##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|  |                                                                                         
|- | ----------------------------------------------------------------------------------------
|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004




|  |                                                                                             
|- | --------------------------------------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to
.


Commission File Number: 001-31251


Banknorth Group, Inc.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Maine                                                              |  | 01-0437984                                 
|(State or other jurisdiction
    of incorporation or organization) |  | (I.R.S. Employer
    Identification Number)

|                                                                                                  |  |                     
|------------------------------------------------------------------------------------------------- |  | --------------------
|P.O. Box 9540
    Two Portland Square
    Portland, Maine(Address of principal executive offices) |  | 04112-9540(Zip Code)

Registrants telephone number, including area code:
(207) 761-8500


Securities registered pursuant to Section 12(b) of the
Act:


|                                                                 |  |                                                                
|---------------------------------------------------------------- |  | ---------------------------------------------------------------
|Title of Class                                                   |  | Name of Each Exchange on Which Registered                      
|                                                                 |  |                                                                
|Common Stock, $.01 par value
    Preferred Stock Purchase Rights |  | New York Stock Exchange, Inc.
    New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the
Act: Not Applicable


þ o


o


þ o


The Wall Street Journal




DOCUMENTS INCORPORATED BY REFERENCE














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BANKNORTH GROUP, INC.


2004 FORM 10-K ANNUAL REPORT


TABLE OF CONTENTS


|                                                                    |  |                                                                                                                          |  |      |     | 
|------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ---- | --- | 
|                                                                    |  |                                                                                                                          |  | Page |    
|                                                                    |  |                                                                                                                          |  |      |    
|PART I                                                             
|Item 1.                                                             |  | BUSINESS                                                                                                                 |  |      | 1   | 
|                                                                    |  | General                                                                                                                  |  |      | 1   | 
|                                                                    |  | Pending Acquisition                                                                                                      |  |      | 1   | 
|                                                                    |  | Business                                                                                                                 |  |      | 1   | 
|                                                                    |  | Acquisitions                                                                                                             |  |      | 2   | 
|                                                                    |  | Subsidiaries and Other Equity
    Investments                                                                            |  |      | 2   | 
|                                                                    |  | Competition                                                                                                              |  |      | 3   | 
|                                                                    |  | Employees                                                                                                                |  |      | 4   | 
|                                                                    |  | Supervision and Regulation                                                                                               |  |      | 4   | 
|                                                                    |  | Taxation                                                                                                                 |  |      | 7   | 
|                                                                    |  | Statistical Disclosure by Bank Holding
    Companies                                                                     |  |      | 8   | 
|                                                                    |  | Availability of Information                                                                                              |  |      | 8   | 
|Item 2.                                                             |  | PROPERTIES                                                                                                               |  |      | 9   | 
|Item 3.                                                             |  | LEGAL PROCEEDINGS                                                                                                        |  |      | 9   | 
|Item 4.                                                             |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS                                                                  |  |      | 9   | 
|PART II                                                            
|Item 5.                                                             |  | MARKET FOR THE REGISTRANTS COMMON
    EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
    EQUITY SECURITIES |  |      | 10  | 
|Item 6.                                                             |  | SELECTED FINANCIAL DATA                                                                                                  |  |      | 11  | 
|Item 7.                                                             |  | MANAGEMENTS DISCUSSION AND ANALYSIS
    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                |  |      | 13  | 
|Item 7A.                                                            |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK                                                           |  |      | 54  | 
|Item 8.                                                             |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY
    DATA                                                                          |  |      | 55  | 
|Item 9.                                                             |  | CHANGES IN AND DISAGREEMENTS WITH
    ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                 |  |      | 109 | 
|Item 9A.                                                            |  | CONTROLS AND PROCEDURES                                                                                                  |  |      | 109 | 
|Item 9B.                                                            |  | OTHER INFORMATION                                                                                                        |  |      | 109 | 
|PART III                                                           
|Item 10.                                                            |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE
    REGISTRANT                                                                   |  |      | 109 | 
|Item 11.                                                            |  | EXECUTIVE COMPENSATION                                                                                                   |  |      | 109 | 
|Item 12.                                                            |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
    OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                       |  |      | 110 | 
|Item 13.                                                            |  | CERTAIN RELATIONSHIPS AND RELATED
    TRANSACTIONS                                                                       |  |      | 110 | 
|Item 14.                                                            |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                   |  |      | 110 | 
|                                                                   
|PART IV                                                            
|Item 15.                                                            |  | EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES                                                                           |  |      | 110 | 
|                                                                    |  | SIGNATURES                                                                                                               |  |      | 114 | 
|EX-10.(I) Retention Agmt. dated September 30, 2004                 
|EX-10.(J)(2) Retirement Agmt. with William J. Ryan                 
|EX-10.(K)(2) Retirement Agmt. with Peter J. Verrill                
|EX-10.(L)(4) Retirement Agmt. with John W. Fridlington             
|EX-10.(M)(2) Amendment to Supplemental Retirement Plan             
|EX-10(N)(2) Amended Deferred Compensation Plan                     
|EX-10(S)(2) First Amendment to the Amended and Restated 401(k) Plan
|EX-21 Subsidiaries of Banknorth Group, Inc.                        
|Ex-23 Consent of Independent Registered Public Accounting Firm     
|EX-31.1 Section 302 CEO Certification                              
|EX-31.2 Section 302 CFO Certification                              
|EX-32.1 Section 906 CEO Certification                              
|EX-32.2 Section 906 CFO Certification                              



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FORWARD-LOOKING STATEMENTS








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our investments in our businesses and in related technology
    could require additional incremental spending, and might not
    produce expected deposit and loan growth and anticipated
    contributions to our earnings;                                                                                                                                                                                                                                                        
|
| |  | general economic or industry conditions could be less favorable
    than expected, resulting in a deterioration in credit quality, a
    change in the allowance for loan and lease losses or a reduced
    demand for credit or fee-based products and services;                                                                                                                                                                                                                   
|
| |  | changes in the domestic interest rate environment could reduce
    net interest income and could increase credit losses;                                                                                                                                                                                                                                                                                                                                                            
|
| |  | the conditions of the securities markets could change, which
    could adversely affect, among other things, the value or credit
    quality of our assets, the availability and terms of funding
    necessary to meet our liquidity needs and our ability to
    originate loans and leases;                                                                                                                                                                                      
|
| |  | changes in the extensive laws, regulations and policies
    governing financial holding companies and their subsidiaries
    could alter our business environment or affect our operations;                                                                                                                                                                                                                                                                                         
|
| |  | the potential need to adapt to industry changes in information
    technology systems, on which we are highly dependent, could
    present operational issues or require significant capital
    spending;                                                                                                                                                                                                                                                                          
|
| |  | competitive pressures could intensify and affect our
    profitability, including as a result of continued industry
    consolidation, the increased availability of financial services
    from non-banks, technological developments such as the internet
    or bank regulatory reform;                                                                                                                                                                                          
|
| |  | acquisitions may result in large one-time charges to income, may
    not produce revenue enhancements or cost savings at levels or
    within time frames originally anticipated and may result in
    unforeseen integration difficulties; and                                                                                                                                                                                                                                     
|
| |  | acts or threats of terrorism and actions taken by the United
    States or other governments as a result of such acts or threats,
    including possible military action, could further adversely
    affect business and economic conditions in the United States
    generally and in our principal markets, which could have an
    adverse effect on our financial performance and that of our
    borrowers and on the financial markets and the price of our
    common stock.



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PART I.







|        |         
|------- | --------
|Item 1. | Business




General











Pending Acquisition







Business








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Acquisitions







Subsidiaries and Other Equity Investments






Insurance Agency Activities.


2



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Investment Planning and Securities Brokerage Activities.




Equipment Leasing Activities.


Investment Activities.


Other Equity Investments.





Competition






3



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Employees







Supervision and Regulation




General.


Financial Modernization.




4



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Bank Acquisitions.




Capital and Operational Requirements.










5



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Distributions.




Source of Strength Policy.


Community Investment and Consumer Protection Laws.


6



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Miscellaneous.


Regulatory Enforcement Authority.


Sarbanes-Oxley Act of 2002.





