, these 
securities will mature at par. The Company amortizes premiums and accretes 
discounts over the life of the securities. Corporate and municipal bonds are 
subject to credit risk. Accordingly, the Company's investment policy 
requires that these securities meet minimum credit quality standards. 
Specifically, Moody's or Standard and Poor's must rate the securities as 
"investment grade" before being considered for investment. Securities that 
subsequently fall below investment grade are evaluated on a case by case 
basis by both management and the Finance and Investment Committee of the 
Board of Directors.

Marketable equity securities have an even greater risk as they are subject 
to market fluctuations. Marketable equity securities are constantly 
monitored and evaluated to determine their suitability for sale, retention 
in the portfolio, or possible writedowns due to impairment issues. Market 
risk is controlled by limiting the total amount invested into marketable 
equity securities, and by maintaining a diversified mix of securities across 
various industry sectors. It is the Company's policy not to invest in equity 
securities that are not traded actively on a national exchange. At September 
30, 2004, the amount invested in marketable equity securities was 3.0% of 
the total market value of the investment portfolio and was distributed over 
various industry sectors.

The Company holds certain securities in two subsidiary corporations 
designated as Massachusetts Securities Corporations. These corporations are 
afforded a beneficial state tax rate, 1.34%, as compared to the regular 
Massachusetts Bank tax rate of 10.50%, provided that the principal and 
interest remains held within the securities corporations. Earnings 
distributed to the Bank or the Company from the securities corporations 
would be subject to state taxation as dividend income to the Bank or the 
Company, and securities transferred to the Bank or the Company would be 
transferred at fair value, subject to taxes on any gains realized. The two 
Massachusetts Securities Corporations hold securities totaling $56.2 
million. Certain securities have been pledged by the Bank as collateral to 
secure FHLB borrowings.


  16


Loans. The following table shows the amount of loans by category at 
September 30, 2004 and December 31, 2003. 




(In Thousands)                       September 30, 2004     December 31, 2003
-----------------------------------------------------------------------------

                                                          
Residential real estate                   $172,743              $147,178
Commercial real estate                     140,640               140,572
Commercial                                  28,483                33,980
Construction and land development           22,479                10,346
Consumer                                     2,680                 3,961
Other                                           81                    57
------------------------------------------------------------------------

Total gross loans                          367,106               336,094
Allowance for loan losses                   (4,103)               (4,154)
Unearned income                               (613)                 (443)
------------------------------------------------------------------------

Net loans                                 $362,390              $331,497
========================================================================


Total gross loans increased by $31.0 million, or 9.2%, from $336.1 million 
at December 31, 2003, to $367.1 million at September 30, 2004. Residential 
mortgage and home equity loans increased by $25.5 million, to $172.7 million 
as of September 30, 2004, compared to $147.2 million at year-end 2003. 
Commercial real estate loans remained constant at $140.6 million. 
Construction and land development loans increased by $12.1 million to $22.5 
million at September 30, 2004, compared to $10.3 million reported at year-
end 2003. The commercial and consumer portions of the Bank's portfolio 
decreased by $5.5 million and $1.3 million respectively from December 31, 
2003 to September 30, 2004. Changes in the loan portfolio mix are indicative 
of the Bank's increased emphasis on the origination of residential real 
estate loans, both first mortgages and equity lines of credit, as a means of 
diversification and credit risk management. Consistent with this emphasis, 
residential real estate and home equity loans represent 47.1% of total loans 
as of September 30, 2004 compared to 43.8% as of December 31, 2003. 
Commercial real estate loans represent 38.3% of the total loans as of 
September 30, 2004, as compared to 41.8% as of December 31, 2003. These 
loans are collateralized by various types of commercial properties, without 
any predominant type of property or concentration of credit in any one 
industry.

          INFORMATION WITH RESPECT TO NONACCRUAL AND PAST DUE LOANS
        AT SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003 AND 2002




                                                         At September 30,        At December 31,
--------------------------------------------------------------------------------------------------
(Dollars In Thousands)                                   2004        2003        2003        2002
--------------------------------------------------------------------------------------------------

                                                                                
Nonaccrual Loans                                       $    218     $  637     $    407     $  635
Loans 90 days or more past due and still accruing           173         13            0          8
Real estate acquired by foreclosure
 or substantively repossessed                                 0          0            0          0
Percentage of nonaccrual loans to total gross loans        0.06%      0.20%        0.12%      0.24%
Percentage of nonaccrual loans, restructured loans,
 and real estate acquired by foreclosure or 
 substantively repossessed to total assets                 0.07%      0.15%        0.09%      0.16%
Percentage of allowance for loan losses
 to nonaccrual loans                                   1,882.11%    687.28%    1,020.64%    764.19%


Non-performing assets include nonaccrual loans, loans past due 90 days or 
more and still accruing, restructured loans not performing in accordance 
with amended terms, and other real estate acquired through foreclosure. Non-
performing assets as a total decreased by $16,000, from $407,000 on December 
31, 2003 to $391,000 as of September 30, 2004.


  17


The $218,000 in nonaccrual loans as of September 30, 2004 consists of 
$73,000 of real estate mortgages, $100,000 attributed to commercial loans 
and $45,000 of consumer loans. There were no restructured loans included in 
nonaccrual loans for the first nine months of 2004.

The percentage of nonaccrual loans to total gross loans decreased from 0.12% 
reported at the year-end 2003 to 0.06% at September 30, 2004 due to a 
decrease in the nonaccrual category and the increase in the total loan 
portfolio. The percentage of nonaccrual loans, restructured loans and real 
estate acquired by foreclosure or substantively repossessed to total assets 
decreased to 0.07% at September 30, 2004 from 0.09% reported at year-end 
2003 due to the decrease in nonaccrual loans.. As noted above, subsequent to 
the Balance Sheet date these loans have been paid or sold. The percentage of 
allowance for loan losses to nonaccrual loans increased to 1,882.11% at 
September 30, 2004 from 1,020.64% at year end 2003 due to a decrease in 
nonaccrual loans. 

