SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                For the Quarterly Period ended September 30, 2001

                          Commission File No. 000-25381

                         CCBT FINANCIAL COMPANIES, INC.
             (Exact name of Registrant as specified in its charter)

     Massachusetts                                               04-3437708
(State of Incorporation)                                     (I.R.S. Employer
                                                            Identification No.)

  495 Station Avenue, South Yarmouth, Massachusetts                02664
     (Address of principal executive office)                     (Zip Code)

            (Registrant's telephone #, incl. area code): 508-394-1300

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

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest practicable date. There were 8,620,423
shares of common stock outstanding as of November 9, 2001.


<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section               Description                                                                      Page No.
<S>                   <C>                                                                              <C>
PART I                FINANCIAL INFORMATION

         Item 1.      Financial Statements

                      Consolidated Statements of Financial Condition                                      3
                               September 30, 2001 (Unaudited) and December 31, 2000

                      Consolidated Statements of Income (Unaudited)                                       4
                               Three and Nine Months Ended September 30, 2001 and 2000

                      Consolidated Statements of Cash Flows (Unaudited)                                   5
                               Nine Months Ended September 30, 2001 and 2000

                      Consolidated Statements of Comprehensive Income (Unaudited)                         6
                               Nine Months Ended September 30, 2001 and 2000

                      Consolidated Statements of Changes in Stockholders' Equity (Unaudited)              6
                               Nine Months Ended September 30, 2001 and 2000

                      Notes to Consolidated Financial Statements                                          7

         Item 2.      Management's Discussion and Analysis of Financial Condition                         7-18
                               and Results of Operations

         Item 3.      Quantitative and Qualitative Disclosures About Market Risk                          19

PART II               OTHER INFORMATION

         Item 1.      Legal Proceedings                                                                   19

         Item 2.      Changes in Securities and Use of Proceeds                                           19

         Item 3.      Defaults upon Senior Securities                                                     19

         Item 4.      Submission of Matters to a Vote of Security Holders                                 19

         Item 5.      Other Information                                                                   19

         Item 6.      Exhibits and Reports on Form 8-K                                                    19

                      SIGNATURES                                                                          20
</TABLE>

                                       2

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 1. Financial Statements

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                         September 30,             December 31,
                                                                             2001                      2000
                                                                             ----                      ----
                                                                         (Unaudited)
ASSETS
<S>                                                                    <C>                        <C>
   Cash and due from banks                                             $    33,709,066            $    49,371,492
   Short term interest-bearing deposits                                        457,442                 16,843,538
   Securities available for sale at fair value                             508,669,050                426,742,801
   Federal Home Loan Bank stock, at cost                                    22,125,400                 22,125,400
   Federal Reserve Bank stock, at cost                                       1,235,050                  1,180,700
   Total loans                                                             877,360,089                848,490,319
   Less:  Reserve for loan losses                                          (12,165,917)               (12,153,944)
                                                                       ---------------            ---------------
   Net loans                                                               865,194,172                836,336,375
   Loans held for sale                                                         623,225                    860,840
   Premises and equipment                                                   17,920,402                 16,633,912
   Deferred tax assets                                                       1,769,330                  4,512,589
   Accrued interest receivable on securities                                 3,070,442                  3,353,580
   Principal and interest receivable on loans                                4,306,330                  4,331,987
   Intangibles                                                               8,367,922                  9,555,425
   Other assets                                                             16,760,759                 12,070,707
                                                                       ---------------            ---------------
           Total assets                                                $ 1,484,208,590            $ 1,403,919,346
                                                                       ===============            ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
   Deposits                                                            $   935,432,739            $   973,302,664
   Borrowings from the Federal Home Loan Bank                              370,926,054                291,286,797
   Other short-term borrowings                                              35,453,049                 24,520,157
   Subordinated debt                                                         5,000,000                        --
   Current taxes payable                                                       934,427                  2,267,117
   Interest payable on deposits and borrowings                               2,583,037                  4,206,555
   Post retirement benefits payable                                          3,188,675                  2,830,386
   Employee profit sharing retirement and bonuses payable                    2,292,844                  2,946,642
   Due to broker securities settlement account                              12,107,571                    756,617
   Other liabilities                                                         3,786,733                  2,949,198
                                                                       ---------------            ---------------

           Total liabilities                                             1,371,705,129              1,305,066,133
                                                                       ---------------            ---------------

Minority interest                                                               29,097                    124,435
                                                                       ---------------            ---------------


 Stockholders' equity
   Common stock, $1.00 par value:
          Authorized: 12,000,000 shares
          Issued: 9,061,064 shares                                           9,061,064                  9,061,064
   Surplus                                                                  27,473,395                 27,494,890
   Undivided profits                                                        79,476,177                 69,896,759
   Treasury stock, at cost (440,641 shares in 2001)                         (7,197,493)                (7,399,628)
                           (453,016 shares in 2000)
   Accumulated other comprehensive income (loss)                             3,661,221                   (324,307)
                                                                       ---------------            ---------------
           Total stockholders' equity                                      112,474,364                 98,728,778
                                                                       ---------------            ---------------

           Total liabilities and stockholders' equity                  $ 1,484,208,590            $ 1,403,919,346
                                                                       ===============            ===============
</TABLE>


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

                                       3

<PAGE>

PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements (continued)

