To Our Shareholders:
     The banking industry in the United States has undergone a remarkable transformation during the last two decades. The neighborhood banks that dotted the landscape have almost disappeared, having been replaced by larger institutions through mergers and acquisitions. Those "newly" created institutions are headquartered hundreds and sometimes thousands of miles from the former locally based community bank. Decisions once made on an individual basis with knowledge of the local economy are now being made in other sections of the region and country on less flexible quantitative models through a computer. At most banks, customers have had difficulty reaching a live voice when telephoning their bank and now receive a recorded voice message with instructions on how to proceed with their call.
     The Bank of Southern Connecticut has changed all of that in Greater New Haven and has re-introduced "banking basics." Decisions are made locally by experienced local management who know the economic needs of the community and the individuals and companies with whom they are dealing. While consulting with clients, qualified lenders have the flexibility to render a decision and not rely on a computer to make those decisions.
     When customers or potential customers call the Main Office or one of our branches, they talk to a "real" person who is instructed to "get the answer" in a rapid fashion. The customer is getting "high touch" personal service.
     The Bank of Southern Connecticut, your Bank, has now become an antidote to these trends and has returned the local banking scene to the traditional values of the sixties and seventies.
     Our mission is clear—to remain a financially strong, independent, locally owned, full-service bank providing customers in select markets with services that exceed their expectations.
     Our first full two years and three months exceeded our expectations for growth and operating results.
     Prior to opening, we were challenged that it would not be easy to break into the merchant, wholesale market in a short period and that it would take at least five years to make a dent in the Greater New Haven marketplace. Also, it would take at least three years for the Bank to achieve profitability. Your Bank has been able to accomplish both tasks rather handily. The Bank now has over 500 business customers from the "Mom and Pop" store doing $150,000 annually to several companies generating $25 million to $30 million in annual revenue. A varied and diverse customer base has been developed as a result of the Bank’s strong marketing effort.

Starting with a main office and 8 employees, the Bank now has three offices and 29 staff members. Most important is that the Bank earned a profit in its ninth quarter of operation of $111,000. By achieving these results, the Bank was able to surpass its peers since most de novo banks have taken an average of three to four years to attain profitability.
     Total assets of Southern Connecticut Bancorp, Inc. at December 31, 2003 were $56,386,040 up from $35,500,115 at December 31, 2002, an increase of 59%. Total deposits increased from $24,992,931 to $47,273,875, or 89.1%, at December 31, 2003; total loans grew from $19,281,212 to $41,239,862, or 114%, from year-end 2002 to 2003, respectively.
     The number of business accounts obtained by the Bank now exceed 500 in total, more than doubling the new business accounts attained during the first year and a quarter of operation. In addition, businesses have now opened 117 commercial money market accounts, 34 commercial savings accounts, and 39 commercial certificates of deposit. A total of 1,455 accounts are now open at the Bank, more than double the 710 at the previous year-end. With the focus of the Bank on the business community, only 20 personal certificates of deposit in amounts of $100,000 or more were opened, a demonstration that the Bank is not bidding for high cost, volatile funds to support both its growth and operation. Instead, the Bank is funding its operation with very low cost core deposits. Further evidence of this fact is that, based on a study prepared by the investment banking firm, Keefe, Bruyette and Woods, the Bank had the second highest net interest margin of Connecticut co mmunity banks at 4.70% for the year ended December 31, 2003.
     During 2003, the net loss for the Company was $597,927 compared to the loss of $1,384,013 for the year ended December 31, 2002. Quarterly losses for the Company were $184,183, $228,466, $211,225 for the first, second and third quarters of 2003, respectively, with Bank net income of $111,000 attained during the fourth quarter and net income of $25,947 for the Company. The Bank was still somewhat handicapped by the low interest rates earned on excess funds invested in federal funds and other market instruments as the interest rate environment is at a 45-year low. Based on the Bank’s solid core deposit mix, a commercial loan portfolio consisting of mostly variable rate instruments and an anticipated rising rate environment, the Bank’s Management believes that earnings should continue to increase in the immediate future.
     The capital level of The Bank of Southern Connecticut, the Company’s main subsidiary, is very strong and will become stronger as continued earnings are expected. The Bank continues to be one of Connecticut’s strongest capitalized banks. The Leverage Capital Ratio at year end is 14.16% compared with the regulatory requirement of 5%. The Tier I Risk Based Capital Ratio is 16.33% compared with a regulatory requirement of 6%. Finally, the Total Risk Based Capital Ratio is 17.24% compared with a regulatory requirement of 10%. Therefore, all of the Bank’s regulatory capital ratios exceed the regulatory requirements for well-capitalized institutions.

The Company is continuing with its plans to establish a new commercial bank in New London, Connecticut.
     The proposed bank in New London will be named The Bank of Southeastern Connecticut and will be located at 15 Masonic Street. This building had previously been a branch bank which closed due to a merger, and prior to that, a main office of another bank. The facility is "turnkey" in that it already has a drive-in, teller counters, vault and other banking equipment.
     On February 23, 2004, the Connecticut Department of Banking held a hearing in Hartford on the Company’s application for The Bank of Southeastern Connecticut (In Organization). Southern Connecticut Bancorp Inc., is presently awaiting preliminary approval from the Banking Department to move forward with this bank organization. After preliminary approval, the Company will seek Federal Deposit Insurance Corporation approval as well. It is then planned that new bank would open in late fall of 2004.
     The Board of Directors, President and staff of the de novo bank will be comprised of New London area oriented individuals, and the business model of the bank will be in the same mold as The Bank of Southern Connecticut where the focus will center on small and medium size closely held businesses.
     New London has not had a hometown Connecticut based commercial bank since1967. The establishment of the new bank will fit the long-range plans of banking and marketing on the Connecticut shoreline from New Haven all the way to the Rhode Island border.
     The proposed overall plan for the two banks is to have The Bank of Southern Connecticut establish branches from Greater New Haven east through Old Saybrook while The Bank of Southeastern Connecticut will establish branches in Greater New London west to Old Saybrook and east to the Rhode Island border. Both banks would continue with the previous overall plan of servicing small and medium sized businesses, professionals and individuals in and along the shore line from New Haven to Rhode Island. This plan has worked so very well in the New Haven startup during the first two years and three months of operation.
     There will be anticipated economies of scale as the Financial and Operations Departments of The Bank of Southern Connecticut will be transferred to the Company. The two departments will do the financial and operations work for both banks on an allocated basis. This move will eliminate the necessity of two chief financial officers and two operations departments, as well as other infrastructure financial and operations duplications.