       INFORMATION WITH RESPECT TO INTEREST ON NONACCRUAL AND PAST DUE
     LOANS AT SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003 AND 2002




                                                 At September 30,    At December 31,
------------------------------------------------------------------------------------
(In Thousands)                                     2004    2003       2003     2002
------------------------------------------------------------------------------------

                                                                   
Nonaccrual Loans                                   $218    $637       $407     $635

Interest income that would have been recorded
 during the period under original terms              21      30         41      303

Interest income recorded during the period           42      18         30      121


The Company stops accruing interest on a loan once it becomes past due 90 
days or more unless there is adequate collateral and the financial condition 
of the borrower is sufficient. When a loan is placed on nonaccrual status, 
all previously accrued but unpaid interest is reversed and charged against 
current income. Interest is thereafter recognized in that category only when 
payments are received and the loan becomes current. Loans in the nonaccrual 
category will remain in that category until the possibility of collection no 
longer exists, the loan is paid off, or the loan becomes current. When a 
loan is determined to be uncollectible, it is then charged off against the 
allowance for loan losses.

Statement of Financial Accounting Standards No. 114 "Accounting by Creditors 
for Impairment of a Loan" ("SFAS No. 114") applies to all loans except large 
groups of smaller-balance homogeneous loans that are collectively evaluated 
for impairment, loans measured at fair value or at a lower of cost or fair 
value, leases, and debt securities as defined in SFAS No. 115. SFAS No.114 
requires that impaired loans be valued at the present value of expected 
future cash flows discounted at the loan's effective interest rate or as a 
practical expedient, at the loan's observable market value of the collateral 
if the loan is collateral dependent. Large groups of smaller balance 
homogeneous loans are collectively evaluated for impairment. Accordingly, we 
do not separately identify individual consumer and residential loans for 
impairment disclosures. A loan is considered impaired when, based on current 
information and events, it is probable that we will be unable to collect the 
scheduled payments of principle or interest when due according to the 
contractual terms of the loan agreement.

At September 30, 2004 there were $120,000 of loans which we had determined 
to be impaired, with a related allowance for credit losses of $6,000. In 
addition, principal reductions, loan payoffs, charged off balances, loan 
upgrades, and a change in our impairment identification methodology are 
other factors resulting in a decrease of impaired loans.

There were no other loans classified for regulatory purposes as of September 
30, 2004 that we expect will materially impact future operating results, 
liquidity or capital resources.


  18


                  ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES




                                                              Nine Months          Year Ended
                                                          Ended September 30,     December 31,
----------------------------------------------------------------------------------------------
(Dollars In Thousands)                                     2004        2003          2003
----------------------------------------------------------------------------------------------

                                                                           
Balance at January 1                                      $4,154      $4,854        $4,854
------------------------------------------------------------------------------------------
Charge-offs:
  Commercial                                                 (62)          0           (10)
  Commercial real estate                                    (425)          0             0
  Residential real estate                                    (18)        (10)         (169)
  Construction and land development                           (4)          0             0
  Consumer                                                   (11)        (18)          (32)
  Other                                                        0           0             0
------------------------------------------------------------------------------------------
Total charge-offs                                           (520)        (28)         (211)
------------------------------------------------------------------------------------------
Recoveries:
  Commercial                                                  57          51            55
  Commercial real estate                                       0           0             0
  Residential real estate                                     25          29            44
  Construction and land development                            0           0             0
  Consumer                                                    10          11            14
  Other                                                        0           0             0
------------------------------------------------------------------------------------------
Total recoveries                                              92          91           113
------------------------------------------------------------------------------------------
Net (charge-offs) recoveries                                (428)         63           (98)
------------------------------------------------------------------------------------------
Provision (benefit) charged to (increasing) operations       376        (539)         (602)
------------------------------------------------------------------------------------------
Balance at end of period                                  $4,102      $4,378        $4,154
==========================================================================================
Ratio of net charge-offs to
 average loans outstanding                                 (0.15%)     (0.01%)       (0.03%)


The Bank maintains an allowance for loan losses at a level that is 
sufficient to absorb the projected credit losses associated with its loan 
portfolio. Projected credit losses reflect consideration of all significant 
factors that affect repayment as of the evaluation date. Projected losses on 
loan categories reflect historical net charge-off levels for similar loans, 
adjusted for changes in current conditions or other relevant factors. 
Calculation of historical charge-off rates can range from a simple average 
of net charge-offs over a relevant period, to more complex techniques such 
as migration analysis.

The level of the allowance for loan losses is evaluated monthly by 
management and reviewed by the Board of Directors. Factors considered in the 
evaluation process include growth of the loan portfolio, risk 
characteristics of the loan types in the portfolio, the value of underlying 
collateral, delinquency and charge off trends, current economic conditions 
within the Bank's market area, and various other external and internal 
factors. The allowance for loan losses is maintained at a level that 
management considers adequate to absorb estimated losses within the Bank's 
loan portfolio. The assessment of the adequacy of the allowance for loan 
losses is reviewed annually by an independent loan review consultant, our 
independent auditors, and regulatory agencies.

The allowance for loan losses at September 30, 2004 was $4.1 million, 
compared to $4.2 million at year-end 2003. The allowance for loan losses as 
a percentage of outstanding loans was 1.13% at September 30, 2004, and 1.25% 
at December 31, 2003. The decrease in the allowance is related to sale of 
certain loans, which were previously identified as problem credits. 
Accordingly, these loans were allocated an elevated level of loan loss 
reserve. Gains on the sale of these loans totaled $196,000 in 2004. In the 
nine months ended September 30, 2003, the Company realized losses on sales 
of problem loans totaling $116,000.

As the composition of the Bank's loan portfolio gradually changes and 
diversifies from higher credit risk weighted loans, such as commercial real 
estate and commercial and industrial loans, to residential and home equity 
loans, management believes that a smaller reserve allowance will be 
required. During the first three


  19


quarters of 2004, due to the continued changes in the loan portfolio, 
stronger underwriting guidelines, the sales of loans previously deemed 
substandard, and overall improvement in credit quality of existing loans, 
management believes that the level of overall credit risk embedded in the 
loan portfolio decreased.

Charge-offs of loans were $211,000 for the year ended December 31, 2003, 
$520,000 for the nine months ended September 30, 2004, and $28,000 for the 
nine months ended September 30, 2003. Recoveries of loans previously charged 
off totaled $113,000 for the year ended December 31, 2003, $92,000 for the 
nine months ended September 30, 2004, and $91,000 for the nine months ended 
September 30, 2003. Management believes that the allowance for loan losses 
of $4.1 million as of September 30, 2004 is adequate to cover potential 
losses in the loan portfolio, based on current information available to us.