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                         Three Months Ended Sept. 30,   Nine Months Ended Sept. 30,
                                                                            2001              2000          2001             2000
                                                                            ----              ----          ----             ----
INTEREST INCOME:                                                                 (Unaudited)                    (Unaudited)
<S>                                                                      <C>            <C>             <C>            <C>
  Interest and fees on loans                                             $ 16,730,597   $ 15,900,554    $ 51,319,096   $ 44,334,344
  Interest on short term interest-bearing deposits                            121,768        356,103         445,463        659,053
  Interest on federal funds sold                                                 --           29,975            --           29,975
  Taxable interest income on securities                                     5,757,443      7,339,386      20,917,500     21,873,218
  Tax-exempt interest income on securities                                    255,465        264,348         722,350        690,810
  Dividends on securities                                                     328,445        451,558       1,108,860      1,298,480
                                                                         ------------   ------------    ------------   ------------
       Total interest income                                               23,193,718     24,341,924      74,513,269     68,885,880
                                                                         ------------   ------------    ------------   ------------
INTEREST EXPENSE
  Interest on deposits                                                      5,116,844      7,636,029      19,638,064     17,901,379
  Interest on borrowings from the Federal Home Loan Bank                    4,858,045      3,487,223      15,464,756     14,417,815
  Interest on other short-term borrowings                                     198,133        412,674         674,897      1,003,120
  Interest on subordinated debt                                                63,677           --            63,677           --
                                                                         ------------   ------------    ------------   ------------
       Total interest expense                                              10,236,699     11,535,926      35,841,394     33,322,314
                                                                         ------------   ------------    ------------   ------------
  Net interest income                                                      12,957,019     12,805,998      38,671,875     35,563,566
  Provision for loan losses                                                      --             --              --              --
                                                                         ------------   ------------    ------------   ------------
  Net interest income after provision for loan losses                      12,957,019     12,805,998      38,671,875     35,563,566
                                                                         ------------   ------------    ------------   ------------
NON-INTEREST INCOME
  Financial Advisor fees                                                    1,574,269      1,442,366       5,222,500      4,779,861
  Deposit account service charges                                             523,051        495,650       1,564,688      1,469,236
  Branch banking fees                                                         804,882        832,337       2,342,191      2,312,947
  Electronic banking fees                                                     493,683        429,933       1,451,848      1,428,785
  Loan servicing and other loan fees                                           27,558         39,330         129,750        225,233
  Brokerage fees and commissions                                              230,741        218,575         720,192        752,216
  Net gain on sales of securities                                             292,426         44,931       1,144,983         73,233
  Net gain on sales of loans                                                1,770,946         31,144       2,192,986         58,798
  Insurance commissions                                                       471,316        304,722       1,358,057        499,315
  Other income                                                                219,549        150,278         607,259        419,224
                                                                         ------------   ------------    ------------   ------------
       Total non-interest income                                            6,408,421      3,989,266      16,734,454     12,018,848
                                                                         ------------   ------------    ------------   ------------
NON-INTEREST EXPENSE
  Salaries                                                                  4,496,761      3,799,920      12,824,169     10,486,815
  Employee benefits                                                         1,687,779      1,624,850       5,226,034      4,610,371
  Building and equipment                                                    1,426,065      1,277,941       4,177,169      3,566,320
  Data processing                                                             830,660        759,273       2,417,640      2,201,146
  Accounting and legal fees                                                   231,506        209,846         704,266        671,530
  Other outside services                                                      609,009        509,830       1,707,234      1,547,574
  Amortization of intangibles                                                 395,833        395,835       1,187,499        455,609
  Delivery and communications                                                 586,781        386,234       1,582,829      1,129,960
  Directors' fees                                                              85,800         86,250         257,400        262,000
  Marketing and advertising                                                   392,854        318,103       1,332,585        842,407
  Printing and supplies                                                       222,802        210,845         668,554        604,052
  Insurance                                                                   111,948         98,081         359,336        286,324
  Branch conversion expenses                                                     --          249,808            --          249,808
  All other expenses                                                          518,594        308,282       1,291,090      1,273,114
                                                                         ------------   ------------    ------------   ------------
       Total operating expense                                             11,596,392     10,235,098      33,735,805     28,187,030
                                                                         ------------   ------------    ------------   ------------
 Minority interest                                                              7,780         (6,917)          2,196        (17,413)
                                                                         ------------   ------------    ------------   ------------
Net income before taxes                                                     7,761,268      6,567,083      21,668,328     19,412,797
Applicable income taxes                                                     2,749,161      2,199,774       7,440,565      6,591,100
                                                                         ------------   ------------    ------------   ------------
Net income                                                               $  5,012,107   $  4,367,309    $ 14,227,763   $ 12,821,697
                                                                         ============   ============    ============   ============
Average shares outstanding                                                  8,615,738      8,608,048       8,610,640      8,608,048
Basic earnings per share                                                 $       0.58   $       0.51    $       1.65   $       1.49
Diluted earnings per share
                                                                         $       0.58   $       0.51    $       1.65   $       1.49
Cash dividends declared
                                                                         $       0.18   $       0.16    $       0.54   $       0.48
</TABLE>


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


                                       4

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 1. Financial Statements (continued)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     For the Nine Months Ended September 30,

<TABLE>
<CAPTION>
                                                                          2001                   2000
                                                                          ----                   ----
                                                                                  (Unaudited)
CASH PROVIDED BY OPERATING ACTIVITIES

<S>                                                                 <C>                        <C>
Net income                                                          $  14,227,763              $  12,821,697
Adjustments to reconcile net income to net cash
        provided by operating activities:
    Provision for loan losses                                                --                         --
    Depreciation and amortization                                       3,067,370                  1,726,808
    Net  amortization of securities                                     4,015,751                  5,126,638
    Accretion of deferred loan fees                                      (430,380)                   (97,509)
    Net gain on sale of investment securities                          (1,144,983)                   (73,233)
    Prepaid income tax expense                                         (4,075,949)                (1,046,754)
    Net gain on sale of loans                                          (2,192,986)                   (58,798)
Net change in:
    Loans held for sale                                                   237,615                     35,230
    Accrued interest receivable                                           308,795                 (1,402,854)
    Accrued expenses and other liabilities                             10,269,462                  1,046,526
    Other, net                                                         (4,752,749)                (2,986,764)
                                                                    -------------              -------------
Net cash provided by operating activities                              19,529,709                 15,090,987
                                                                    -------------              -------------

CASH USED BY INVESTING ACTIVITIES
    Net increase in loans                                            (137,220,055)              (130,355,375)
    Proceeds from sale of loans                                       110,375,126                  8,749,600
    Dispositions of property from defaulted loans                            --                       70,000
    Maturities of securities                                          321,793,992                546,702,601
    Purchases of available for sale securities                       (479,927,573)              (783,033,661)
    Sales of available for sale securities                             84,746,392                297,988,862
    Purchases of premises and equipment                                (4,399,992)                (5,608,672)
                                                                    -------------              -------------
Net cash used by investing activities                                (104,632,110)               (65,486,645)
                                                                    -------------              -------------
CASH PROVIDED BY FINANCING ACTIVITIES
    Net (decrease) increase in deposits                               (37,869,925)               217,412,024
    Net increase (decrease) in borrowings from the
            Federal Home Loan Bank                                     79,639,257               (135,427,962)

    Net increase in other short-term borrowings                        10,932,892                 12,851,082
    Proceeds from issuance of Subordinated debt                         5,000,000                       --
    Cash dividends paid on common stock                                (4,648,345)                (4,136,183)
                                                                    -------------              -------------
Net cash provided by financing activities                              53,053,879                 90,698,961
                                                                    -------------              -------------
Net (decrease) increase in cash and cash equivalents                  (32,048,522)                40,303,303
Cash and cash equivalents at beginning of year                         66,215,030                 45,622,428
                                                                    -------------              -------------
Cash and cash equivalents at end of period                          $  34,166,508              $  85,925,731
                                                                    =============              =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
    Interest                                                        $  37,528,588              $  33,085,019
    Income taxes                                                        8,779,819                  7,067,843
Non-cash transactions:
    Additions to property from defaulted loans                      $        --                $      70,000
</TABLE>


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


                                       5

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 1. Financial Statements (continued)

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     For the Nine Months Ended September 30,