Taxation






7



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Statistical Disclosure by Bank Holding Companies







































Availability of Information


http://www.banknorth.com


8



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|        |           
|------- | ----------
|Item 2. | Properties





|              |       |                 |     |                        |          |   |           |            | 
|------------- | ----- | --------------- | --- | ---------------------- | -------- | - | --------- | ---------- | 
|              |       | Number of       |     |                        |         
|State         |       | Banking Offices |     |                        | Deposits |  
|              |       |                 |     |                        |          |  
|              |       |                 |     | (Dollars in Thousands) |         
|Maine         |       |                 | 60  |                        |          | $ | 2,808,559 |           
|New Hampshire |       |                 | 76  |                        |          |   | 4,190,703 |           
|Massachusetts |       |                 | 144 |                        |          |   | 6,987,858 |           
|Vermont       |       |                 | 36  |                        |          |   | 1,672,390 |           
|New York      |       |                 | 27  |                        |          |   | 1,157,935 |           
|Connecticut   |       |                 | 43  |                        |          |   | 2,410,136 |           
|              |       |                 |     |                        |          |  
|              | Total |                 |     | 386                    |          |   | $         | 19,227,581 | 
|              |       |                 |     |                        |          |  








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



9



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PART II.







|        |                                                                                                                    
|------- | -------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Stock, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Information and Related Matters.


|               |  |              |       |  |                    |   |       |           |  |   |       | 
|-------------- |  | ------------ | ----- |  | ------------------ | - | ----- | --------- |  | - | ----- | 
|               |  | Market Price |       |  |                   
|               |  |              |       |  | Dividends Declared |  
|2004           |  | High         |       |  | Low                |   |       | Per Share | 
|               |  |              |       |  |                    |   |       |           | 
|First Quarter  |  | $            | 34.45 |  |                    | $ | 30.53 |           |  | $ | 0.195 | 
|Second Quarter |  |              | 34.75 |  |                    |   | 30.25 |           |  |   | 0.195 | 
|Third Quarter  |  |              | 36.10 |  |                    |   | 30.49 |           |  |   | 0.200 | 
|Fourth Quarter |  |              | 36.71 |  |                    |   | 34.49 |           |  |   | 0.200 | 
|2003           |  |              |       |  |                    |   |       |           |  |   |       | 
|               |  |              |       |  |                    |   |       |           | 
|              
|First Quarter  |  | $            | 24.02 |  |                    | $ | 20.60 |           |  | $ | 0.160 | 
|Second Quarter |  |              | 26.68 |  |                    |   | 21.09 |           |  |   | 0.160 | 
|Third Quarter  |  |              | 29.70 |  |                    |   | 25.43 |           |  |   | 0.190 | 
|Fourth Quarter |  |              | 33.57 |  |                    |   | 27.58 |           |  |   | 0.190 | 





Share Repurchases.


|                    |  |              |   |  |            |                     |   |                    |                   |  |                        |  |  |  |           | 
|------------------- |  | ------------ | - |  | ---------- | ------------------- | - | ------------------ | ----------------- |  | ---------------------- |  |  |  | --------- | 
|                    |  |              |   |  |            | Total Number of     |   |                    |                  
|                    |  |              |   |  |            | Shares Purchased as |   |                    | Maximum Number of | 
|                    |  | Total Number |   |  | Average    |                     |   | Part of Publicly   |                   |  | Shares that May Yet Be | 
|                    |  | of Shares    |   |  | Price Paid |                     |   | Announced Plans or |                   |  | Purchased Under the    | 
|Period              |  | Purchased    |   |  | per Share  |                     |   | Programs           |                   |  | Plans or Programs(1)   | 
|                    |  |              |   |  |            |                     |   |                    |                   |  |                        | 
|October 1-31, 2004  |  |              |  |  |            |                     |  |                    |                   |  |                       |  |  |  | 2,853,200 | 
|November 1-30, 2004 |  |              |  |  |            |                     |  |                    |                   |  |                       |  |  |  | 2,853,200 | 
|December 1-31, 2004 |  |              |  |  |            |                     |  |                    |                   |  |                       |  |  |  | 2,853,200 | 
|Total               |  |              |  |  |            |                     |  |                    |                   |  |                       |  |  |  | 2,853,200 | 






|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | An 8,000,000 share repurchase program was approved by the
    Board of Directors in February 2002. For additional information,
    see Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Recent
    Developments in Item 7.

10



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|        |                                     
|------- | ------------------------------------
|Item 6. | Selected Consolidated Financial Data