The following table shows an allocation of the allowance for loan losses as 
of the end of each of the periods indicated.




                                         September 30, 2004             December 31, 2003
                                     --------------------------------------------------------
                                                   Percent of                    Percent of
                                                  Loans in Each                 Loans in Each
                                                   Category to                   Category to
                                      Amount       Total Loans      Amount       Total Loans
                                     --------------------------------------------------------
                                                      (Dollars In Thousands)

                                                                       
Commercial (5)                       $  456(1)         7.76%       $  943(1)        10.11%
Residential real estate                 416(2)        47.06           323(2)        43.79
Commercial real estate                3,045(3)        38.31         2,748(3)        41.83
Construction and land development       121            6.12            52            3.08
Consumer                                 64(4)          .73            80(4)         1.17
Other                                     -             .02             8             .02
                                     ----------------------------------------------------
                                     $4,102          100.00%       $4,154          100.00%
                                     ====================================================


--------------------
  Includes amounts specifically reserved for impaired loans of $0 as of 
      September 30, 2004 and $251,280 as of December 31, 2003 as required by 
      SFAS No. 114.
  Includes amounts specifically reserved for impaired loans of $3,533 as 
      of September 30, 2004 and $13,979 as of December 31, 2003 as required 
      by SFAS No. 114. 
  Includes amounts specifically reserved for impaired loans of $0 as of 
      September 30, 2004 and $9,642 as of December 31, 2003 as required by 
      SFAS No. 114. 
  Includes amounts specifically reserved for impaired loans of $0 as of 
      September 30, 2004 and $170 as of December 31, 2003 as required by 
      SFAS No. 114. 
  Includes commercial, financial, agricultural and nonprofit loans.



Commercial real estate loans represent 38.31% of gross loans as of September 
30, 2004. Residential real estate, including home equity loans, represents 
47.06% of gross loans. The Company requires a loan to value ratio of 80% in 
both commercial and residential mortgages. Residential real estate loans 
secured by a first mortgage can be written with a loan-to-value ratio of 95% 
with private mortgage insurance. These mortgages are secured by real 
properties that have a readily ascertainable appraised value.

Generally, commercial real estate loans have a higher degree of credit risk 
than residential real estate loans because they depend primarily on the cash 
flows from rental or operation of the underlying collateral. When granting 
these loans, we evaluate the financial condition of the borrower, the 
location of the real estate, the quality of management, and general economic 
and competitive conditions. When granting a residential mortgage, we review 
the property securing the loan, the borrower's repayment history on past 
debts and the


  20


borrower's ability to meet existing obligations and payments on the proposed 
loans. Real estate construction loans comprise both residential and 
commercial construction loans throughout our market area.

Commercial loans consist of loans predominantly collateralized by inventory, 
furniture and fixtures, and accounts receivable. In assessing the collateral 
for this type of loan, we apply a 50% liquidation value to inventories; 25% 
to furniture, fixtures and equipment; and 70% to accounts receivable less 
than 90 days of invoice date. Commercial loans represent 7.8% of the loan 
portfolio as of September 30, 2004, compared to 10.1% at December 31, 2003.

Consumer loans are both secured and unsecured borrowings and, at September 
30, 2004, represents only 0.7% of the total loan portfolio, compared to 1.2% 
at December, 2003. These loans have a higher degree of risk than residential 
mortgage loans. The underlying collateral of a secured consumer loan tends 
to depreciate in value. Consumer loans are typically made based on the 
borrower's ability to repay the loan through continued financial stability. 
We endeavor to minimize risk by reviewing the borrower's repayment history 
on past debts, and assessing the borrower's ability to meet existing 
obligations on the proposed loans.

Total Liabilities. Total liabilities increased from $396.7 million on 
December 31, 2003 to $497.8 million at September 30, 2004. This increase is 
mainly attributable to a $70.3 million increase in deposits throughout the 
year, a net increase in FHLB advances of $19.9 million, and the issuance of 
$10.3 million of subordinated debentures in March 2004.

Deposits. Total deposits at September 30, 2004 were $403.5 million, an 
increase of $70.3 million or 21.1%, as compared to $333.1 million at 
December 31, 2003. Savings deposit balances and money market accounts 
increased by $43.2 million during the first nine months of 2004. This 
increase is mainly attributable to the addition of a market-rate savings 
product. Term certificates of deposit as of September 30, 2004 increased by 
$17.3 million when compared to December 31, 2003. The Bank's marketing 
programs, particularly in early 2004, were targeted to attracting and 
cementing multiple account relationships with more affluent customers. The 
Bank continues to offer a full range of deposit products to customers of all 
income levels.

The following table shows the amount of deposits at the end of September 30, 
2004 and December 31, 2003.




(In Thousands)         September 30, 2004    December 31, 2003
                       ------------------    -----------------

                                            
Noninterest-bearing         $ 77,182              $ 73,254
Interest-bearing             326,273               259,891
                            --------              --------
                            $403,455              $333,145
                            ========              ========


FHLB Advances. Total borrowed funds were $80.4 million at September 30, 
2004, as compared to $60.5 million at December 31, 2003, an increase of 
$19.9 million. In accordance with the Bank's strategic plan, FHLB advances 
of varying terms, totaling $29.8 million were drawn during the nine months 
ended September 30, 2004. A total of $24.0 million of these advances funded 
the purchase of investment securities in the third quarter of 2004, in order 
to "pre-fund" or replace expected loan origination during the third and 
fourth quarters of 2004. Maturing advances totaling $9.6 million were repaid 
during the nine months ended September 30, 2004, and principal totaling $0.3 
million was repaid on amortizing advances during the same time frame.

During the next twelve months, FHLB advances totaling $5 million will 
mature. Management believes that there will be adequate liquidity on hand to 
repay these advances on schedule.