<TABLE>
<CAPTION>
                                                                           2001                    2000
                                                                           ----                    ----
                                                                                   (Unaudited)
<S>                                                                    <C>                     <C>
Net income                                                             $ 14,227,763            $ 12,821,697
                                                                       ------------            ------------
Unrealized holding  gains (losses) on securities available for            7,956,354                (356,893)
  sale
Reclassification of gains on securities realized in income               (1,144,983)                (73,233)
                                                                       ------------            ------------
Net unrealized gains (losses)                                             6,811,371                (430,126)
Related tax effect                                                       (2,825,843)                144,743
                                                                       ------------            ------------
Net other comprehensive income (loss)                                     3,985,528                (285,383)
                                                                       ------------            ------------
Comprehensive income                                                   $ 18,213,291            $ 12,536,314
                                                                       ============            ============
</TABLE>

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     For the Nine Months Ended September 30,

<TABLE>
<CAPTION>
                                                          2001                         2000
                                                          ----                         ----
                                                       (Unaudited)
COMMON STOCK
<S>                                                   <C>                          <C>
Balance, beginning of the year                        $   9,061,064                $   9,061,064
                                                      -------------                -------------
Balance, September 30                                     9,061,064                    9,061,064
                                                      -------------                -------------

SURPLUS
Balance, beginning of the year                           27,494,890                   27,494,890
Issuance of common stock under stock option plan            (21,495)                         --
                                                      -------------                -------------
Balance, September 30                                    27,473,395                   27,494,890
                                                      -------------                -------------

UNDIVIDED PROFITS
Balance, beginning of the year                           69,896,759                   58,181,480
Net income                                               14,227,763                   12,821,697
Cash dividends declared                                  (4,648,345)                  (4,136,183)
                                                      -------------                -------------
Balance, September 30                                    79,476,177                   66,866,994
                                                      -------------                -------------


TREASURY STOCK
Balance, beginning of the year                           (7,399,628)                  (7,399,628)
Issuance of common stock under stock option plan            202,135                          --
                                                      -------------                -------------
Balance, September 30                                    (7,197,493)                  (7,399,628)
                                                      -------------                -------------

ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of the year                             (324,307)                  (1,688,195)
Net other comprehensive income (loss)                     3,985,528                     (285,383)
                                                      -------------                -------------
Balance, September 30                                     3,661,221                   (1,973,578)
                                                      -------------                -------------
TOTAL STOCKHOLDERS' EQUITY                            $ 112,474,364                $  94,049,742
                                                      =============                =============
</TABLE>


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

                                       6

<PAGE>

PART I  FINANCIAL INFORMATION
ITEM 1. Financial Statements (continued)


                         CCBT FINANCIAL COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            Nine Months Ended September 30, 2001 and 2000 (Unaudited)

Business

     CCBT Financial Companies,  Inc. ("Company") was incorporated under the laws
of the  Commonwealth of  Massachusetts on October 8, 1998 under the name of CCBT
Bancorp,  Inc. at the direction of the Board of Directors and management of Cape
Cod Bank and Trust  Company  ("Bank") for the purpose of becoming a bank holding
company for the Bank. On February 11, 1999,  Bancorp became the holding  company
for the Bank by acquiring  100% of the  outstanding  shares of the Bank's common
stock in a 1:1 exchange for Bancorp  common  stock.  During 1999,  the Company's
name was  changed to CCBT  Financial  Companies,  Inc.  The Bank's  charter  was
converted to that of a national bank effective September 1, 1999. Currently, the
Company's business activities are conducted primarily through the Bank.

     During the second  quarter of 2000, the Company,  through its  wholly-owned
subsidiary,  Cape Cod Bank and Trust Company N.A.,  acquired 51% of the stock of
Murray  &  MacDonald  Insurance  Services,  Inc.  (the  "Agency")  of  Falmouth,
Massachusetts,  a full service  insurance  agency offering  property,  casualty,
life,  accident and health  products to clients on Cape Cod. The Agency has been
in  business  since  1972 and has  license  agreements  with  more  than  thirty
insurance  firms.  As part of the  transaction,  Murray  &  MacDonald  President
Douglas D. MacDonald  will continue as President of the Agency,  and will direct
all insurance activities for the Bank.

     In addition to the  acquisition of Murray & MacDonald  Insurance  Services,
Inc., the Company also completed its acquisition of two branch banking  offices,
in  Falmouth  and  Wareham,  Massachusetts,  from Fleet  Bank  during the second
quarter of 2000. These branches added approximately $55 million in deposits at a
15.5% premium, at June 30, 2000.

Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  Certain amounts have been  reclassified in the September
30,  2000  financial  statements  to  conform to the 2001  presentation.  In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results  for the nine  months  ended  September  30,  2001  are not  necessarily
indicative of the results that may be expected for the current  fiscal year. For
further  information,   refer  to  the  consolidated  financial  statements  and
footnotes  thereto  included in the Company's annual report on Form 10-K for the
year ended December 31, 2000.

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

General

     This  Form  10Q  contains   certain   statements  that  may  be  considered
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  The Company's  actual  results could differ  materially  from those
projected in the forward-looking statements as a result, among other factors, of
changes in general,  national or regional economic  conditions,  changes in loan
default  and  charge-off  rates,  reductions  in  deposit  levels  necessitating
increased  borrowing to fund loans and  investments,  changes in interest rates,
changes in the size and nature of the Company's competition,  and changes in the
assumptions used in making such forward-looking statements.

                                       7

<PAGE>

PART I  FINANCIAL INFORMATION
ITEM 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations (continued)

     The  following   discussion   should  be  read  in  conjunction   with  the
accompanying   consolidated   financial  statements  and  selected  consolidated
financial data included within this report.  Given that the Company's  principal
activity  currently is ownership of the Bank,  for ease of  reference,  the term
"Company" in this item generally will refer to the investments and activities of
the Company and the Bank except where otherwise noted.

     CCBT Financial  Companies,  Inc. is a bank holding company.  The Company is
the sole  stockholder  of Cape Cod Bank and  Trust  Company,  N.A.  which is the
largest  commercial bank  headquartered in Barnstable  County.  It offers a wide
range of commercial  banking  services for individuals,  businesses,  non-profit
organizations,   governmental   units  and   fiduciaries.   The  Bank   receives
substantially all of its deposits from and makes  substantially all of its loans
to individuals  and businesses on Cape Cod,  although the Bank has some loans on
properties  outside its market area,  including some sizable  participations  in
commercial mortgages. The Bank's core market is comprised of retail,  wholesale,
and  manufacturing  businesses;  primary  households  (including  a  significant
retirement population);  and a growing number of second homeowners. In addition,
a substantial  non-core  vacation  population  contributes  to seasonal  deposit
growth.  The Company's  only  subsidiary  other than the Bank is CCBT  Statutory
Trust I.


             (The remainder of this page intentionally left blank.)