|                                                                |       |      |            |       |      |   |            |       |  |   |            |       |  |      |            |       |  |   |            |       | 
|--------------------------------------------------------------- | ----- | ---- | ---------- | ----- | ---- | - | ---------- | ----- |  | - | ---------- | ----- |  | ---- | ---------- | ----- |  | - | ---------- | ----- | 
|                                                                |       | 2004 |            |       | 2003 |   |            | 2002  |  |   | 2001       |       |  | 2000 |           
|                                                                |       |      |            |       |      |   |            |       |  |   |            |       |  |      |           
|Condensed Income Statement                                      |       |      |            |       |      |   |            |       |  |   |            |       |  |      |            |       |  |   |            |      
|Net interest income                                             |       | $    | 933,382    |       |      | $ | 840,831    |       |  | $ | 796,517    |       |  | $    | 679,890    |       |  | $ | 603,550    |      
|Provision for loan and lease losses                             |       |      | 40,340     |       |      |   | 42,301     |       |  |   | 44,314     |       |  |      | 41,889     |       |  |   | 23,819     |      
|                                                                |       |      |            |       |      |   |            |       |  |   |            |       |  |      |           
|Net interest income after loan and lease loss provision         |       |      | 893,042    |       |      |   | 798,530    |       |  |   | 752,203    |       |  |      | 638,001    |       |  |   | 579,731    |      
|Noninterest income(1)                                           |       |      | 339,799    |       |      |   | 367,159    |       |  |   | 274,508    |       |  |      | 240,505    |       |  |   | 211,188    |      
|Noninterest expense(2)                                          |       |      | 765,101    |       |      |   | 641,270    |       |  |   | 579,392    |       |  |      | 515,317    |       |  |   | 502,392    |      
|                                                                |       |      |            |       |      |   |            |       |  |   |            |       |  |      |           
|Income before income taxes                                      |       |      | 467,740    |       |      |   | 524,419    |       |  |   | 447,319    |       |  |      | 363,189    |       |  |   | 288,527    |      
|Income tax expense                                              |       |      | 163,097    |       |      |   | 173,660    |       |  |   | 148,681    |       |  |      | 124,104    |       |  |   | 96,793     |      
|Cumulative effect of change in accounting principle, net of tax |       |      |           |       |      |   |           |       |  |   |           |       |  |      | (290       | )     |  |   |           |      
|                                                                |       |      |            |       |      |   |            |       |  |   |            |       |  |      |           
|Net income                                                      |       | $    | 304,643    |       |      | $ | 350,759    |       |  | $ | 298,638    |       |  | $    | 238,795    |       |  | $ | 191,734    |      
|                                                               
|Per Common Share                                                |       |      |            |       |      |   |            |       |  |   |            |       |  |      |            |       |  |   |            |      
|Basic earnings per share                                        |       | $    | 1.78       |       |      | $ | 2.18       |       |  | $ | 2.01       |       |  | $    | 1.70       |       |  | $ | 1.33       |      
|Diluted earnings per share                                      |       |      | 1.75       |       |      |   | 2.15       |       |  |   | 1.99       |       |  |      | 1.68       |       |  |   | 1.32       |      
|Dividends per share                                             |       |      | 0.79       |       |      |   | 0.70       |       |  |   | 0.58       |       |  |      | 0.53       |       |  |   | 0.50       |      
|Book value per share at year end                                |       |      | 17.71      |       |      |   | 15.54      |       |  |   | 13.70      |       |  |      | 11.83      |       |  |   | 9.42       |      
|Tangible book value per share at year end                       |       |      | 9.82       |       |      |   | 8.37       |       |  |   | 9.09       |       |  |      | 8.75       |       |  |   | 8.11       |      
|Stock price:                                                    |       |      |            |       |      |   |            |       |  |   |            |       |  |      |            |       |  |   |            |      
|                                                                | High  |      |            | 36.71 |      |   |            | 33.57 |  |   |            | 27.22 |  |      |            | 24.39 |  |   |            | 21.13 | 
|                                                                | Low   |      |            | 30.25 |      |   |            | 20.60 |  |   |            | 20.44 |  |      |            | 18.13 |  |   |            | 10.38 | 
|                                                                | Close |      |            | 36.60 |      |   |            | 32.53 |  |   |            | 22.60 |  |      |            | 22.52 |  |   |            | 19.94 | 
|Period end common shares outstanding                            |       |      | 179,298    |       |      |   | 162,188    |       |  |   | 150,579    |       |  |      | 151,221    |       |  |   | 141,245    |      
|Weighted average shares outstanding  diluted                   |       |      | 174,158    |       |      |   | 163,520    |       |  |   | 149,829    |       |  |      | 141,802    |       |  |   | 145,194    |      
|                                                               
|Financial Ratios                                                |       |      |            |       |      |   |            |       |  |   |            |       |  |      |            |       |  |   |            |      
|Return on average assets                                        |       |      | 1.08       | %     |      |   | 1.37       | %     |  |   | 1.39       | %     |  |      | 1.29       | %     |  |   | 1.05       | %    
|Return on average equity                                        |       |      | 10.63      |       |      |   | 14.51      |       |  |   | 16.25      |       |  |      | 16.48      |       |  |   | 15.69      |      
|Net interest margin(3)                                          |       |      | 3.72       |       |      |   | 3.66       |       |  |   | 4.07       |       |  |      | 3.99       |       |  |   | 3.60       |      
|Net interest rate spread(3)                                     |       |      | 3.47       |       |      |   | 3.41       |       |  |   | 3.69       |       |  |      | 3.43       |       |  |   | 3.05       |      
|Average equity to average assets                                |       |      | 10.17      |       |      |   | 9.44       |       |  |   | 8.56       |       |  |      | 7.82       |       |  |   | 6.66       |      
|Efficiency ratio(4)                                             |       |      | 60.09      |       |      |   | 53.09      |       |  |   | 54.10      |       |  |      | 55.34      |       |  |   | 61.67      |      
|Noninterest income as a percent of total income                 |       |      | 26.69      |       |      |   | 30.39      |       |  |   | 25.63      |       |  |      | 26.13      |       |  |   | 25.92      |      
|Tier 1 leverage capital ratio                                   |       |      | 7.58       |       |      |   | 6.65       |       |  |   | 7.13       |       |  |      | 7.14       |       |  |   | 7.02       |      
|Tier 1 risk-based capital ratio                                 |       |      | 9.98       |       |      |   | 8.96       |       |  |   | 9.66       |       |  |      | 9.59       |       |  |   | 10.56      |      
|Total risk-based capital ratio                                  |       |      | 12.16      |       |      |   | 11.29      |       |  |   | 12.15      |       |  |      | 12.23      |       |  |   | 11.81      |      
|Dividend payout ratio(5)                                        |       |      | 44.36      |       |      |   | 31.90      |       |  |   | 28.76      |       |  |      | 30.27      |       |  |   | 36.91      |      
|                                                               
|Average Balance Sheet                                           |       |      |            |       |      |   |            |       |  |   |            |       |  |      |            |       |  |   |            |      
|Assets                                                          |       | $    | 28,173,424 |       |      | $ | 25,616,347 |       |  | $ | 21,460,719 |       |  | $    | 18,545,709 |       |  | $ | 18,343,226 |      
|Loans and leases(6)                                             |       |      | 17,734,537 |       |      |   | 15,633,207 |       |  |   | 13,236,803 |       |  |      | 11,246,007 |       |  |   | 10,485,289 |      
|Deposits                                                        |       |      | 18,877,811 |       |      |   | 17,302,983 |       |  |   | 14,566,644 |       |  |      | 12,529,630 |       |  |   | 11,891,481 |      
|Shareholders equity                                            |       |      | 2,865,540  |       |      |   | 2,416,926  |       |  |   | 1,838,064  |       |  |      | 1,449,353  |       |  |   | 1,222,378  |      
|                                                               
|Year End Balance Sheet Data                                     |       |      |            |       |      |   |            |       |  |   |            |       |  |      |            |       |  |   |            |      
|Assets                                                          |       | $    | 28,687,810 |       |      | $ | 26,453,735 |       |  | $ | 23,418,941 |       |  | $    | 21,076,586 |       |  | $ | 18,233,810 |      
|Loans and leases, net(7)                                        |       |      | 18,349,842 |       |      |   | 16,113,675 |       |  |   | 13,847,735 |       |  |      | 12,525,493 |       |  |   | 10,692,112 |      
|Securities(8)                                                   |       |      | 6,992,778  |       |      |   | 7,247,232  |       |  |   | 6,947,876  |       |  |      | 6,156,861  |       |  |   | 5,880,658  |      
|Goodwill and identifiable intangible assets                     |       |      | 1,416,156  |       |      |   | 1,163,054  |       |  |   | 695,158    |       |  |      | 466,633    |       |  |   | 185,520    |      
|Deposits                                                        |       |      | 19,227,581 |       |      |   | 17,901,185 |       |  |   | 15,664,601 |       |  |      | 14,221,049 |       |  |   | 12,107,256 |      
|Borrowings                                                      |       |      | 5,990,705  |       |      |   | 5,882,864  |       |  |   | 5,432,581  |       |  |      | 4,602,388  |       |  |   | 4,659,390  |      
|Shareholders equity                                            |       |      | 3,176,114  |       |      |   | 2,520,519  |       |  |   | 2,063,485  |       |  |      | 1,789,115  |       |  |   | 1,330,857  |      
|Nonperforming assets(9)                                         |       |      | 81,103     |       |      |   | 63,103     |       |  |   | 68,953     |       |  |      | 81,227     |       |  |   | 67,132     |      
|                                                               

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|    |                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Noninterest income included net securities losses of
    $17.8 million and gains of $29.2 million in the fourth
    quarter of 2004 and second quarter of 2003, respectively, which
    were incurred as part of balance sheet deleveraging programs
    implemented during these periods.                                                                             
|   
|(2) | Noninterest expense included prepayment penalties on borrowings
    of $61.5 million and $28.5 million in the fourth
    quarter of 2004 and the second quarter of 2003, respectively,
    which were incurred as part of balance sheet deleveraging
    programs implemented during these periods.                                                                    
|   
|(3) | Net interest margin represents net interest income divided by
    average interest-earning assets and net interest rate spread
    represents the difference between the weighted average yield on
    interest-earning assets and the weighted average rate paid on
    interest-bearing liabilities, in each case calculated on a
    fully-taxable equivalent basis.
|   
|(4) | Represents noninterest expenses as a percentage of net interest
    income and noninterest income including net securities gains.                                                                                                                                                                                                                                      
|   
|(5) | Cash dividends paid divided by net income.                                                                                                                                                                                                                                                                                                                             
|   
|(6) | Includes loans and leases held for sale.                                                                                                                                                                                                                                                                                                                               
|   
|(7) | Excludes loans and leases held for sale.                                                                                                                                                                                                                                                                                                                               
|   
|(8) | Includes securities held to maturity.                                                                                                                                                                                                                                                                                                                                  
|   
|(9) | Nonperforming assets consist of nonperforming loans, other real
    estate owned, repossessed assets and investment securities
    placed on non-accrual status.                                                                                                                                                                                                       

12



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##### Table of Contents








|        |                                                                                                                                                 
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations (In thousands, except per
    share data and as noted)