Subordinated Debentures. On March 17, 2004, Slade's Ferry Capital Trust I 
(the "Trust"), a Connecticut Statutory trust formed by the Company, 
completed the sale of $10.0 million of floating rate trust preferred 
securities (liquidation amount of $1,000 per security) in a private 
placement as part of a pooled trust preferred


  21


securities transaction. The Trust also issued common securities to the 
Company and used the net proceeds from the offering to purchase a like 
amount of floating rate junior subordinated deferrable interest debentures 
of the Company. The subordinated debentures are the sole assets of the 
Trust. The Company contributed $10 million of the proceeds from the sale of 
the subordinated debentures to the Bank as Tier I Capital to support the 
Bank's growth. Total expenses associated with the offering approximating 
$140,000 at March 31, 2004 are included in other assets and are being 
amortized on a straight-line basis over the life of the subordinated 
debentures.

The trust preferred securities accrue and pay distributions quarterly on 
March 17, June 17, September 17 and December 17 of each year, commencing on 
June 17, 2004, at a floating rate of 3-Month LIBOR plus 2.79% of the stated 
liquidation amount of $1,000 per trust preferred security. At September 30, 
2004, this rate was 4.68%. The Company has fully and unconditionally 
guaranteed all of the obligations of the Trust, including the semi-annual 
distributions and payments on liquidation or redemption of the trust 
preferred securities.

The trust preferred securities are mandatorily redeemable upon the maturing 
of the subordinated debentures on March 17, 2034 or upon earlier redemption 
as provided in the Indenture. The Company has the right to redeem the 
subordinated debentures, in whole or in part, on or after March 17, 2009 at 
par value, plus any accrued but unpaid interest to the redemption date. 
Redemption may occur prior to March 17, 2009 under certain conditions, at a 
premium to par value.

Stockholders' Equity. Total stockholders' equity increased by $2.7 million, 
from $42.5 million as reported on December 31, 2003, to $45.2 million as of 
September 30, 2004. A portion of this increase resulted from net income of 
$2.3 million, net change in comprehensive income totaling $0.2 million and 
dividend reinvestments and option exercises totaling $1.3 million, partially 
offset by dividends declared of $1.1 million.


  22


Results of Operations

Nine-month period ended September 30, 2004 compared to the nine-month period 
ended September 30, 2003. The Company's operating performance is dependent 
on net interest and dividend income, which is the difference between 
interest income earned on loans and investments and interest expense paid on 
deposits and borrowed funds. The level of net interest income achieved is 
significantly impacted by several factors such as economic conditions, 
interest rates, asset/liability management, and corporate tax and strategic 
planning.

The year-to-date results of operations nine months ended September 30, 2003 
have been revised from that previously reported to reclassify the 
extraordinary item. The extraordinary item treatment previously presented in 
Form 10-Q for the quarter ended September 30, 2003 was revised, and its 
individual components were reclassified to other expense and income taxes. 
See Footnote 20 to the Company's audited consolidated financial statements 
included in the Company's annual report on Form 10-K for the year ended 
December 31, 2003 filed with the U.S. Securities and Exchange Commission.

The Company's net income for the nine months ended September 30, 2004 was 
$2,286,804 or $0.56 per share diluted, as compared to $1,625,681 for the 
nine months ended September 30, 2003 or $0.41 per share diluted.

Total interest and dividend income for the nine-month period ended September 
30, 2004 increased by $2,164,921 or 14.1%, to $17,487,099, as compared to 
$15,322,178 recorded during the same period in 2003. Interest and fees on 
loans increased $2,132,247, or 16.5%, from $12,928,787 for the nine months 
ended September 30, 2003 to $15,061,034 for the nine months ended September 
30, 2004. The change was attributable to increases in the levels of both the 
commercial and residential loan portfolios. As previously discussed, the 
portfolio growth is the result of increased focus on expansion of the Bank's 
loan portfolio, leveraging the Bank's excess capital. Interest and dividend 
income on investments, federal funds sold, and other interest remained 
relatively constant, increasing by a total of $32,674 when comparing the 
nine months ended September 30, 2004 and 2003. Although balances increased, 
the yields on this group of assets, taken as a whole, decreased, as a large 
portion was held in the liquidity portfolio of overnight investments, in 
anticipation of deployment as loans or longer-term securities.

Total interest expense increased from $4,598,832 for the nine months ended 
September 30, 2003 to $5,762,679 for the nine months ended September 30, 
2004, an increase of 25.3%. This increase was primarily attributable to the 
growth in Federal Home Loan Bank advances in 2004 as well as the issuance of 
subordinated debt in March, 2004. Interest on deposits increased by 
$187,479. This increase resulted from increased deposit volume and is 
partially offset by reduced market interest rates.

The net interest margin decreased by 33 basis points from 3.78% reported at 
September 30, 2003 to 3.45% as of September 30, 2004. The Bank, like other 
financial institutions, has experienced margin compression because of the 
extended periods of low market interest rates.

The Company records a provision for loan losses as a charge against earnings 
to fund the allowance for loan losses. Management maintains the allowance 
for loan losses at a level that it believes is adequate to absorb losses 
inherent within the loan portfolio. Management reviews the adequacy of the 
allowance for loan losses on a monthly basis and reports changes in the 
allowance to the Board of Directors. In determining the appropriate level of 
the allowance for loan losses, management considers past and anticipated 
loss experience, prevailing economic conditions, evaluations of underlying 
collateral, and the volume of the loan portfolio and balance of non-
performing and classified loans. The Bank's provision for loan losses for 
the nine months ended September 30, 2004 totaled $376,215, compared to a 
benefit to earnings of $539,357 for the nine months ended September 30, 
2003. The benefit recorded in 2003 was the result of the Bank's successful 
and continuing efforts to improve the credit quality of its loan portfolio. 
During 2004, the Bank sold additional non-performing loans, enabling the 
Bank to reduce its allowance for loan losses and recognize gains on certain 
loans. Management believes that the loan sales have improved overall loan 
quality.