                                       8

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

<TABLE>
<CAPTION>
                                                                          Net Interest Income, Net Interest Margin
                                                                              Three Months Ended September 30,
                                                    -------------------------------------------------------------------------------
                                                                   2001                                        2000
                                                    -----------------------------------          ----------------------------------
                                                      Average                Average               Average                Average
                                                      Balance    Interest     Yield                Balance    Interest     Yield
                                                    -----------------------------------          ----------------------------------
                                                                            (Dollar amounts in thousands)
ASSETS
Securities:
<S>                                                 <C>            <C>           <C>             <C>            <C>          <C>
           Mortgage-backed securities               $    19,858    $   306       6.17%           $   25,380     $   477      7.52%
           CMOs                                         188,609      2,466       5.23%              167,842       3,255      7.76%
           U.S. Government agencies                      12,777        172       5.46%               25,935         454      7.12%
           State and municipal obligations               26,321        255       5.12%               20,288         256      6.67%
           Other securities                             244,412      3,264       5.34%              214 826       4,000      7.45%
                                                    -----------    -------                       ----------     -------
       Total securities                                 491,977      6,463       5.32%              454,271       8,442      7.51%
                                                    -----------    -------                       ----------     -------

Loans:
           Commercial                                    84,930      1,699       7.83%               72,479       1,796      9.70%
           Commercial construction                       51,533        922       7.00%               35,152         842      9.37%
           Residential construction                      48,173        776       6.44%               57,747         943      6.53%
           Commercial mortgages                         252,175      5,461       8.47%              220,570       5,158      9.15%
           Industrial revenue bonds                       1,246         19       8.71%                1,716          34     11.07%
           Residential mortgages                        431,542      6,820       6.32%              343,793       6,025      7.01%
           Home equity                                   46,231        817       7.01%               34,269         858      9.96%
           Consumer                                       8,514        217      10.74%                9,443         244     10.28%
                                                    -----------    -------                       ----------     -------
       Total loans                                      924,344     16,731       7.16%              775,169      15,900      8.12%
                                                    -----------    -------                       ----------     -------
       Total earning assets                           1,416,321     23,194       6.51%            1,229,440      24,342      7.90%
                                                                   -------                                      -------
Cash and due from banks                                  39,432                                      38,932
Non-earning assets                                       26,749                                      32,499
                                                    -----------                                  ----------
       Total assets                                 $ 1,482,502                                  $1,300,871
                                                    ===========                                  ==========

LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
           NOW accounts                               $ 143,054        172       0.48%            $ 133,146         244      0.73%
           Regular savings                              148,212        756       2.02%              148,456       1,159      3.11%
           Money Market accounts                        180,293      1,202       2.65%              165,402       1,617      3.89%
           Certificates of Deposit of
               $100,000 or more                          62,979        736       4.64%              111,955       1,874      6.66%
           Other time deposits                          176,316      2,251       5.06%              177,767       2,741      6.13%
                                                    -----------    -------                       ----------     -------
       Total interest bearing deposits                  710,854      5,117       2.86%              736,726       7,635      4.12%
                                                    -----------    -------                       ----------     -------

Borrowings:
           Federal Home Loan Bank                       391,857      4,857       4.92%              217,149       3,488      6.39%
           Other short-term borrowings                   34,825        263       2.98%               29,016         413      5.66%
                                                    -----------    -------                       ----------     -------
       Total borrowings                                 426,682     5,120        4.76%              246,165       3,901      6.30%
                                                    -----------    -------                       ----------     -------

       Total interest-bearing liabilities             1,137,536     10,237       3.57%              982,891      11,536      4.67%
                                                                   -------                                      -------

Demand deposits                                         229,346                                     221,020
Non-interest bearing liabilities                          7,789                                       6,971
Stockholders' equity                                    107,831                                      89,989
                                                    -----------                                  ----------
       Total liabilities & equity                   $ 1,482,502                                  $1,300,871
                                                    ===========                                  ==========
Net interest income/spread                                         $12,957       2.94%                          $12,806      3.23%
                                                                   =======                                      =======
Net interest margin (NII/Avg. Earning Assets)                                    3.63%                                       4.14%
</TABLE>

                                       9

<PAGE>

PART I   FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

                              RESULTS OF OPERATIONS
          Three Months Ended September 30, 2001 vs. September 30, 2000

Source and Use of  Funds

     Borrowings from the Federal Home Loan Bank were the primary source of funds
during the third  quarter of 2001,  resulting  in an increase of 80.5% or $174.7
million, on average, when compared to the same quarter of 2000. Average interest
bearing  deposits  were lower by 3.5% or $25.9  million in the third  quarter of
2001 as compared to 2000. A significant  reduction  occurred in Certificates o f
Deposit of $100,000 or more which  decreased  43.7% or $49.0 million  during the
third quarter of 2001 when compared to the same quarter of 2000.  This reduction
can  be  attributed  to  the  maturity  of a  significant  amount  of  one  year
certificates  of deposit during the third quarter of 2001. In contrast,  average
interest bearing transaction accounts increased for the third quarter of 2001 as
compared to 2000 with Money  Market  accounts  up $14.9  million or 9.0% and NOW
accounts  increasing $9.9 million or 7.4%. Average  Non-interest  bearing demand
deposits  increased  3.8%  or $8.3  million  for the  third  quarter  of 2001 as
compared to 2000.

     On  average,  securities  were  higher by $37.7  million or 8.3% during the
third  quarter  of  2001  when  compared  to the  third  quarter  of  2000  with
significant  growth  occuring in the Other  Securities  category which increased
$29.6 million or 13.8% and in CMO's which increased $20.8 million or 12.4%. When
compared  to the third  quarter of 2000,  average  loans were  higher in 2001 by
19.2% or $149.2  million.  Loan growth was  spearheaded by residential  mortgage
lending,  up $87.7  million or 25.5% in a very active local  market.  On average
commercial  construction  and mortgage loans also increased in the third quarter
of 2001 by $48.0  million or 18.8% when compared to the same period in the prior
year.

Net interest income

     Net interest  income was $13.0 million for the three months ended September
30, 2001 as compared to $12.8 million for the same period in 2000, up 1.2%.  The
spread and net interest  margin ratios were 2.94% and 3.63%,  respectively,  for
the three  months  ended  September  30,  2001 as  compared  to 3.23% and 4.14%,
respectively, for the comparable 2000 period.

Provision for loan losses

     A slowing economy  increased  management's  concern regarding the potential
for future loan losses.  However,  seasonal paydowns of commercial loans and the
sale  of  residential  mortgages  decreased  the  size  of the  loan  portfolio.
Accordingly on balance no provisions were made to the reserve for loan losses in
the quarters ended  September 30, 2001 or 2000.  Management  believes that, upon
continuing  review of loan payment and quality  statistics,  the current reserve
continues  to be  adequate  to cover  losses  likely to result from loans in the
current portfolio.