General










| |                  
| | -----------------
| | Business Strategy







13



---



##### Table of Contents





Executive Overview






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In October 2004, we implemented a deleveraging program under
    which we sold approximately $1.2 billion of securities with
    a weighted average yield of 2.77% and prepaid a similar amount
    of borrowings with a weighted average rate of 4.77%, both of
    which had a duration of approximately 3.5 years. A
    $51.6 million after-tax loss was incurred in connection
    with this program in the fourth quarter. This program is
    expected to improve our annual net interest margin by
    approximately 28 basis points.
|
| |  | We completed the acquisitions of CCBT Financial Companies, Inc.
    and Foxborough Savings Bank on April 30, 2004 and an
    insurance agency on July 1, 2004. Acquisitions continue to
    be an important part of our long-term strategy for growth.                                                                                                                                                                                                                                                                                       
|
| |  | Net interest income increased 11% in 2004 compared to 2003,
    primarily due to a $2.1 billion increase in average earning
    assets. The net interest margin increased by 6 basis points
    in 2004 versus 2003 primarily due to the 9% increase in earning
    assets.                                                                                                                                                                                                                                                                  
|
| |  | Noninterest income from deposit services, insurance agency
    commissions, merchant and electronic banking services, wealth
    management services and investment planning services increased
    by $36.9 million (or 16%) in the aggregate, due in part to
    acquisitions. This aggregate increase was offset by a decrease
    in net securities gains of $50.2 million (primarily related
    to the balance sheet deleveraging program) and a decrease in
    other noninterest income of $14.5 million. See Table 6for details.    
|
| |  | During 2004, we recorded strong growth in commercial real estate
    loans, commercial business loans and leases and consumer loans
    and leases. During the year, commercial business loans and
    leases increased 20%, commercial real estate loans increased 13%
    and consumer loans increased 11%. Excluding the effects of
    acquisitions, total average loans and leases increased 8%.                                                                                                                                        
|
| |  | Asset quality remained strong despite an increase in
    nonperforming assets of $18 million at December 31,
    2004 as compared to December 31, 2003, which was
    attributable to increases in commercial real estate and
    commercial business loans and leases.                                                                                                                                                                                                                                                                      
|
| |  | Total deposits increased by 7% during 2004. Excluding
    acquisitions, total average deposits increased
    $554 million, or 3%, as average checking deposits increased
    16% and savings and money market deposits increased 6%, while
    certificates of deposit declined 11%.                                                                                                                                                                                                                                                         





| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | using the definitions of banking regulators, we continue to be
    well-capitalized;
|
| |  | the Moodys rating of our senior notes was A3
    at December 31, 2004;             

14



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##### Table of Contents





| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | we increased our annual dividend by 13% in 2004 compared to
    2003; and              
|
| |  | our liquidity measures at December 31, 2004 continue to
    meet our policy guidelines.

Recent Developments


















15



---



##### Table of Contents





| |             
| | ------------
| | Acquisitions



Table 1  Acquisitions 2002  2004


|                                  |  |                                  |            |                  |        |                           |         |        |       |              |          |  |      |             |       |        |      |   |          |        |  |   |       |  |  |  |      |  |  |   |       | 
|--------------------------------- |  | -------------------------------- | ---------- | ---------------- | ------ | ------------------------- | ------- | ------ | ----- | ------------ | -------- |  | ---- | ----------- | ----- | ------ | ---- | - | -------- | ------ |  | - | ----- |  |  |  | ---- |  |  | - | ----- | 
|                                  |  |                                  |            |                  |        | Transaction-Related Items |        
|                                  |  |                                  |            | Balance at       |        |                           |         |       
|                                  |  |                                  |            | Acquisition Date |        |                           |         |        | Other |              |          |  |      | Total       |      
|                                  |  | Acquisition                      |            |                  |        |                           |         |        |       | Identifiable |          |  | Cash |             |       | Shares |      |   | Purchase |       
|                                  |  | Date                             |            |                  | Assets |                           |         | Equity |       |              | Goodwill |  |      | Intangibles |       |        | Paid |   |          | Issued |  |   | Price | 
|                                  |  |                                  |            |                  |        |                           |         |        |       |              |          |  |      |             |       |        |      |   |          |        |  |   |       | 
|                                  |  | (Dollars and shares in millions) |           
|CCBT Financial Companies, Inc.    |  |                                  | 4/30/2004  |                  |        | $                         | 1,292.9 |        |       | $            | 108.5    |  |      | $           | 178.2 |        |      | $ | 19.4     |        |  | $ |      |  |  |  | 9.2  |  |  | $ | 298.1 | 
|Foxbrough Savings Bank            |  |                                  | 4/30/2004  |                  |        |                           | 241.8   |        |       |              | 22.8     |  |      |             | 62.2  |        |      |   | 2.2      |        |  |   | 88.9  |  |  |  |     |  |  |   | 88.9  | 
|First & Ocean Bancorp             |  |                                  | 12/31/2003 |                  |        |                           | 274.4   |        |       |              | 15.6     |  |      |             | 35.1  |        |      |   | 1.8      |        |  |   | 49.7  |  |  |  |     |  |  |   | 49.7  | 
|American Financial Holdings, Inc. |  |                                  | 2/14/2003  |                  |        |                           | 2,690.3 |        |       |              | 408.2    |  |      |             | 422.2 |        |      |   | 9.3      |        |  |   | 328.5 |  |  |  | 13.4 |  |  |   | 711.4 | 
|Warren Bancorp, Inc.              |  |                                  | 12/31/2002 |                  |        |                           | 466.1   |        |       |              | 45.3     |  |      |             | 90.5  |        |      |   | 2.7      |        |  |   | 59.8  |  |  |  | 2.7  |  |  |   | 136.6 | 
|Bancorp Connecticut, Inc.         |  |                                  | 8/31/2002  |                  |        |                           | 661.7   |        |       |              | 61.4     |  |      |             | 96.9  |        |      |   | 8.7      |        |  |   | 161.2 |  |  |  |     |  |  |   | 161.2 | 
|Ipswich Bancshares, Inc.          |  |                                  | 7/26/2002  |                  |        |                           | 318.0   |        |       |              | 13.9     |  |      |             | 22.0  |        |      |   | 4.8      |        |  |   | 19.9  |  |  |  | 0.9  |  |  |   | 40.1  | 





| |                      
| | ---------------------
| | Results of Operations



| |                            
| | ---------------------------
| | Comparison of 2004 and 2003



