EXHIBIT 10.3

                       GRANITE STATE BANKSHARES, INC. 
 
                   AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT 
 
      WHEREAS, Charles W. Smith ("Executive") and the Granite State 
Bankshares, Inc. (the "Holding Company") are parties to an employment 
agreement made effective as of June 30, 1986 (the "Agreement"); and 

      WHEREAS, there is an accelerating trend of consolidation among 
companies within the banking industries; and 

      WHEREAS, the Agreement is intended to provide certain benefits to 
Executive in the event of a change in control of the Holding Company; and 

      WHEREAS, tax law provisions relating to "golden parachute payments" 
could have the effect of reducing the benefits  otherwise provided to 
Executive under the Agreement as a result of a change in control of the 
Holding Company; and 

      WHEREAS, the Board believes that it is in the best interests of the 
Holding Company and its shareholders that the Agreement be amended in order 
to provide the benefits originally intended to be provided under the 
Agreement to Executive in the event of a change in control of the Holding 
Company, without any reduction because of tax code "penalties" or excise 
taxes relating to a change in control; and 

      WHEREAS, the Holding Company and the Executive also desire to amend 
the Agreement in the manner set forth herein for the purpose of providing 
further incentive to the Executive to achieve successful results in the 
management and the operation of the Holding Company. 

      NOW, THEREFORE, in consideration of the mutual covenants herein 
contained, and upon the other terms and conditions hereinafter provided, the 
parties hereby agree to the following amendment to the Agreement: 

      1.   Paragraph (j) of Section 5 shall be added to read as follows: 

           (h)   Notwithstanding any other provisions contained in this 
                 Agreement, in each calendar year that Executive is entitled 
                 to receive payments or benefits under the provisions of 
                 this Section 5, the independent accountants of the Holding 
                 Company shall determine if an excess parachute payment (as 
                 defined in Section 4999 of the Internal Revenue Code of 
                 1986, as amended, and any successor provision thereto, (the 
                 "Code")) exists.  Such determination shall be made after 
                 taking any reductions permitted pursuant to Section 280G of 
                 the Code and the regulations thereunder.  Any amount 
                 determined to be an excess parachute payment after taking 
                 into account such reductions shall be hereafter referred to 
                 as the "Initial Excess Parachute Payment".  As soon as 
                 practicable after a Change in Control, the Initial Excess 
                 Parachute Payment shall be determined.  Upon the Date of 
                 Termination following a Change in Control, the Holding 
                 Company shall pay Executive, subject to applicable 
                 withholding requirements under applicable state or federal 
                 law an amount equal to: 

                    (i)   twenty (20) percent of the Initial Excess 
                          Parachute Payment (or such other amount equal to 
                          the tax imposed under Section 4999 of the Code), 
                          and 

                   (ii)   such additional amount (tax allowance) as may be 
                          necessary to compensate Executive for the payment 
                          by Executive of state and federal income and 
                          excise taxes on the payment provided under Clause 
                          (i) and on any payments under this Clause (ii).  
                          In computing such tax allowance, the payment to be 
                          made under Clause (i) shall be multiplied by the 
                          "gross up percentage" ("GUP").  The GUP shall be 
                          determined as follows: 

                                             Tax Rate
                                       GUP = ---------------
                                             1- Tax Rate 

                          The Tax Rate for purposes of computing the GUP 
                          shall be the highest marginal federal and state 
                          income and employment-related tax rate applicable 
                          to the Executive in the year in which the payment 
                          under Clause (i) is made. 

                 Notwithstanding the foregoing, if it shall subsequently be 
                 determined in a final judicial determination or a final 
                 administrative settlement to which Executive is a party 
                 that the excess parachute payment as defined in Section 
                 4999 of the Code, reduced as described above, is different 
                 from the Initial Excess Parachute Payment (such different 
                 amount being hereafter referred to as the "Determinative 
                 Excess Parachute Payment") then the Holding Company's 
                 independent accountants shall determine the amount (the 
                 "Adjustment Amount") the Executive must pay to the Holding 
                 Company or the Holding Company must pay to the Executive in 
                 order to put the Executive (or the Holding Company, as the 
                 case may be) in the same position as the Executive (or the 
                 Holding Company, as the case may be) would have been if the 
                 Initial Excess Parachute Payment had been equal to the 
                 Determinative Excess Parachute Payment.  In determining the 
                 Adjustment Amount, the independent accountants shall take 
                 into account any and all taxes (including any penalties and 
                 interest) paid by or for Executive or refunded to Executive 
                 or for Executive's benefit.  As soon as practicable after 
                 the Adjustment Amount has been so determined, the Holding 
                 Company shall pay the Adjustment Amount to Executive or the 
                 Executive shall repay the Adjustment Amount to the Holding 
                 Company, as the case may be. 

                 In each calendar year that Executive receives payments or 
                 benefits under the provisions of this Section 5, Executive 
                 shall report on his state and federal income tax returns 
                 such information as is consistent with the determination 
                 made by the independent accountants of the Holding Company 
                 as described above.  The Holding Company shall indemnify 
                 and hold Executive harmless from any and all losses, costs 
                 and expenses (including without limitation, reasonable 
                 attorney's fees, interest, fines and penalties) which 
                 Executive incurs as a result of so reporting such 
                 information.  Executive shall promptly notify the Holding 
                 Company in writing whenever the Executive receives notice 
                 of the institution of a judicial or administrative 
                 proceeding, formal or informal, in which the federal tax 
                 treatment under Section 4999 of the Code of any amount paid 
                 or payable under this Agreement is being reviewed or is in 
                 dispute.  The Holding Company shall assume control at its 
                 expense over all legal and accounting matters pertaining to 
                 such federal tax treatment (except to the extent necessary 
                 or appropriate for Executive to resolve any such proceeding 
                 with respect to any matter unrelated to amounts paid or 
                 payable pursuant to this contract) and Executive shall 
                 cooperate fully with the Holding Company in any such 
                 proceeding. The Executive shall not enter into any 
                 compromise or settlement or otherwise prejudice any rights 
                 the Holding Company may have in connection therewith 
                 without prior consent to the Holding Company. 

      2.   All other terms and provisions of the Agreement shall remain 
unchanged and in full force and effect. 

      IN WITNESS WHEREOF, Granite State Bankshares, Inc. has caused this 
Amendment No. 1 to the Agreement to be executed and its seal to be affixed 
hereunto by its duly authorized officer, and Executive has signed this 
Amendment No. 1, on the 12th day of August, 1996. 
 
 
ATTEST:   [SEAL]                       GRANITE STATE BANKSHARES, INC. 
 
 
/s/ Charles B. Paquette                By:  /s/ William Smedley

[SEAL] 
 
 
WITNESS: 
 
 
/s/ Stacey W. Cole                     /s/ Charles W. Smith
                                       Executive