Non-interest Income and Expense

     Non-interest  income  totaled  $6.4  million  for the  three  months  ended
September 30, 2001, up 60.6% compared to the $4.0 million earned during the same
period in 2000. Net gains on the sale of Residential  Mortgage loans contributed
$1.7  million  to this  increase  while  net  gains  on the  sale of  securities
increased $247 thousand.  Financial Advisor Fees increased $132 thousand despite
the negative  effects of the Stock  Market  decline,  reflecting  a  significant
increase in new business while insurance  commissions,  largely due to referrals
of bank customers, have increased $167 thousand.

During the third quarter of 2001,  non-interest  expenses totaled $11.6 million,
greater than the $10.2 million  expended during the comparable  period last year
by $1.4 million or 13.3%.  Salaries and employee  benefits rose $760 thousand or
14.0%,  with  $404  thousand  of  this  increase  attributable  to  commissions.
Increased  expenses in other  categories  include  delivery  and  communications
expenses,  and building and equipment expenses.  These increases are a result of
increased utilities costs, real estate tax increases, and a significant increase
in amortization expense of computer software.


                                       10

<PAGE>

PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

Income taxes

     Applicable  State and Federal  income tax  expense of $2.7  million for the
quarter ended  September 30, 2001 was 24.9% more than the $2.2 million  recorded
for the same  quarter in 2000,  a reflection  of higher  pretax net income.  The
combined  effective  State and  Federal  tax rate was 35% and 34% of pretax  net
income for the third quarter of 2001 and 2000, respectively.

Net income

     Consolidated net income was $5.0 million representing earnings per share of
$0.58 for the three months ended  September 30, 2001 as compared to $4.4 million
or $0.51 per share for the  comparable  three months ended  September  30, 2000.
Annualized  returns on average  assets and average equity were 1.34% and 18.44%,
respectively, for the three months ended September 30, 2001 as compared to 1.34%
and 19.31%, respectively, for the three months ended September 30, 2000.


             (The remainder of this page intentionally left blank.)


                                       11


<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

<TABLE>
<CAPTION>
                                                                         Net Interest Income, Net Interest Margin
                                                                              Nine Months Ended September 30,
                                                    -------------------------------------------------------------------------------
                                                                   2001                                        2000
                                                    -----------------------------------          ----------------------------------
                                                      Average                Average               Average                Average
                                                      Balance    Interest     Yield                Balance    Interest     Yield
                                                    -----------------------------------          ----------------------------------
                                                                            (Dollar amounts in thousands)
ASSETS
Securities:
<S>                                                 <C>            <C>           <C>             <C>            <C>          <C>
           Mortgage-backed securities               $    31,263    $ 1,525       6.50%           $   29,519     $ 1,697      7.67%
           CMOs                                         184,507      8,748       6.32%              187,961      10,274      7.29%
           U.S. Government agencies                      16,963        682       5.43%               27,899       1,369      6.65%
           State and municipal obligations               22,851        736       5.66%               20,233         691      6.02%
           Other securities                             250,629     11,503       6.12%              205,186      10,521      6.84%
                                                    -----------    -------                       ----------     -------
       Total securities                                 506,213     23,194       6.17%              470,798      24,552      7.02%
                                                    -----------    -------                       ----------     -------

Loans:
           Commercial                                    86,140      5,456       8.35%               79,584       5,754      9.50%
           Commercial construction                       47,362      2,790       7.77%               28,483       2,005      9.25%
           Residential construction                      48,841      2,365       6.46%               52,396       2,486      6.33%
           Commercial mortgages                         244,867     16,418       8.84%              216,032      14,823      9.02%
           Industrial revenue bonds                       1,369         73       9.97%                1,297          82     11.87%
           Residential mortgages                        415,807     21,049       6.75%              317,450      16,390      6.88%
           Home equity                                   42,196      2,508       7.95%               29,252       2,117      9.67%
           Consumer                                       8,579        660      10.28%                9,161         677      9.87%
                                                    -----------    -------                       ----------     -------
       Total loans                                      895,161     51,319       7.61%              733,655      44,334      8.00%
                                                    -----------    -------                       ----------     -------

       Total earning assets                           1,401,374     74,513       7.11%            1,204,453      68,886      7.56%
                                                                   -------                                      -------
Cash and due from banks                                  37,942                                      34,444
Non-earning assets                                       29,585                                      24,792
                                                    -----------                                  ----------
       Total assets                                 $ 1,468,901                                  $1,263,689
                                                    ===========                                  ==========

LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
           NOW accounts                               $ 137,959        577       0.56%            $ 121,475         680      0.75%
           Regular savings                              143,998      2,616       2.43%              149,684       3,463      3.09%
           Money Market accounts                        168,888      3,954       3.13%              148,750       4,083      3.67%
           Certificates of Deposit of
               $100,000 or more                          96,856      4,197       5.79%               79,413       3,687      6.20%
           Other time deposits                          192,008      8,294       5.78%              141,504       5,988      5.65%
                                                    -----------    -------                       ----------     -------
       Total interest bearing deposits                  739,709     19,638       3.55%              640,826      17,901      3.73%
                                                    -----------    -------                       ----------     -------

Borrowings:
           Federal Home Loan Bank                       383,134     15,464       5.40%              315,825      14,418      6.10%
           Other short-term borrowings                   29,055        739       3.40%               24,680       1,003      5.43%
                                                    -----------    -------                       ----------     -------
       Total borrowings                                 412,189     16,203       5.26%              340,505      15,421      6.05%
                                                    -----------    -------                       ----------     -------

       Total interest-bearing liabilities             1,151,898     35,841       4.16%              981,331      33,322      4.54%
                                                                   -------                                      -------

Demand deposits                                         205,908                                     186,769
Non-interest bearing liabilities                          8,168                                       7,644
Stockholders' equity                                    102,927                                      87,945
                                                    -----------                                  ----------
       Total liabilities & equity                    $1,468,901                                  $1,263,689
                                                     ==========                                  ==========
Net interest income/spread                                         $38,672       2.95%                          $35,564      3.02%
                                                                   =======                                      =======
Net interest margin (NII/Avg. Earning Assets)                                    3.69%                                       3.94%
</TABLE>

                                       12

<PAGE>



PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

                              RESULTS OF OPERATIONS
           Nine Months Ended September 30, 2001 vs. September 30, 2000

Source and Use of  Funds

     Average  interest  bearing  deposits  increased $98.9 million or 15.4% when
comparing  the  first  nine  months  of 2001  with  the  same  period  in  2000.
Significant  growth  occurred in average  Time  deposits  with  Certificates  of
Deposit greater than $100,000  increasing $17.4 million or 22.0%, and Other time
deposits  increasing  $50.5  million  or  35.7%.  Interest  bearing  transaction
accounts also  increased in the 2001 period with Money Market  accounts up 13.5%
or $20.1  million  and NOW  accounts  up 13.6%  or $16.5  million.  Non-interest
bearing  demand  deposits  increased  $19.1 million or 10.2% on average,  in the
first nine months of 2001 when  compared to the same period in 2000.  Additional
funds were raised through increased  borrowings from the Federal Home Loan Bank,
up $67.3 million or 21.3% in the 2001 period when compared to the same period of
2000.