| |                    
| | -------------------
| | Net Interest Income



16



---



##### Table of Contents



Table 2  Three-Year Average Balance Sheets




|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |            |  |  |   |           |   |  |  |       | 
|--------------------------------------------------- |  | ----------------------- | ---------- |  | -------- | - | --------- | ---- |  | ------- | ------- |  |  | -------- | ---------- |  | ---- | ------- | --------- | ------- |  |  | -------- |  |  | ---- | ---------- |  |  | - | --------- | - |  |  | ----- | 
|                                                    |  | Year Ended December 31, |           
|                                                    |  |                         |           
|                                                    |  | 2004                    |            |  | 2003     |   |           | 2002 | 
|                                                    |  |                         |            |  |          |   |           |      | 
|                                                    |  | Average                 |            |  |          |   | Yield/    |      |  | Average |         |  |  |          | Yield/     |  |      | Average |           |         |  |  | Yield/   | 
|                                                    |  | Balance                 |            |  | Interest |   |           | Rate |  |         | Balance |  |  | Interest |            |  | Rate |         |           | Balance |  |  | Interest |  |  | Rate |           
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Loans and leases(1):                                |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |            |  |  |   |           |   |  |  |       | 
|Residential real estate mortgages                   |  | $                       | 2,997,572  |  |          | $ | 150,245   |      |  |         | 5.01%   |  |  | $        | 2,839,969  |  |      | $       | 159,215   |         |  |  | 5.61%    |  |  | $    | 2,635,952  |  |  | $ | 177,837   |   |  |  | 6.75% | 
|Commercial real estate mortgages                    |  |                         | 5,959,510  |  |          |   | 345,147   |      |  |         | 5.79%   |  |  |          | 5,162,413  |  |      |         | 312,681   |         |  |  | 6.06%    |  |  |      | 4,293,816  |  |  |   | 298,412   |   |  |  | 6.95% | 
|Commercial business loans and leases                |  |                         | 3,686,919  |  |          |   | 181,437   |      |  |         | 4.92%   |  |  |          | 3,153,293  |  |      |         | 160,761   |         |  |  | 5.10%    |  |  |      | 2,665,973  |  |  |   | 158,260   |   |  |  | 5.94% | 
|Consumer loans and leases                           |  |                         | 5,090,536  |  |          |   | 261,358   |      |  |         | 5.13%   |  |  |          | 4,477,532  |  |      |         | 251,347   |         |  |  | 5.61%    |  |  |      | 3,641,062  |  |  |   | 250,971   |   |  |  | 6.89% | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Total loans and leases                              |  |                         | 17,734,537 |  |          |   | 938,187   |      |  |         | 5.29%   |  |  |          | 15,633,207 |  |      |         | 884,004   |         |  |  | 5.65%    |  |  |      | 13,236,803 |  |  |   | 885,480   |   |  |  | 6.69% | 
|Investment securities                               |  |                         | 7,501,956  |  |          |   | 325,199   |      |  |         | 4.33%   |  |  |          | 7,464,162  |  |      |         | 314,701   |         |  |  | 4.22%    |  |  |      | 6,403,807  |  |  |   | 353,576   |   |  |  | 5.52% | 
|Securities purchased under agreements to resell     |  |                         | 419        |  |          |   | 7         |      |  |         | 1.75%   |  |  |          |           |  |      |         |          |         |  |  | 0.00%    |  |  |      |           |  |  |   |          |   |  |  | 0.00% | 
|Federal funds sold and other short-term investments |  |                         | 9,567      |  |          |   | 83        |      |  |         | 0.86%   |  |  |          | 11,004     |  |      |         | 160       |         |  |  | 1.46%    |  |  |      | 60,257     |  |  |   | 1,064     |   |  |  | 1.77% | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Total earning assets                                |  |                         | 25,246,479 |  |          |   | 1,263,476 |      |  |         | 5.00%   |  |  |          | 23,108,373 |  |      |         | 1,198,865 |         |  |  | 5.19%    |  |  |      | 19,700,867 |  |  |   | 1,240,120 |   |  |  | 6.30% | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Bank-owned life insurance                           |  |                         | 503,957    |  |          |   |           |      |  |         |         |  |  |          | 465,446    |  |      |         |           |         |  |  |          |  |  |      | 359,994    |  |  |   |           |   |  |  |       | 
|Noninterest-earning assets                          |  |                         | 2,422,988  |  |          |   |           |      |  |         |         |  |  |          | 2,042,528  |  |      |         |           |         |  |  |          |  |  |      | 1,399,858  |  |  |   |           |   |  |  |       | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Total assets                                        |  | $                       | 28,173,424 |  |          |   |           |      |  |         |         |  |  | $        | 25,616,347 |  |      |         |           |         |  |  |          |  |  | $    | 21,460,719 |  |  |   |           |   |  |  |       | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Interest-bearing deposits:                          |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |            |  |  |   |           |   |  |  |       | 
|Regular savings                                     |  | $                       | 2,563,838  |  |          |   | 7,513     |      |  |         | 0.29%   |  |  | $        | 2,399,179  |  |      |         | 10,994    |         |  |  | 0.46%    |  |  | $    | 1,743,501  |  |  |   | 15,444    |   |  |  | 0.89% | 
|Now and money market accounts                       |  |                         | 7,678,644  |  |          |   | 62,336    |      |  |         | 0.81%   |  |  |          | 6,652,030  |  |      |         | 59,193    |         |  |  | 0.89%    |  |  |      | 5,463,179  |  |  |   | 79,384    |   |  |  | 1.45% | 
|Certificates of deposit                             |  |                         | 4,647,746  |  |          |   | 91,149    |      |  |         | 1.96%   |  |  |          | 5,027,739  |  |      |         | 118,649   |         |  |  | 2.36%    |  |  |      | 4,693,518  |  |  |   | 149,028   |   |  |  | 3.18% | 
|Brokered deposits                                   |  |                         | 272        |  |          |   | 6         |      |  |         | 2.03%   |  |  |          |           |  |      |         |          |         |  |  | 0.00%    |  |  |      | 43,311     |  |  |   | 792       |   |  |  | 1.83% | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Total interest-bearing deposits                     |  |                         | 14,890,500 |  |          |   | 161,004   |      |  |         | 1.08%   |  |  |          | 14,078,948 |  |      |         | 188,836   |         |  |  | 1.34%    |  |  |      | 11,943,509 |  |  |   | 244,648   |   |  |  | 2.05% | 
|Borrowed funds                                      |  |                         | 6,245,995  |  |          |   | 162,619   |      |  |         | 2.60%   |  |  |          | 5,693,420  |  |      |         | 163,302   |         |  |  | 2.87%    |  |  |      | 4,870,795  |  |  |   | 193,952   |   |  |  | 3.98% | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Total interest-bearing liabilities                  |  |                         | 21,136,495 |  |          |   | 323,623   |      |  |         | 1.53%   |  |  |          | 19,772,368 |  |      |         | 352,138   |         |  |  | 1.78%    |  |  |      | 16,814,304 |  |  |   | 438,600   |   |  |  | 2.61% | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Non-interest bearing deposits                       |  |                         | 3,987,311  |  |          |   |           |      |  |         |         |  |  |          | 3,224,035  |  |      |         |           |         |  |  |          |  |  |      | 2,623,135  |  |  |   |           |   |  |  |       | 
|Other liabilities                                   |  |                         | 184,078    |  |          |   |           |      |  |         |         |  |  |          | 203,018    |  |      |         |           |         |  |  |          |  |  |      | 185,216    |  |  |   |           |   |  |  |       | 
|Shareholders equity                                |  |                         | 2,865,540  |  |          |   |           |      |  |         |         |  |  |          | 2,416,926  |  |      |         |           |         |  |  |          |  |  |      | 1,838,064  |  |  |   |           |   |  |  |       | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Total liabilities and shareholders equity          |  | $                       | 28,173,424 |  |          |   |           |      |  |         |         |  |  | $        | 25,616,347 |  |      |         |           |         |  |  |          |  |  | $    | 21,460,719 |  |  |   |           |   |  |  |       | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Net earning assets                                  |  | $                       | 4,109,984  |  |          |   |           |      |  |         |         |  |  | $        | 3,336,005  |  |      |         |           |         |  |  |          |  |  | $    | 2,886,563  |  |  |   |           |   |  |  |       | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Net interest income (fully-taxable equivalent)      |  |                         |            |  |          |   | 939,853   |      |  |         |         |  |  |          |            |  |      |         | 846,727   |         |  |  |          |  |  |      |            |  |  |   | 801,520   |   |  |  |       | 
|Less: fully-taxable equivalent adjustments          |  |                         |            |  |          |   | (6,471    | )    |  |         |         |  |  |          |            |  |      |         | (5,896    | )       |  |  |          |  |  |      |            |  |  |   | (5,003    | ) |  |  |       | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Net interest income                                 |  |                         |            |  |          | $ | 933,382   |      |  |         |         |  |  |          |            |  |      | $       | 840,831   |         |  |  |          |  |  |      |            |  |  | $ | 796,517   |   |  |  |       | 
|                                                    |  |                         |            |  |          |   |           |      |  |         |         |  |  |          |            |  |      |         |           |         |  |  |          |  |  |      |           
|Net interest rate spread (fully-taxable equivalent) |  |                         |            |  |          |   |           |      |  |         | 3.47%   |  |  |          |            |  |      |         |           |         |  |  | 3.41%    |  |  |      |            |  |  |   |           |   |  |  | 3.69% | 
|Net interest margin (fully-taxable equivalent)      |  |                         |            |  |          |   |           |      |  |         | 3.72%   |  |  |          |            |  |      |         |           |         |  |  | 3.66%    |  |  |      |            |  |  |   |           |   |  |  | 4.07% | 






|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|(1) | Loans and leases include portfolio loans and leases and loans
    held for sale.