  23


Total non-interest income increased by $500,720 or 34.0%, from $1,475,427 
for the nine months ended September 30, 2003, to $1,976,147 for the nine 
months ended September 30, 2004. The increase is primarily the result of an 
increase of $311,609 in gain on sale of loans. Gains recognized on sales of 
non-performing loans totaled $195,817 for the nine months ended September 
30, 2004, as compared to a loss on sales of loans totaling $115,792 for the 
nine months ended September 30, 2003. Service and overdraft charges on 
deposit accounts decreased slightly by $32,323, when comparing the nine 
months ended 2004 and 2003. The proliferation of "free" checking accounts in 
the Bank's market area has resulted in the Bank's offering and promoting 
these accounts. The income realized through the increase in cash surrender 
value of bank owned life insurance policies associated with both the 
directors' and executive officers' life insurance programs increased by 
$39,541 over the same time frame. Other income increased by $137,539 when 
compared to the first nine months of 2003, primarily the result of increased 
commissions on sales of non-deposit investment products. Other income 
consists of commissions derived from sale of non-deposit investment income, 
safe deposit rental, ATM and debit card fees.

Total non-interest expense increased from $9,484,593 for the nine months 
ended September 30, 2003 to $9,894,319 for the nine months ended September 
30, 2004, an increase of 4.3%. Salaries and employee benefits increased by 
$298,324, or 5.2%, from $5,728,779 during the first nine months of 2003, to 
$6,027,104 million during the same period in 2004. The increase was 
attributable to additions in staff to support consumer lending activities, 
sales incentive commissions paid for achieving sales production targets and 
general salary increases due to annual performance reviews. Occupancy 
expense totaled $599,518 for the nine months ended September 30, 2004, 
compared to $710,580 for the nine months ended September 30, 2003. The 
decrease was achieved through closing a branch office in Swansea, 
Massachusetts during 2003. Two additional branches were closed in October 
2004. Management believes that these closings will afford additional cost 
savings in the future. These savings will be partially offset by the costs 
associated with the opening and operation of a new branch in Assonet, 
Massachusetts, which is expected to be open in early 2005. Equipment 
expenses increased by $18,916, or 4.8% from $398,971 for the first nine 
months of 2003 to $417,887 for the same period in 2004. The Company, during 
2003 and early 2004, made significant technology investments, adding the 
infrastructure to support internet banking functions and a more active call 
center, as well as increased levels of back room automation. Equipment 
expenses have increased based on the costs necessary to support the 
technology and depreciation and amortization of hardware and software.

The expenses for stationery and supplies increased by 7.6% from $164,337 for 
the nine months ended September 30, 2003 to $176,783 for the nine months 
ended September 30, 2004. The increase is attributable to the support of new 
marketing initiatives, as well as increases in the general price levels due 
to inflation. These costs are partially offset by new inventory control 
procedures initiated in 2004 and the closing of the Swansea branch office in 
late 2003.

Professional fees remained relatively constant, decreasing form $780,640 for 
the nine months ended September 30, 2003 to $779,085 for the nine months 
ended September 30, 2004. Although constant, management believes, that in 
the short term, these costs will increase, based on the anticipated costs of 
implementation of the internal controls provisions of section 404 of the 
Sarbanes-Oxley Act.

Marketing expenses attributed to production and media costs, print 
advertising, and other direct marketing increased by $99,579 to $409,637 for 
the nine months ended September 30, 2004, from $310,058 for the same period 
in 2003. The increase in marketing costs is attributed to the introduction 
of internet banking, cash management, and a host of new relationship-based 
deposit products.


  24


The following table sets forth the primary components of other expenses. 
This table reflects an increase of $194,085 to $424,376 from $618,461 for 
the three month period ending September 30, 2004 and an increase of $93,077 
to $1,391,228 from $1,484,305 for the nine month period ending September 30, 
2004 when compared to the same periods in 2003.




                                          Three Months                           Nine Months
                                -------------------------------------------------------------------------
                                  2004        2003      Variance       2004          2003        Variance
                                -------------------------------------------------------------------------

                                                                              
Communications/postage          $ 91,631    $ 83,383    $  8,248    $  263,404    $  251,341    $  12,063
Committee fees                    60,062      40,750      19,312       183,212       123,650       59,562
Interest expense (associated
 with REIT tax treatment)              0           0           0             0       128,977     (128,977)
Other various expenses           466,768     300,243     166,525     1,037,689       887,260      150,429
                                -------------------------------------------------------------------------
Other expense total             $618,461    $424,376    $194,085    $1,484,305    $1,391,228    $  93,077
                                =========================================================================


Income before income taxes totaled $3,430,034 for the nine months ended 
September 30, 2004, an increase of $176,497, or 5.42% as compared to 
$3,253,537 for the nine months ended September 30, 2003. Applicable taxes 
decreased by $484,627 to $1,143,229 for the nine months ended September 30, 
2004, as compared to $1,627,856 for the nine months ended September 30, 
2003. The 2003 presentation includes income taxes related to the dissolution 
of the REIT totaling $529,133.


  25


Three Month Period Ended September 30, 2004 Compared to the Three Month 
Period Ended September 30, 2003. Net income for the three months ended 
September 30, 2004 totaled $1,076,457, or $0.26 per share diluted, as 
compared to $749,993, or $0.19 per share diluted for the three months ended 
September 30, 2003.

Total interest and dividend income increased by $1,131,772, or 22.1%, from 
$5,118,233 for the three months ended September 30, 2003 to $6,250,005 for 
the three months ended September 30, 2004. Interest and fees on loans 
increased by $729,497 or 16.5%, from $4,419,503 for the three months ended 
September 30, 2003 to $5,149,000 for the three months ended September 30, 
2004. This increase was the result of the growth in the Bank's loan 
portfolio. Interest and dividends on investments increased from $671,857 for 
the three months ended September 30 2003 to $998,496 for the corresponding 
period in 2004. The increase, totaling $326,639, or 48.6%, is the result of 
the deployment of excess liquidity, raised in the deposit campaign and 
through pre-funding planned loan originations into the investment portfolio. 
Other interest, primarily interest on federal funds sold and other cash 
equivalents, totaled $57,509 for the three months ended September 30, 2004, 
an increase of $30,636 when comparing to the three months ended September 
30, 2003. This increase is the result of the cash flows from the deposit 
campaign being temporarily parked in short-term investments until such time 
as the funds could be deployed in a fashion consistent with the Company's 
strategic goals.