     When  compared to the first nine months of 2000,  average loans were higher
in  2001  by  $161.5  million  or  22.0%.   Residential   mortgages  contributed
significantly  to this  growth,  up $98.4  million  or 31.0%,  while  commercial
construction and mortgage loans increased $47.7 million or 19.5%.  Additionally,
Home Equity loans were up $12.9 million for a 44.2%  increase for the first nine
months of 2001 as  compared  to 2000.  On average,  Securities  increased  $35.4
million or 7.5% during the first nine  months of 2001 when  compared to the same
period in 2000,  with growth in Other  Securities  of $45.4  million,  or 22.1%,
while U. S. Government agencies declined $10.9 million or 3.9%.

Net interest income

     Net interest  income was $38.7 million for the nine months ended  September
30, 2001 as compared to $35.6  million for the same period in 2000 up 8.7%.  The
spread and net interest  margin ratios were 2.95% and 3.69%,  respectively,  for
the nine  months  ended  September  30,  2001 as  compared  to 3.02% and  3.94%,
respectively, for the comparable 2000 period.

Provision for loan losses

     Although the size of the loan  portfolio  grew during the nine months ended
September 30, 2001 and there was increasing  concern about the possible  effects
of a weakening  economy,  non-performing  assets declined during this period and
recoveries on loans previously charged off exceeded new charge-offs. Accordingly
on balance no  provisions  were made to the  reserve for loan losses in the nine
months  ended  September  30,  2001 or  2000.  Management  believes  that,  upon
continuing  review of loan payment and quality  statistics,  the current reserve
continues  to be adequate to cover  losses  likely to results  from loans in the
current portfolio.

Non-interest Income and Expense

     Non-interest  income  totaled  $16.7  million  for the  nine  months  ended
September  30, 2001, up 39.2%  compared to the $12.0  million  earned during the
same  period  in  2000.   Of  this  increase  $1.1  million  and  $2.2  million,
respectively,  can be  attributable  to net gains on the sale of securities  and
loans. Insurance commissions have increased $859 thousand compared to prior year
results  which only  included the agency's  revenues  from the date of purchase.
However, the increase in insurance commissions also reflects the positive impact
of the referral of bank customers to the agency.


     During the first nine months of 2001,  non-interest  expenses totaled $33.7
million,  greater than the $28.2 million  expended during the comparable  period
last year by $5.5 million or 19.7%.  Salaries and  employee  benefits  rose $3.0
million or 19.6% with commissions  accounting for $884 thousand of this increase
and salaries, in line with Management expectations,  increasing $1,723 thousand.
Increased expenses in other categories  include  amortization of intangibles for
acquisitions completed during the second quarter of 2000, building and equipment
expenses for additional  locations and depreciation and amortization  related to
upgraded  computer  equipment and software,  and marketing and advertising costs
incurred for a campaign to launch the Company's new logo.

                                       13

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

Income taxes

     Applicable  State and Federal  income tax  expense of $7.4  million for the
nine months  ended  September  30, 2001 was 12.9%  greater than the $6.6 million
recorded for the same period in 2000, a reflection  of higher pretax net income.
The combined  effective  State and Federal tax rate was 34% of pretax net income
for each period presented.

Net income

     Consolidated net income was $14.2 million  representing  earnings per share
of $1.65 for the nine  months  ended  September  30,  2001 as  compared to $12.8
million or $1.49 per share for the  comparable  nine months ended  September 30,
2000.  Annualized  returns on average  assets and average  equity were 1.29% and
18.48%,  respectively,  for the nine months ended September 30, 2001 as compared
to 1.36 % and 19.47%,  respectively,  for the nine months  ended  September  30,
2000.


               COMPARATIVE ANALYSIS OF SELECTED PERIOD-END ASSETS,
                             LIABILITIES AND CAPITAL

     The Company had $1.48 billion  consolidated  total assets,  $935.4  million
deposits and $112.5  million  stockholders'  equity at September  30, 2001.  Its
capital to assets ratio was 7.6%,  exceeding  all  regulatory  requirements.  As
compared to reported  balances at December 31, 2000,  securities  available  for
sale at fair value increased $81.9 million or 19.2%, gross loans increased $28.9
million or 3.4%,  deposits  decreased  $37.9 million or 3.9% and borrowed  funds
increased $95.6 million or 30.3%.

Securities

     The adjusted  cost and  estimated  market  values of  securities  which the
Company  classified as available for sale at September 30, 2001 and December 31,
2000 were as follows:

<TABLE>
<CAPTION>
                                                                       September 30, 2001
                                              ----------------------------------------------------------------------
                                                                       Gross            Gross         Estimated
                                                  Adjusted          Unrealized       Unrealized         Market
                                                    Cost               Gains           Losses           Value
                                              ---------------- ------------------ ---------------- -----------------
                                                                   (Dollar amounts in thousands)
<S>                                                  <C>                  <C>               <C>            <C>
U.S. Government agency CMOs                          $177,974             $1,879            $ 941          $178,912
Other U.S. Government agencies                         13,456                 82               13            13,525
Other collateralized mortgage obligations              62,935              2,987              199            65,723
State and municipal obligations                        28,676                 --               --            28,676
Other debt securities                                 219,380              3,023              570           221,833
                                                     --------             ------           ------          --------
    Totals                                           $502,421             $7,971           $1,723          $508,669
                                                     ========             ======           ======          ========

<CAPTION>

                                                                        December 31, 2000
                                              ----------------------------------------------------------------------
                                                                       Gross            Gross         Estimated
                                                  Adjusted          Unrealized       Unrealized         Market
                                                    Cost               Gains           Losses           Value
                                              ---------------- ------------------ ---------------- -----------------
                                                                   (Dollar amounts in thousands)
<S>                                                  <C>                  <C>              <C>             <C>
U.S. Government agency CMOs                          $140,472             $1,412           $2,437          $139,447
Other U.S. Government agencies                         22,663                 31              200            22,494
Other collateralized mortgage obligations              47,746                526              529            47,743
State and municipal obligations                        25,479                  3               --            25,482
Other debt securities                                 190,946              1,484              853           191,577
                                                     --------             ------           ------          --------
    Totals                                           $427,306             $3,456           $4,019          $426,743
                                                     ========             ======           ======          ========
</TABLE>

                                       14

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

     Securities available for sale increased $81.9 million,  from $426.7 million
at December  31, 2000 to $508.7  million at September  30, 2001.  Net gains from
security sales were $292 thousand and $1,145.0  thousand  during the quarter and
nine months ended September 30, 2001, respectively, compared to net gains of $45
thousand and $73 thousand, respectively, during the same periods in 2000.