17



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##### Table of Contents



Table 3  Changes in Net Interest Income




|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |         |   |   |         |        |   |   |         |         |  
|----------------------------------------------- | ----------------------------- | ------------------------------------- | ------- | -------- | ------------------------------------- | - | ------- | --------- | - | - | ------ | -------- | - | --------- | ------- | ------- | ---- | - | ------- | --------- | - | - | -------- | ------- | - | - | ------- | ------ | - | - | ------- | ------- | -
|                                                |                               | Year Ended December 31, 2004 vs. 2003 |         |          | Year Ended December 31, 2003 vs. 2002 |  
|                                                |                               | Increase (Decrease) Due to            |         |          | Increase (Decrease) Due to            |  
|                                                |                               |                                       |         |          |                                       |  
|                                                |                               |                                       |         | Rate and |                                       |   | Total   |           |   |   |        | Rate and |   |           | Total   |        
|                                                |                               | Volume(1)                             |         |          | Rate                                  |   |         | Volume(2) |   |   | Change |          |   | Volume(1) |         |         | Rate |   |         | Volume(2) |   |   | Change   |        
|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |        
|Interest income:                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |         |   |   |         |        |   |   |         |        
|Loans and leases                                |                               | $                                     | 118,725 |          |                                       | $ | (56,280 | )         |   | $ | (8,262 | )        |   | $         | 54,183  |         |      | $ | 160,319 |           |   | $ | (137,663 | )       |   | $ | (24,132 | )      |   | $ | (1,476  | )      
|Investment securities                           |                               |                                       | 1,595   |          |                                       |   | 8,211   |           |   |   | 692    |          |   |           | 10,498  |         |      |   | 58,532  |           |   |   | (83,249  | )       |   |   | (14,158 | )      |   |   | (38,875 | )      
|Securities purchased under agreements to resell |                               |                                       |        |          |                                       |   |        |           |   |   | 7      |          |   |           | 7       |         |      |   |        |           |   |   |         |         |   |   |        |        |   |   |        |        
|Federal funds and other short-term investments  |                               |                                       | (21     | )        |                                       |   | (66     | )         |   |   | 10     |          |   |           | (77     | )       |      |   | (872    | )         |   |   | (187     | )       |   |   | 155     |        |   |   | (904    | )      
|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |        
|Total interest income                           |                               |                                       | 120,299 |          |                                       |   | (48,135 | )         |   |   | (7,553 | )        |   |           | 64,611  |         |      |   | 217,979 |           |   |   | (221,099 | )       |   |   | (38,135 | )      |   |   | (41,255 | )      
|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |        
|Interest expense:                               |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |         |   |   |         |        |   |   |         |        
|Interest-bearing deposits                       |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |         |   |   |         |        |   |   |         |        
|                                                | Regular savings               |                                       |         | 757      |                                       |   |         | (4,079    | ) |   |        | (159     | ) |           |         | (3,481  | )    |   |         | 5,836     |   |   |          | (7,497  | ) |   |         | (2,789 | ) |   |         | (4,450  | )
|                                                | NOW and money market accounts |                                       |         | 9,137    |                                       |   |         | (5,322    | ) |   |        | (672     | ) |           |         | 3,143   |      |   |         | 17,238    |   |   |          | (30,594 | ) |   |         | (6,835 | ) |   |         | (20,191 | )
|                                                | Certificates of deposit       |                                       |         | (8,968   | )                                     |   |         | (20,111   | ) |   |        | 1,579    |   |           |         | (27,500 | )    |   |         | 10,628    |   |   |          | (38,487 | ) |   |         | (2,520 | ) |   |         | (30,379 | )
|                                                | Brokered deposits             |                                       |         |         |                                       |   |         |          |   |   |        | 6        |   |           |         | 6       |      |   |         | (793      | ) |   |          | (793    | ) |   |         | 794    |   |   |         | (792    | )
|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |        
|Total interest-bearing deposits                 |                               |                                       | 926     |          |                                       |   | (29,512 | )         |   |   | 754    |          |   |           | (27,832 | )       |      |   | 32,909  |           |   |   | (77,371  | )       |   |   | (11,350 | )      |   |   | (55,812 | )      
|Borrowed funds                                  |                               |                                       | 15,859  |          |                                       |   | (15,372 | )         |   |   | (1,170 | )        |   |           | (683    | )       |      |   | 32,740  |           |   |   | (54,066  | )       |   |   | (9,324  | )      |   |   | (30,650 | )      
|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |        
|Total interest expense                          |                               |                                       | 16,785  |          |                                       |   | (44,884 | )         |   |   | (416   | )        |   |           | (28,515 | )       |      |   | 65,649  |           |   |   | (131,437 | )       |   |   | (20,674 | )      |   |   | (86,462 | )      
|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |        
|Net interest income (fully taxable equivalent)  |                               | $                                     | 103,514 |          |                                       | $ | (3,251  | )         |   | $ | (7,137 | )        |   | $         | 93,126  |         |      | $ | 152,330 |           |   | $ | (89,662  | )       |   | $ | (17,461 | )      |   | $ | 45,207  |        
|                                                |                               |                                       |         |          |                                       |   |         |           |   |   |        |          |   |           |         |         |      |   |         |           |   |   |          |        






|    |                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Volume increases include the effects of the acquisitions of
    American Financial Holdings, Inc. on February 14, 2003,
    First and Ocean Bancorp on December 31, 2003, and CCBT
    Financial Companies, Inc. and Foxborough Savings Bank on
    April 30, 2004.
|   
|(2) | Includes changes in interest income and expense not due solely
    to volume or rate changes.                                                                                                                                                                      

18



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##### Table of Contents



Table 4  Analysis of Net Interest Income


|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |      |           |    |  |       |           |   
|---------------------------------------------- | --------------------------------------------------- | ----------------------- | ---- | ---------- | ------ |  | ---- | ---------- | - |  | --------- | ---------- | - | --------- | ---- | --------- | -- |  | ----- | --------- | --
|                                               |                                                     | Year Ended December 31, |      |            | Change | 
|                                               |                                                     |                         |      |            |        | 
|                                               |                                                     | 2004                    |      |            | 2003   |  |      | 2002       |   |  | 2004-2003 |            |   | 2003-2002 |     
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|Components of net interest income              |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |      |           |    |  |       |          
|                                               | Income on earning assets (fully-taxable equivalent) |                         | $    | 1,263,476  |        |  | $    | 1,198,865  |   |  | $         | 1,240,120  |   |           | $    | 64,611    |    |  | $     | (41,255   | ) 
|                                               | Expenses on interest-bearing liabilities            |                         |      | 323,623    |        |  |      | 352,138    |   |  |           | 438,600    |   |           |      | (28,515   | )  |  |       | (86,462   | ) 
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|                                               | Net interest income (fully-taxable equivalent)      |                         |      | 939,853    |        |  |      | 846,727    |   |  |           | 801,520    |   |           |      | 93,126    |    |  |       | 45,207    |   
|                                               | Less: fully-taxable equivalent adjustments          |                         |      | (6,471     | )      |  |      | (5,896     | ) |  |           | (5,003     | ) |           |      | 575       |    |  |       | 893       |   
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|                                               | Net interest income, as reported                    |                         | $    | 933,382    |        |  | $    | 840,831    |   |  | $         | 796,517    |   |           | $    | 92,551    |    |  | $     | 44,314    |   
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|Average yields and rates paid                  |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |      |           |    |  |       |          
|                                               | Earning assets yield (fully-taxable equivalent)     |                         |      | 5.00       | %      |  |      | 5.19       | % |  |           | 6.30       | % |           |      | (0.19     | )% |  |       | (1.11     | )%
|                                               | Rate paid on interest-bearing liabilities           |                         |      | 1.53       | %      |  |      | 1.78       | % |  |           | 2.61       | % |           |      | (0.25     | )% |  |       | (0.83     | )%
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|                                               | Net interest rate spread (fully-taxable equivalent) |                         |      | 3.47       | %      |  |      | 3.41       | % |  |           | 3.69       | % |           |      | 0.06      | %  |  |       | (0.28     | )%
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|Net interest margin (fully-taxable equivalent) |                                                     |                         | 3.72 | %          |        |  | 3.66 | %          |   |  | 4.07      | %          |   |           | 0.06 | %         |    |  | (0.41 | )%       
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|Average balances                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |      |           |    |  |       |          
|                                               | Loans                                               |                         | $    | 17,734,537 |        |  | $    | 15,633,207 |   |  | $         | 13,236,803 |   |           | $    | 2,101,330 |    |  | $     | 2,396,404 |   
|                                               | Investment securities                               |                         |      | 7,501,956  |        |  |      | 7,464,162  |   |  |           | 6,403,807  |   |           |      | 37,794    |    |  |       | 1,060,355 |   
|                                               | Securities purchased under agreements to resell     |                         |      | 419        |        |  |      |           |   |  |           |           |   |           |      | 419       |    |  |       |          |   
|                                               | Fed funds sold and other short term investments     |                         |      | 9,567      |        |  |      | 11,004     |   |  |           | 60,257     |   |           |      | (1,437    | )  |  |       | (49,253   | ) 
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|                                               | Total earning assets                                |                         |      | 25,246,479 |        |  |      | 23,108,373 |   |  |           | 19,700,867 |   |           |      | 2,138,106 |    |  |       | 3,407,506 |   
|                                               | Total interest-bearing liabilities                  |                         |      | 21,136,495 |        |  |      | 19,772,368 |   |  |           | 16,814,304 |   |           |      | 1,364,127 |    |  |       | 2,958,064 |   
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     
|                                               | Net earning assets                                  |                         | $    | 4,109,984  |        |  | $    | 3,336,005  |   |  | $         | 2,886,563  |   |           | $    | 773,979   |    |  | $     | 449,442   |   
|                                               |                                                     |                         |      |            |        |  |      |            |   |  |           |            |   |           |     