Total interest expense increased from $1,499,682 for the three months ended 
September 20, 2003 to $2,024,559, an increase of $524,877 or 35.0%. The 
increase is the result of increased levels of deposits, particularly from 
the deposit promotions in early 2004, increased levels of borrowing from the 
FHLB during 2004, and the issue of subordinated debt in March 2004. Total 
interest on deposits increased by $188,362, or 17.3%, as the Bank's highly 
successful deposit campaign in early 2004 led to a 22% increase in deposits. 
These deposits were raised predominantly in the month of January 2004. 
Interest on FHLB advances increased by $218,312 as a result of the expanded 
use of this wholesale funding opportunity. Borrowings during the three 
months ended September 30, 2004 have been utilized to pre-fund anticipated 
loan growth in late 2004 and 2005.

Net interest income increased from $3,618,551 for the three months ended 
September 30, 2003 to $4,225,446 for the three months ended September 30, 
2004, an increase of $606,895 or 16.8%.

Total non-interest income increased by $243,566, to a total of $812,732 for 
the three months ending September 30, 2004, as compared to $569,166 for the 
three months ended September 30, 2003; an increase of 42.8%. The increase is 
primarily attributable to a gain recognized on the sale of loans totaling 
$195,817, compared with losses of $12,558 recognized in the three months 
ended September 30, 2003. Also contributing to the increase was an increase 
in investment and insurance commissions (included in other income) of 
$97,376. The increase is partially offset by decreases in deposit and 
overdraft charges, totaling $17,624, and decreases in securities gains 
totaling $35,868.

Total non-interest expenses, made up of various noninterest expenses, 
increased by $378,272 from $3,083,291 for the three month period ended 
September 30, 2003 to $3,461,563 for the three month period ended September 
30, 2004. The increase can be attributed to increases in marketing expenses 
as the Bank more actively promoted its internet banking and relationship-
based deposit products. Marketing costs increased from $80,441 for the three 
months ended September 30, 2003 to $211,169 for the three months ended 
September 30, 2004. Professional fees also increased as the Company incurred 
additional legal costs associated with general corporate matters. As 
indicated above, other expenses also increased by a total of $194,085. 
Salaries and employee benefits remained relatively constant, increasing by 
$25,033, from $1,919,939 for the three months ended September 30, 2003 to 
$1,944,972 for the three months ended September 30, 2004. Cost savings from 
staff attrition and the closing of one branch in late 2003 offset the 
increases in salaries and benefits costs arising from promotions and 
performance reviews. These increases are partially offset by decreases in 
occupancy and equipment charges totaling $52,000.


  26


Liquidity and Capital Resources

Liquidity is defined as the ability to meet current and future funding 
requirements. The primary objective of the Company's liquidity management 
program is to maintain a balance between sources and uses of funds to meet 
the Company's cash flow needs in an economical and expedient manner. The 
Company's cash flow needs require the availability of cash to meet the 
withdrawal demands of customers and the credit commitments to borrowers. In 
assessing the appropriate level of liquidity, we consider deposit levels, 
lending funding requirements and investment maturities in light of 
prevailing economic conditions. Through this assessment, we manage our 
liquidity level to optimize earnings and respond to fluctuations in customer 
borrowing needs and cash withdrawals from deposit accounts.

Our principal sources of funds are customer deposits, borrowings, principal 
and interest payments on outstanding loans and mortgage-backed securities, 
maturities of investment securities and funds provided from operations. 
Although scheduled payments from amortization of loans, mortgage-backed 
securities, and maturing investment securities are predictable sources of 
liquidity, deposit cash flows and loan prepayments are influenced by 
interest rate movement. In addition, deposit flow could be impacted by other 
instruments available to the public such as mutual funds and annuities.

Customer deposits represent the Company's principal source of funds. 
Deposits are obtained from consumers and commercial customers within our 
community reinvestment area, being Bristol County, Massachusetts and several 
abutting towns in Rhode Island. The Bank does not currently solicit or 
accept brokered deposits. The level of interest rates, economic conditions, 
and the attractiveness of competing deposits and other investment 
alternatives influence deposit flows.

The Bank has the ability to borrow funds for liquidity purposes from 
correspondent banks, the FHLB, as well as the Federal Reserve Bank of 
Boston, by pledging various investment securities as collateral, and in the 
case of FHLB borrowings, one to four family residential loans are secured as 
collateral. Borrowings from the FHLB increased by approximately $19.9 
million from December 31, 2003 to September 30, 2004. During 2003, we took 
advantage of the favorable low interest rate environment to draw down some 
longer term structured funding opportunities, and to hedge against any 
possible interest rate risk as a result of the increase in long term, fixed 
rate residential mortgages. As of September 30, 2004, we had approximately 
$13.2 million in available borrowing capacity with the FHLB that is 
contingent upon the purchase of additional FHLB stock.

Excess available funds are invested on a daily basis into Federal Funds Sold 
and overnight deposits with the FHLB. An appropriate level of Federal Funds 
Sold is maintained to meet loan commitments, anticipated loan growth and 
deposit forecasts. Funds exceeding this level are then used to purchase 
investment securities that are suitable in yields and maturities for the 
investment portfolio.

Liquidity during the first nine months of 2004 was primarily provided by a 
net increase in deposits of $70.3 million, trust preferred securities of 
$10.3 million, and proceeds from maturities, sales and calls of securities 
totaling $14.1 million. These were offset by purchases of securities of 
$80.3 million and net loan originations totaling $39.5 million. Other 
factors affecting liquidity included cash provided by other operating 
activities and cash used in financing activities as indicated in the 
consolidated statements of cash flows.

At September 30, 2004 the Bank had firm commitments to lend totaling $20.3 
million, as well as commitments on outstanding construction and commercial 
loans and lines of credit totaling $16.1 million and commitments on existing 
equity lines of credit totaling $19.0 million. Management believes that 
there is adequate liquidity available to fund these commitments.

Total stockholders' equity was $45.2 million at September 30, 2004, as 
compared to $42.5 million at December 31, 2003, an increase of $2.6 million. 
The increase was a combination of several factors, including nine months 
earnings of $2.3 million and transactions originating through the Company's 
Dividend


  27


Reinvestment Program whereby 4,225 shares were issued for optional cash 
contributions of $89,000 and 20,989 shares were issued in lieu of cash 
dividend payments of $462,000. There were also stock options exercised 
resulting in the issuance of common stock totaling $532,000, including a tax 
benefit of $157,000. These additions were offset by dividends declared of 
$1.1 million.