On April 1, 2003, The Bank of Southern Connecticut opened its third office at 1495 Whalley Avenue on the Amity/Woodbridge border, a former Taco Bell location. At year-end 2003, the new office had opened 55 business checking accounts and 193 accounts in all. Deposits were close to $5,000,000 during the Amity Office’s first nine months of operation. This office has performed up to expectations.
     In November of 2003, Southern Connecticut Bancorp formed SCB Capital, Inc. This company was created to be an investment banking company that specializes in raising equity capital for small to medium-sized, closely held businesses. Besides engaging in corporate finance activities, SCB Capital, Inc. will obtain management consulting assignments and participate in the sale of equity securities and other fee based investment banking activities. SCB Capital, Inc. will be managed by a former Wall Street banker with a myriad of investment banking experience. In addition, SCB Capital, Inc. has applied for membership in the NASD.
     On February 17, 2004, the Board of Directors of the Southern Connecticut Bancorp, Inc. issued a 10% stock dividend to shareholders of record on January 30, 2004. The dividend was voted to reward the original shareholders for their confidence in supporting the Board of Directors and Management during the startup of the Company and Bank. The dividend was based on the performance of The Bank of Southern Connecticut, its growth and profitability as well as the overall progress it has made since the inception in October of 2001.
     The Board of Directors and Management thank you for your continuing support. Come visit with us at any of our three locations—we welcome you at your Bank.
     Thank you.

     Most sincerely,

THE BANK OF SOUTHERN CONNECTICUT
BOARD OF DIRECTORS
2003-2004

*Juan Jose Alvarez de Lugo, Director
Arquin Decoraciones

*CarI R. Borrelli, Treasurer
All Brite Electric, Inc.

James S. Brownstein, Esq.
Kantrovitz & Brownstein

*Joseph V Ciaburri, Chairman and Chief Executive Officer
The Bank of Southern Connecticut

Michael M. Ciaburri, President and Chief Operating Officer
The Bank of Southern Connecticut

*G. Leon Jacobs, Tribal Manager
Mashantucket Pequot Tribal Nation

*Elmer F Laydon, President
Elmer F Laydon Construction Corp.

Janette J. Parker, Former Director
Connecticut Port Authority

W. Martyn Philpot, Jr., Esq.
Law Offices of Martyn Philpot, Jr.

Alfred J. Ranieri, Jr., MD

J. Daniel Sagarin, Esq.
Hurwitz & Sagarin

*Joshua H. Sandman, Vice President
Deitsch Plastic Co., Inc.

*AIphonse F Spadaro, Jr., Managing Principal, Levitsky & Berney PC.

*Also Director of Southern Connecticut Bancorp, Inc.

The selected consolidated financial data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," the consolidated financial statements and the notes thereto and the other information contained in the accompanying Form 10-KSB. The selected balance sheet and statement of operations data as of and for the year ended December 31, 2003 and 2002, are derived from and are qualified by reference to, the audited consolidated financial statements of the Company appearing elsewhere in the accompanying Form 10-KSB.

As of and for the Year Ended December 31,

Bancorp Officers

Joseph V. Ciaburri, Chairman & Chief Executive Officer
Elmer F. Laydon, Vice Chairman
Michael M. Ciaburri, President & Chief Operating Officer
William F. Weaver, Vice President & Chief Financial Officer
Anthony M. Avellani, Vice President & Controller
Rosemarie A. Romano, Corporate Secretary

Bank Officers
Joseph V. Ciaburri, Chairman & Chief Executive Officer
Michael M. Ciaburri, President & Chief Operating Officer
William F. Weaver, Vice President & Chief Financial Officer
Rosemarie A. Romano, Associate Vice President, Executive Assistant to the Chairman
Anthony M. Avellani, Vice President & Controller
Thomas W.Keefe, Vice President, Commercial Lending
Joseph R Nuzzo, Vice President, Commercial Banking Officer
James A. Peters, Vice President, Operations Officer
Neal Chorney, Vice President, Marketing Officer
S. John Severson, Vice President, Marketing Officer
C. James Walker, Vice President, Investment Banking
Jorge L. Perez, Vice President, Banking Officer
Kenneth A. Innocenzi, Assistant Vice President, Operations
Kathleen M. Mirto, Assistant Vice President, Branch Officer
Christine Curtis, Assistant Manager, Branch Officer
Kelly A. Brereton, Operations Officer

Market Makers
Fahnestock & Co. and A.G. Edwards, Stock Symbol: SCNO


Request for Annual Report to: Rosemarie A. Romano, Corporate Secretary, Southern Connecticut Bancorp, Inc., 215 Church Street, New Haven, Connecticut 06510. Bancorp stock is traded on the NASDAQ Bulletin Board under the symbol: SCNO