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##### Table of Contents







Provision and Allowance for
Loan and Lease Losses


Table 5  Provision for Loan and Lease Losses


|                                    |  |                         |        |  |           |   |        |           |  |   |        |  |  |         |        |   |        |  |    |         |  |   |        |   |  |  |    |   
|----------------------------------- |  | ----------------------- | ------ |  | --------- | - | ------ | --------- |  | - | ------ |  |  | ------- | ------ | - | ------ |  | -- | ------- |  | - | ------ | - |  |  | -- | --
|                                    |  |                         |        |  |           |   |        | Change    | 
|                                    |  |                         |        |  |           |   |        |           | 
|                                    |  | Year Ended December 31, |        |  | 2004-2003 |   |        | 2003-2002 | 
|                                    |  |                         |        |  |           |   |        |           | 
|                                    |  | 2004                    |        |  | 2003      |   |        | 2002      |  |   | Amount |  |  | Percent |        |   | Amount |  |    | Percent | 
|                                    |  |                         |        |  |           |   |        |           |  |   |        |  |  |         |        |   |        |  |    |         | 
|Provision for loan and lease losses |  | $                       | 40,340 |  |           | $ | 42,301 |           |  | $ | 44,314 |  |  | $       | (1,961 | ) |        |  | (5 | )%      |  | $ | (2,013 | ) |  |  | (5 | )%
|                                    |  |                         |        |  |           |   |        |           |  |   |        |  |  |         |        |   |        |  |    |         | 





20



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##### Table of Contents



Noninterest Income


Table 6  Noninterest Income




|                    |                                             |                                  |                                |         |           |        |         |           |        |        |         |        |        |         |         |         |        |         |         |         |      |     |    |        |        |        |        |     |     |    |    |  
|------------------- | ------------------------------------------- | -------------------------------- | ------------------------------ | ------- | --------- | ------ | ------- | --------- | ------ | ------ | ------- | ------ | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ---- | --- | -- | ------ | ------ | ------ | ------ | --- | --- | -- | -- | -
|                    |                                             |                                  |                                |         |           |        |         | Change    |       
|                    |                                             |                                  |                                |         |           |        |         |           |       
|                    |                                             | Year Ended December 31,          |                                |         | 2004-2003 |        |         | 2003-2002 |       
|                    |                                             |                                  |                                |         |           |        |         |           |       
|                    |                                             | 2004                             |                                |         | 2003      |        |         | 2002      |        |        | Amount  |        |        | Percent |         |         | Amount |         |         | Percent |     
|                    |                                             |                                  |                                |         |           |        |         |           |        |        |         |        |        |         |         |         |        |         |         |         |     
|Noninterest income: |                                             |                                  |                                |         |           |        |         |           |        |        |         |        |        |         |         |         |        |         |         |         |      |     |    |        |        |        |        |    
|                    | Deposit services                            |                                  | $                              | 109,321 |           |        | $       | 97,323    |        |        | $       | 82,139 |        |         | $       | 11,998  |        |         |         | 12      | %    |     | $  | 15,184 |        |        |        | 18  | %  
|                    | Insurance brokerage commissions             |                                  |                                | 50,311  |           |        |         | 45,714    |        |        |         | 44,439 |        |         |         | 4,597   |        |         |         | 10      | %    |     |    | 1,275  |        |        |        | 3   | %  
|                    | Merchant and electronic banking income, net |                                  |                                | 50,564  |           |        |         | 41,778    |        |        |         | 37,643 |        |         |         | 8,786   |        |         |         | 21      | %    |     |    | 4,135  |        |        |        | 11  | %  
|                    | Wealth management services                  |                                  |                                | 39,788  |           |        |         | 31,956    |        |        |         | 32,453 |        |         |         | 7,832   |        |         |         | 25      | %    |     |    | (497   | )      |        |        | (2  | )% 
|                    | Bank-owned life insurance                   |                                  |                                | 23,282  |           |        |         | 22,930    |        |        |         | 20,002 |        |         |         | 352     |        |         |         | 2       | %    |     |    | 2,928  |        |        |        | 15  | %  
|                    | Investment planning services                |                                  |                                | 19,418  |           |        |         | 15,692    |        |        |         | 11,572 |        |         |         | 3,726   |        |         |         | 24      | %    |     |    | 4,120  |        |        |        | 36  | %  
|                    | Net securities (losses) gains               |                                  |                                | (7,701  | )         |        |         | 42,460    |        |        |         | 7,282  |        |         |         | (50,161 | )      |         |         | (118    | )%   |     |    | 35,178 |        |        |        | 483 | %  
|                    | Other noninterest income:                   |                                  |                                |         |           |        |         |           |        |        |         |        |        |         |         |         |        |         |         |         |      |     |    |        |        |        |        |     |    
|                    |                                             | Covered call option premiums     |                                |         | 18,024    |        |         |           | 27,756 |        |         |        | 7,279  |         |         |         | (9,732 | )       |         |         | (35  | )%  |    |        | 20,477 |        |        |     | 281 | % 
|                    |                                             | Loan fee income                  |                                |         | 26,453    |        |         |           | 24,831 |        |         |        | 21,893 |         |         |         | 1,622  |         |         |         | 7    | %   |    |        | 2,938  |        |        |     | 13  | % 
|                    |                                             | Mortgage banking services income |                                |         | 6,562     |        |         |           | 10,212 |        |         |        | 8,539  |         |         |         | (3,650 | )       |         |         | (36  | )%  |    |        | 1,673  |        |        |     | 20  | % 
|                    |                                             | Venture capital write-downs      |                                |         | (2,880    | )      |         |           | (592   | )      |         |        | (2,753 | )       |         |         | (2,288 | )       |         |         | (386 | )%  |    |        | 2,161  |        |        |     | 78  | % 
|                    |                                             | Miscellaneous income             |                                |         | 6,657     |        |         |           | 7,099  |        |         |        | 4,020  |         |         |         | (442   | )       |         |         | (6   | )%  |    |        | 3,079  |        |        |     | 77  | % 
|                    |                                             |                                  |                                |         |           |        |         |           |        |        |         |        |        |         |         |         |        |         |         |         |     
|                    |                                             |                                  | Total other noninterest income |         |           | 54,816 |         |           |        | 69,306 |         |        |        | 38,978  |         |         |        | (14,490 | )       |         |      | (21 | )% |        |        | 30,328 |        |     |     | 78 | % 
|                    |                                             |                                  |                                |         |           |        |         |           |        |        |         |        |        |         |         |         |        |         |         |         |     
|                    |                                             |                                  |                                | Total   |           | $      | 339,799 |           |        | $      | 367,159 |        |        | $       | 274,508 |         |        | $       | (27,360 | )       |      |     | (7 | )%     |        | $      | 92,651 |     |     |    | 34 | %
|                    |                                             |                                  |                                |         |           |        |         |           |        |        |         |        |        |         |         |         |        |         |         |         |     