Capital also increased as a result of a decrease in the accumulated other 
comprehensive loss, which reflects net unrealized gains or losses, net of 
taxes, on securities classified as Available-for-Sale and the minimum 
pension liability adjustment. On December 31, 2003, the Available-for-Sale 
portfolio had unrealized losses, net of taxes, of $9,740, and on September 
30, 2004, as a result of the change in market values, the portfolio had 
unrealized gains, net of taxes, of $225,602. There was no change in the 
minimum pension liability adjustment of $402,652, net of taxes, recorded 
December 31, 2003.

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

In addition to meeting the required levels, the Company and the Bank's 
capital ratios meet the criteria of the "well capitalized" category 
established by the federal bank regulatory agencies as of September 30, 
2004.

At September 30, 2004 the actual total Risk Based Capital of the Bank was 
$44,741,000 for Tier 1 Capital, exceeding the minimum requirements of 
$14,402,000 by $30,339,000. Total Capital of $48,843,000 exceeded the 
minimum requirements of $28,803,000 by $20,040,000 and Leverage Capital of 
$44,741,000 exceeded the minimum requirements of $20,652,000 by $24,089,000. 
In addition to the "minimum" capital requirements, "well capitalized" 
standards have also been established by the Federal Banking Regulators.

The table below illustrates the capital ratios of the Company and the Bank 
on September 30, 2004 and at December 31, 2003.




                                               Well        September 30, 2004    December 31, 2003
                                            Capitalized    ------------------    -----------------
                                            Requirement    Bancorp     Bank      Bancorp     Bank
                                            ------------------------------------------------------

                                                                             
Total Capital (to Risk Weighted Assets)     > or = 10%     15.83%     13.57%     13.58%     11.42%

Tier 1 Capital (to Risk Weighted Assets)    > or =  6%     11.83%     12.43%     12.33%     10.17%

Leverage Capital (to Average Assets)        > or =  5%      8.26%      8.67%      9.28%      7.70%


The Bank was required to maintain a 7% Tier 1 Leverage Capital ratio while 
under the informal agreement with the Massachusetts Commissioner of Banks 
and the Federal Deposit Insurance Corporation which was originally entered 
into in 2000, and revised in March of 2003. As a result of the improved 
condition and operation of the Bank, the informal agreement was terminated 
effective January 22, 2004.

Off-Balance Sheet Arrangements

Neither the Company, nor the Bank have any off-balance sheet arrangements 
that have or are reasonably likely to have a current or future effect on our 
financial condition, revenues or expenses, results of operations, liquidity, 
capital expenditures or capital resources that is material to investors.


  28


ITEM 3

Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------

Interest Rate Risk

The Company's net income is largely dependent on its net interest income, 
the difference between the yield on its interest-earning assets and the cost 
of its interest-bearing liabilities. Volatility in market interest rates 
requires the Company to manage interest rate risk that arises from the 
differences in the timing of repricing of assets and liabilities. Management 
considers interest rate risk, the exposure of earnings to adverse movements 
in interest rates, to be a significant market risk as it could potentially 
have an affect on our financial condition and results of operation.

The Company's objective is to control interest rate risk and control the 
vulnerability of its net interest margin to changes in interest rates by 
managing the relationship of interest-earning assets and interest-bearing 
liabilities. The interest rate risk is managed by periodic review and 
evaluation of the risk potential in certain balance sheet accounts, and 
determining the level of risk considered appropriate for our level of 
capital. This, in conjunction with certain assumptions and other related 
factors, such as anticipated changes in interest rates, liquidity 
requirements, performance objectives and strategic plans, provides 
management a means of evaluating interest rate risk.

The Finance and Investment Committee; comprised of designated executive 
management and directors, is responsible for managing and monitoring 
interest rate risk. The Committee reviews the Company's interest rate risk 
position with the Board of Directors at least quarterly, including the 
impact changes in interest rates would have on net interest income, and the 
maintenance of interest rate risks within approved guidelines.

The Company quantifies its interest rate risk exposure using a sophisticated 
income simulation model. This simulation analysis is used to measure the 
exposure to net interest income to changes in interest rates over a 
specified time frame. The simulation analysis projects future interest 
income and interest expense under different rate scenarios. Internal 
guidelines on limitations on interest rate risk specify that for every 100 
basis points of immediate change in interest rates, projected net interest 
income over the next twelve months should not decline by more than 5%.

The simulation model generally utilizes a 300 basis point shift in interest 
rates, both upward and downward. However, because of the existing low 
interest rate environment in effect with the average Federal Funds overnight 
rate trading below 1.75%, the simulation model only reduces rates downward 
by 75 basis points. The interest rate movements used assume an instant and 
parallel change in interest rates, and no implementation of any strategic 
plans are made in response to the change in interest rates. Prepayment 
speeds for loans are based on median dealer forecasts for each for each loan 
type in a given interest rate scenario.

The following table reflects our estimated exposure as a percentage of 
estimated net interest income for the next twelve months, assuming an 
immediate change in interest rates as set forth below:




                         Estimated Exposure as a Percentage
       Rate Change             of Net Interest Income
      (Basis Points)             September 30, 2004
      -----------------------------------------------------

                                   
           +300                       (14.16)%
            -75                        (0.85)%


The model used to monitor earnings-at-risk provides management a measurement 
tool to assess the effect of changes in interest rates on our current and 
future earnings. The limit we established provides an internal tolerance 
level to control interest rate risk exposure.


  29


ITEM 4

Controls and Procedures
-----------------------

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as 
amended (the "Exchange Act"), the Company's management conducted an 
evaluation with the participation of the Company's Chief Executive Officer 
and Chief Financial Officer, regarding the effectiveness of the Company's 
disclosure controls and procedures, as of the end of the last fiscal 
quarter. Based upon that evaluation, the Chief Executive Officer and Chief 
Financial Officer concluded that the Company's disclosure controls and 
procedures were effective as of September 30, 2004 to ensure that 
information required to be disclosed by the Company in the reports it files 
or submits under the Exchange Act is (i) recorded, processed, summarized and 
reported, within the time periods specified in the Securities and Exchange 
Commission's rules and forms and (ii) accumulated and communicated to the 
Company's management, including its principal executive and financial 
officers, as appropriate to allow timely decisions regarding required 
disclosure. We intend to continue to review and document our disclosure 
controls and procedures, including our internal controls and procedures for 
financial reporting, and we may from time to time make changes to the 
disclosure controls and procedures to enhance their effectiveness and to 
ensure that our systems evolve with our business. In designing and 
evaluating the Company's disclosure controls and procedures, the Company and 
its management recognize that any controls and procedures, no matter how 
well designed and operated, can provide only a reasonable assurance of 
achieving the desired control objectives, and management necessarily was 
required to apply its judgment in evaluating and implementing possible 
controls and procedures.