Loans

The following is a summary of the Company's  outstanding loan balances as of the
dates indicated:

                                               September 30,     December 31,
                                                   2001             2000
                                                   ----             ----
                                                (Dollar amounts in thousands)
Mortgage loans on real estate
    Residential                                 $ 385,516         $ 393,574
    Commercial                                    258,513           242,536
    Construction                                   96,980            87,978
    Equity lines of credit                         49,095            37,377
Other loans
    Commercial                                     78,091            76,275
    Industrial revenue bonds                        1,223             1,603
    Consumer                                        7,942             9,147
                                                ---------         ---------
          Total loans                             877,360           848,490
    Less: Reserve for loan losses                 (12,166)          (12,154)
                                                ---------         ---------
          Total portfolio loans, net            $ 865,194         $ 836,336
                                                =========         =========
Loans held for sale                             $     623         $     861
                                                =========         =========


     As shown in the table above,  total loans  increased $28.9 million or 3.40%
to $877.4  million at September 30, 2001 as compared to December 31, 2000,  with
significant  growth  occuring in commercial  mortgages up $16.0 million,  equity
lines of  credit  up $11.7  million,  and  construction  mortgage  loans up $9.0
million. New residential  mortgage  originations of $24.5 million fixed rate and
$49.8 million  adjustable  rate were achieved in the third quarter 2001.  During
the same period, the Company sold $75.8 million residential mortgages, producing
net gains of $1.8 million.

Non performing assets and loan loss experience

     As shown in the following table non-performing  assets were $3.4 million or
 .23% of total assets at September  30, 2001  compared to $3.7 million or .26% of
total  assets at  December  31,  2000.  Accrual of  interest  income on loans is
discontinued  when it is  questionable  whether the borrower will be able to pay
the  principal  and interest in full and/or when loan  payments are 60 days past
due,  or 90 days past due if the loan is fully  secured by real  estate or other
collateral held by the Bank.


<TABLE>
<CAPTION>

                                                                  September 30,           December 31,
                                                                     2001                     2000
                                                                    ------                   ------
                                                                     (Dollar amounts in thousands)
<S>                                                                 <C>                      <C>
Nonaccrual loans                                                    $1,891                   $2,192
Loans past due 90 days or more and still accruing                       --                       --
Property from defaulted loans                                        1,500                    1,500
                                                                    ------                   ------

Total non-performing assets                                         $3,391                   $3,692
                                                                    ======                   ======
Restructured troubled debt performing in
accordance with amended terms, not included above                   $  227                   $  237
                                                                    ======                   ======

</TABLE>

                                       15

<PAGE>

PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

The following is a summary of the activity in the reserve for loan losses for
the indicated periods:

<TABLE>
<CAPTION>
                                             Nine Months Ended  September 30,
                                                  2001             2000
                                                --------        --------
                                              (Dollar amounts in thousands)
<S>                                             <C>             <C>
Balance, beginning of the period                $ 12,154        $ 11,158
Provision for loan losses                           --               --
Charge-offs                                         (276)           (151)

Recoveries on loans previously charged off           288             966
                                                --------        --------

Balance, end of  the period                     $ 12,166        $ 11,973
                                                ========        ========
</TABLE>

     Management   believes  that,  upon  review  of  loan  quality  and  payment
statistics,  provisions  from current  income were  unnecessary in the indicated
periods,  notwithstanding growth in the loan portfolio.  The reserve represented
1.39% of total loans at  September  30, 2001,  1.43% at December  31, 2000,  and
1.50% at September 30,2000.  Management  considers the reserve to be adequate at
September  30,  2001,  although  there can be no  assurance  that the reserve is
adequate or that additional provisions might be necessary.

     The Company had  outstanding  commitments to originate new  residential and
commercial mortgages of $52.9 million at September 30, 2001 and $57.8 million at
December 31, 2000 which are not  reflected  on the  consolidated  statements  of
financial condition.  Additional unadvanced loan funds are summarized as follows
for the indicated periods:

                                  September 30, 2001        December 31, 2000
                                  ------------------        -----------------
 Commercial loans                         (Dollar amounts in thousands)
     Dealer floor plan                $ 11,893                   $  9,134
     Lines of credit                    44,900                     46,743
     Other                               3,713                      3,657
 Commercial mortgages
     Construction                       25,997                     14,129
     Other                               9,958                      2,896
 Residential mortgages
      Home equity                       55,620                     45,733
 Consumer loans
      Lines of credit                    3,010                      2,861
                                      --------                   --------
             Total                    $155,091                   $125,153
                                      ========                   ========


                                       16

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

Deposits

     The following  table is a summary of deposits  outstanding  as of the dates
indicated:

<TABLE>
<CAPTION>
                                                              September 30, 2001         December 31, 2000
                                                              ------------------         -----------------
                                                                        (Dollar amounts in thousands)
Deposits
<S>                                                               <C>                         <C>
    Demand                                                        $223,776                    $201,904
    NOW                                                            148,549                     139,453
    Money market                                                   182,604                     163,794
    Other savings                                                  148,814                     143,239
    Certificates of deposit greater than $100,000                   61,154                      96,159
    Other time deposits                                            170,536                     228,754
                                                                  --------                    --------

        Total deposits                                            $935,433                    $973,303
                                                                  ========                    ========
</TABLE>

     Reflecting  the  maturity  of $25  million  in  brokered  deposits  and the
seasonal  nature of the Cape Cod economy as discussed in  "Liquidity" on page 18
herein,  total  deposits at September  30, 2001 are $37.9  million or 3.9% lower
than total deposits at December 31, 2000.  Generally,  the Company's strategy is
to price deposits  according to local market rates,  offering higher alternative
rates based on increasing amounts deposited.  Interest rates paid are frequently
reviewed and are modified to reflect changing conditions.

Borrowed Funds

     Historically,  the Company has  selectively  engaged in short and long term
borrowings  from the Federal Home Loan Bank of Boston,  and has sold  securities
under agreements to repurchase, to fund loans and investments.  At September 30,
2001,  borrowed funds totaled $406.4 million, up 28.7% or $90.6 million compared
to borrowed  funds at  December  31,2000.  This  increase  offsets the  seasonal
deposit  decline  described  under the  section  entitled  "Deposits"  above and
contributes to the support of heretofore described loan growth.

     During the third quarter of 2001, CCBT Statutory Trust I was formed for the
purpose of issuing trust preferred  securities and investing the proceeds of the
sale of these  securities in subordinated  debentures  issued by the Company.  A
total of $5 million of floating rate Trust Preferred  Securities were issued and
are  scheduled  to mature in 2031,  callable at the option of the Company  after
7/31/06.  Distributions on these securities are payable  quarterly in arrears on
the last day of April, July, October and January. The Trust Preferred Securities
are  presented in the  consolidated  statements  of  financial  condition of the
Company as Subordinated Debt. The Company records  distributions  payable on the
Trust Preferred  Securities as Interest on subordinated debt in its consolidated
statements of income.

Stockholders' Equity

     The  Company's  capital to assets  ratio was 7.58% at  September  30,  2001
compared to 7.03% at December 31, 2000.

     The Company (on a  consolidated  basis) and the Bank are subject to various
regulatory  capital  requirements  administered by the federal banking agencies.
Failure to meet minimum capital  requirements can initiate certain mandatory and
possible  additional  discretionary  actions by regulators  that, if undertaken,
could have a direct  material  effect on the Company's and the Bank's  financial
statements.  Under capital adequacy guidelines and the regulatory  framework for
prompt corrective action, the Company and/or the Bank must meet specific capital
guidelines that involve quantitative  measures of their assets,  liabilities and
certain  off-balance-sheet  items  as  calculated  under  regulatory  accounting
practices.  Holding  companies,  such as the Company,  are not subject to prompt
corrective action  provisions.  The capital amounts and  classification are also
subject to  qualitative  judgments  by the  regulators  about  components,  risk
weightings,  and other factors.  Quantitative measures established by regulation
to ensure capital  adequacy require the Company and the Bank to maintain minimum
amounts of total and Tier 1 capital (as defined) to average assets (as defined).
The following  schedule displays these capital  guidelines and the ratios of the
Company and the Bank as of September 30, 2001.

                                       17

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (cont.)

<TABLE>
<CAPTION>
                                         Minimum       September 30, 2001
                                       Regulatory    -----------------------
                                       Guidelines    Company           Bank
                                       -------------------------------------
<S>                                        <C>         <C>            <C>
Tier 1 leverage capital                    4.00%       6.76%           6.85%
Tier 1 capital to risk-weighted assets     4.00%       9.59%           9.70%
Total capital to risk-weighted assets      8.00%      10.75%          10.87%
</TABLE>


     The  Company's  book  value at  September  30,  2001 was  $13.05  per share
compared to $11.47 per share at December 31, 2000.

                                    LIQUIDITY

     The Company normally experiences a wide swing in its liquidity each year as
a result of the seasonal nature of the economy in its market area.  Liquidity is
usually  high in late  summer and early fall and the annual low point is usually
in the early spring.  The Bank's investment  portfolio is of high quality and is
highly marketable  although a gain or loss would be realized if the market value
of securities  sold were not equal to their adjusted book value at date of sale.
Alternately,   the  Bank  can  borrow  funds  using  investment   securities  as
collateral.  The Bank has an  available  line of credit of $5.0 million from the
Federal Home Loan Bank of Boston.  The Bank may borrow from the Federal  Reserve
Bank if necessary.

                           ASSET/LIABILITY MANAGEMENT

     Through the Company's Asset/Liability  Management Committee ("ALCO"), which
is comprised of senior  management and several  Directors,  the Company monitors
the level and general mix of earning  assets and interest  bearing  liabilities,
with   particular   attention  to  those  assets  and   liabilities   which  are
rate-sensitive. The primary objective of ALCO is to manage interest rate risk in
accordance with policies approved by the Board of Directors regarding acceptable
levels of interest rate risk, liquidity and capital. The committee meets monthly
and  sets  the  rates  paid on  deposits,  approves  loan  pricing  and  reviews
investment transactions.

     Given  the  substantial  liquidity  from cash  flow and  maturities  of the
Company's investment  portfolio,  the sizable proportion of rate sensitive loans
to total loans, and the large core deposit base, ALCO believes the Company to be
moderately  asset-sensitive  to changes in  interest  rates.  Nevertheless,  the
Company's  strategy has  included  the funding of certain  fixed rate loans with
medium term borrowed funds in order to mitigate a margin squeeze should interest
rates rise.

     The  Cape  Cod  market  is one in which  competing  financial  institutions
frequently  offer a wide range of yields for similar  deposit  products.  Within
this market, the Company finds it necessary,  from time to time, to offer higher
rates  than it would  otherwise  justify,  thereby  increasing  pressure  on net
interest  income.  In order to offset  this  pressure  somewhat,  the Company is
strategically focusing on customer relationship profitability.

                          NEW ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  141,  Business
Combinations,  and SFAS No. 142,  Goodwill and Other  Intangible  Assets.  These
Statements  change the  accounting  for business  combinations  and goodwill and
intangible assets.  SFAS No. 141 requires that the purchase method of accounting
be used for all business combinations  initiated after June 30, 2001. Use of the
pooling-of-interests  method is  prohibited.  SFAS No. 142,  which is  effective
January 1, 2002, changes the accounting for goodwill from an amortization method
to an  impairment-only  approach.  In addition,  this  Statement  requires  that
acquired intangible assets, as defined, be amortized over their useful lives. As
a result,  effective  January 1, 2002, the Company's  goodwill will no longer be
amortized but will be evaluated for  impairment  and the Company's  core deposit
intangibles  will continue to be amortized  over their  estimated  useful lives.
Management is currently  evaluating the impact of adopting this Statement on the
consolidated financial statements.

                                       18

<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

     For a discussion of the Company's  management of market risk exposure,  see
"Asset/Liability  Management"  in Item 2 of Part I of this report and Item 7A of
Part II of the  Company's  Annual  Report on Form 10-K for the fiscal year ended
December 31, 2000 (the "2000 Annual Report").

     For quantitative  information  about market risk, see Item 7A of Part II of
the Company's 2000 Annual Report.

     There have been no material  changes in the  quantitative  and  qualitative
disclosures  about market risk as of September 30, 2001 from those  presented in
the Company's 2000 Annual Report.


PART II  OTHER INFORMATION

ITEM 1.  Legal proceedings

     There are no material legal  proceedings to which the Company is a party or
to which any of its  property  is  subject,  although  the Company is a party to
ordinary routine litigation incidental to its business.

ITEM 2.  Changes in securities and use of proceeds

           Not applicable

ITEM 3.  Defaults upon senior securities

           Not applicable

ITEM 4.  Submission of matters to a vote of security holders

           Not applicable

ITEM 5.  Other information

           Not applicable

ITEM 6.  Exhibits and Reports on Form 8-K

          (a)  Exhibits
               None

          (b)  Reports on Form 8-K
               None

                                       19

<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


(Registrant):                   CCBT Financial Companies, Inc.
                ----------------------------------------------------------



Date:                              November 14, 2001
                ----------------------------------------------------------


                /s/   STEPHEN B. LAWSON, President and Chief Executive Officer
               ---------------------------------------------------------------
                   Stephen B. Lawson,  President and Chief Executive Officer


               /s/   NOAL D. REID, Chief Financial Officer and Treasurer
              ----------------------------------------------------------------
                  Noal D. Reid,  Chief Financial Officer and Treasurer


                                       20