There has been no change in the Company's internal control over financial 
reporting identified in connection with the evaluation that occurred during 
the Company's last fiscal quarter that has materially affected, or that is 
reasonably likely to materially affect, the Company's internal control over 
financial reporting.


  30


                                   PART II
                              Other Information

ITEM 1

Legal Proceedings
-----------------

None.

ITEM 2

Changes in Securities, Use of Proceeds and Issuer Purchases
-----------------------------------------------------------
of Equity Securities
--------------------

During the three months ended September 30, 2004, the Company did not 
repurchase any of its common stock. The Company currently does not have a 
stock repurchase program in place.

ITEM 3

Defaults Upon Senior Securities
-------------------------------

None.

ITEM 4

Submission of Matters to a Vote of Security Holders
---------------------------------------------------

None.

ITEM 5

Other Information
-----------------

None.


  31


ITEM 6

Exhibits
--------

      (1)  Exhibit 11.1 - Computation of Per Share Earnings
      (2)  Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of the CEO
      (3)  Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of the CFO
      (4)  Exhibit 32.1 - Section 1350 Certification of the CEO
      (5)  Exhibit 32.2 - Section 1350 Certification of the CFO


  32


                                 SIGNATURES

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

                                       SLADE'S FERRY BANCORP.
                                       -------------------------------------
                                       (Registrant)


August 15, 2005                        /s/ Mary Lynn D. Lenz
-------------------                    -------------------------------------
(Date)                                 (Signature)         Mary Lynn D. Lenz
                                           President/Chief Executive Officer


August 15, 2005                        /s/ Deborah A. McLaughlin
-------------------                    -------------------------------------
(Date)                                 (Signature)     Deborah A. McLaughlin
                                                    Executive Vice President
                                                    Chief Operating Officer/
                                                     Chief Financial Officer


  


                                EXHIBIT INDEX

Exhibit No.    Description                                              Item
-----------    -----------                                              ----

   3.1         Amended and Restated Articles of Incorporation of
               Slade's Ferry Bancorp.                                    (1)

   3.2         Amended and Restated Bylaws of Slade's Ferry Bancorp.     (2)

   3.3         Articles of Amendment to the Amended and Restated
               Articles of Incorporation of Slade's Ferry Bank           (3)

  10.1         Slade's Ferry Bancorp. 1996 Stock Option Plan,
               as amended                                                (4)

  10.2         Supplemental Executive Retirement Agreement between
               Slade's Ferry Bancorp. and Manuel J. Tavares              (5)

  10.3         Form of Director Supplemental Retirement Program
               Director Agreement, Exhibit 1 thereto (Slade's Ferry
               Trust Company Director Supplemental Retirement
               Program Plan) and Endorsement Method Split Dollar Plan
               Agreement thereunder.                                     (6)

  10.4         Form of Directors' Paid-up Insurance Policy (part of
               the Director Supplemental Retirement Program).            (7)

  10.5         Supplemental Executive Retirement Agreement between
               Slade's Ferry Bancorp. and Mary Lynn D. Lenz              (8)

  10.6         Employment Agreement between Slade's Ferry Bancorp. 
               and Mary Lynn D. Lenz                                     (9)

  10.7         Employment Agreement between Slade's Ferry Bancorp.
               and Deborah A. McLaughlin                                (10)

  10.8         Employment Agreement between Slade's Ferry Bancorp.
               and Manuel J. Tavares                                    (11)

  10.9         Form Change of Control Agreement                         (12)

  10.10        Severance Pay Plan                                       (13)

  10.11        Slade's Ferry Bancorp 2004 Equity Incentive Plan         (14)

  11.1         Statement Regarding Computation of Per Share Earnings

  14.1         Code of Ethics                                           (15)

  31.1         Rule 13a-14(a)/15d-14(a) Certification of the CEO

  31.2         Rule 13a-14(a)/15d-14(a) Certification of the CFO

  32.1         Section 1350 Certification of the CEO

  32.2         Section 1350 Certification of the CFO


--------------------
  Incorporated by reference to the Registrant's Registration Statement 
      on Form SB-2 filed with the Commission on April 14, 1997. 
  Incorporated by reference to the Registrant's Form 10-Q filed with the 
      Commission on May 12, 2005. 
  Incorporated by reference to the Registrant's Form 8-K filed with the 
      Commission on December 21, 2004.
  Incorporated by reference to the Registrant's Form 10-Q/A for the 
      quarter ended June 30, 1999.
  Incorporated by reference to the Registrant's Form 10-K/ASB for the 
      fiscal year ended December 31, 1996.
  Incorporated by reference to Exhibit 10 to the Registrant's Form
      10-Q/A for the quarter ended March 31, 1999.
  Incorporated by reference to Exhibit 10 to the Registrant's Form
      10-Q/ASB for the quarter ended June 30, 1998.


  


  Incorporated by reference to Exhibit 10.10 to the Registrant's Form 
      10-Q/A for the quarter ended March 31, 2003.
  Incorporated by reference to Exhibit 10.11 to the Registrant's Form 
      10-Q/A for the quarter ended June 30, 2004.
 Incorporated by reference to Exhibit 10.7 to the Registrant's Form
      10-Q/A for the quarter ended September 30, 2004.
 Incorporated by reference to Exhibit 10.8 to the Registrant's Form
      10-Q/A for the quarter ended September 30, 2004.
 Incorporated by reference to the Registrant's Form 8-K filed with the 
      Commission on January 13, 2005.
 Incorporated by reference to the Registrant's Form 8-K filed with the 
      Commission on January 14, 2005.
 Incorporated by reference to Appendix C to the Registrant's Proxy 
      Statement filed on April 9, 2004
 Incorporated by reference to the Registrant's Form 10-K for the fiscal 
      year ended December 31, 2003.