21



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22



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##### Table of Contents



Noninterest Expense


Table 7  Noninterest Expense




|                                                       |                                                |                                                        |                                 |        |           |         |         |           |        |        |         |        |        |         |         |        |        |        |         |         |     |    |        |        |       |       |        |      |    |    |    |  
|------------------------------------------------------ | ---------------------------------------------- | ------------------------------------------------------ | ------------------------------- | ------ | --------- | ------- | ------- | --------- | ------ | ------ | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------ | ------- | ------- | --- | -- | ------ | ------ | ----- | ----- | ------ | ---- | -- | -- | -- | -
|                                                       |                                                |                                                        |                                 |        |           |         |         | Change    |       
|                                                       |                                                |                                                        |                                 |        |           |         |         |           |       
|                                                       |                                                | Year Ended December 31,                                |                                 |        | 2004-2003 |         |         | 2003-2002 |       
|                                                       |                                                |                                                        |                                 |        |           |         |         |           |       
|                                                       |                                                | 2004                                                   |                                 |        | 2003      |         |         | 2002      |        |        | Amount  |        |        | Percent |         |        | Amount |        |         | Percent |    
|                                                       |                                                |                                                        |                                 |        |           |         |         |           |        |        |         |        |        |         |         |        |        |        |         |         |    
|Noninterest expense Compensation and employee benefits |                                                | $                                                      | 356,611                         |        |           | $       | 326,621 |           |        | $      | 311,385 |        |        | $       | 29,990  |        |        |        | 9       | %       |     | $  | 15,236 |        |       |       | 5      | %   
|                                                       | Occupancy                                      |                                                        |                                 | 63,892 |           |         |         | 59,200    |        |        |         | 52,422 |        |         |         | 4,692  |        |        |         | 8       | %   |    |        | 6,778  |       |       |        | 13   | % 
|                                                       | Equipment                                      |                                                        |                                 | 48,480 |           |         |         | 47,459    |        |        |         | 40,933 |        |         |         | 1,021  |        |        |         | 2       | %   |    |        | 6,526  |       |       |        | 16   | % 
|                                                       | Data processing                                |                                                        |                                 | 43,141 |           |         |         | 40,940    |        |        |         | 40,702 |        |         |         | 2,201  |        |        |         | 5       | %   |    |        | 238    |       |       |        | 1    | % 
|                                                       | Advertising and marketing                      |                                                        |                                 | 25,550 |           |         |         | 22,000    |        |        |         | 17,239 |        |         |         | 3,550  |        |        |         | 16      | %   |    |        | 4,761  |       |       |        | 28   | % 
|                                                       | Amortization of identifiable intangible assets |                                                        |                                 | 8,627  |           |         |         | 8,946     |        |        |         | 6,492  |        |         |         | (319   | )      |        |         | (4      | )%  |    |        | 2,454  |       |       |        | 38   | % 
|                                                       | Merger and consolidation costs                 |                                                        |                                 | 49,635 |           |         |         | 8,104     |        |        |         | 14,691 |        |         |         | 41,531 |        |        |         | 512     | %   |    |        | (6,587 | )     |       |        | (45  | )%
|                                                       | Prepayment penalties on borrowings             |                                                        |                                 | 61,546 |           |         |         | 30,490    |        |        |         |       |        |         |         | 31,056 |        |        |         | 102     | %   |    |        | 30,490 |       |       |        | 100  | % 
|                                                       | Write-off of branch automation project         |                                                        |                                 |       |           |         |         |          |        |        |         | 6,170  |        |         |         |       |        |        |         |        |     |    |        | (6,170 | )     |       |        | (100 | )%
|                                                       | Other noninterest expense:                     |                                                        |                                 |        |           |         |         |           |        |        |         |        |        |         |         |        |        |        |         |         |     |    |        |        |       |       |        |      |   
|                                                       |                                                | Telephone                                              |                                 |        | 14,717    |         |         |           | 12,858 |        |         |        | 13,396 |         |         |        | 1,859  |        |         |         | 14  | %  |        |        | (538  | )     |        |      | (4 | )%
|                                                       |                                                | Office supplies                                        |                                 |        | 10,638    |         |         |           | 10,513 |        |         |        | 10,736 |         |         |        | 125    |        |         |         | 1   | %  |        |        | (223  | )     |        |      | (2 | )%
|                                                       |                                                | Postage and freight                                    |                                 |        | 10,657    |         |         |           | 11,187 |        |         |        | 9,707  |         |         |        | (530   | )      |         |         | (5  | )% |        |        | 1,480 |       |        |      | 15 | % 
|                                                       |                                                | Miscellaneous loan costs                               |                                 |        | 4,930     |         |         |           | 5,984  |        |         |        | 4,290  |         |         |        | (1,054 | )      |         |         | (18 | )% |        |        | 1,694 |       |        |      | 39 | % 
|                                                       |                                                | Deposits and other assessments                         |                                 |        | 3,756     |         |         |           | 3,752  |        |         |        | 3,541  |         |         |        | 4      |        |         |         | 0   | %  |        |        | 211   |       |        |      | 6  | % 
|                                                       |                                                | Collection and carrying costs of non-performing assets |                                 |        | 2,717     |         |         |           | 2,694  |        |         |        | 2,713  |         |         |        | 23     |        |         |         | 1   | %  |        |        | (19   | )     |        |      | (1 | )%
|                                                       |                                                | Miscellaneous                                          |                                 |        | 60,204    |         |         |           | 50,522 |        |         |        | 44,975 |         |         |        | 9,682  |        |         |         | 19  | %  |        |        | 5,547 |       |        |      | 12 | % 
|                                                       |                                                |                                                        |                                 |        |           |         |         |           |        |        |         |        |        |         |         |        |        |        |         |         |    
|                                                       |                                                |                                                        | Total other noninterest expense |        |           | 107,619 |         |           |        | 97,510 |         |        |        | 89,358  |         |        |        | 10,109 |         |         |     | 10 | %      |        |       | 8,152 |        |      |    | 9  | % 
|                                                       |                                                |                                                        |                                 |        |           |         |         |           |        |        |         |        |        |         |         |        |        |        |         |         |    
|                                                       |                                                |                                                        |                                 | Total  |           | $       | 765,101 |           |        | $      | 641,270 |        |        | $       | 579,392 |        |        | $      | 123,831 |         |     |    | 19     | %      |       | $     | 61,878 |      |    |    | 11 | %
|                                                       |                                                |                                                        |                                 |        |           |         |         |           |        |        |         |        |        |         |         |        |        |        |         |         |    





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##### Table of Contents









Taxes


Table 8  Income Tax Expense


|                   |  |                         |         |  |           |   |         |           |  |   |         |  |  |         |         |   |        |  |    |         |  |   |        |  |  |  |    |  
|------------------ |  | ----------------------- | ------- |  | --------- | - | ------- | --------- |  | - | ------- |  |  | ------- | ------- | - | ------ |  | -- | ------- |  | - | ------ |  |  |  | -- | -
|                   |  |                         |         |  |           |   |         | Change    | 
|                   |  |                         |         |  |           |   |         |           | 
|                   |  | Year Ended December 31, |         |  | 2004-2003 |   |         | 2003-2002 | 
|                   |  |                         |         |  |           |   |         |           | 
|                   |  | 2004                    |         |  | 2003      |   |         | 2002      |  |   | Amount  |  |  | Percent |         |   | Amount |  |    | Percent | 
|                   |  |                         |         |  |           |   |         |           |  |   |         |  |  |         |         |   |        |  |    |         | 
|Income tax expense |  | $                       | 163,097 |  |           | $ | 173,660 |           |  | $ | 148,681 |  |  | $       | (10,563 | ) |        |  | (6 | )%      |  | $ | 24,979 |  |  |  | 17 | %
|                   |  |                         |         |  |           |   |         |           |  |   |         |  |  |         |         |   |        |  |    |         | 





24



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Comprehensive Income


Table 9  Comprehensive Income


|                                                                                                    |  |                         |         |   |           |   |          |           |  |   |         |   |  |         |         |   |        |  |      |         |  |   |          |   |  |  |      |   
|--------------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | --------- | - | -------- | --------- |  | - | ------- | - |  | ------- | ------- | - | ------ |  | ---- | ------- |  | - | -------- | - |  |  | ---- | --
|                                                                                                    |  |                         |         |   |           |   |          | Change    | 
|                                                                                                    |  |                         |         |   |           |   |          |           | 
|                                                                                                    |  | Year Ended December 31, |         |   | 2004-2003 |   |          | 2003-2002 | 
|                                                                                                    |  |                         |         |   |           |   |          |           | 
|                                                                                                    |  | 2004                    |         |   | 2003      |   |          | 2002      |  |   | Amount  |   |  | Percent |         |   | Amount |  |      | Percent | 
|                                                                                                    |  |                         |         |   |           |   |          |           |  |   |         |   |  |         |         |   |        |  |      |         | 
|Net income                                                                                          |  | $                       | 304,643 |   |           | $ | 350,759  |           |  | $ | 298,638 |   |  | $       | (46,116 | ) |        |  | (13  | )%      |  | $ | 52,121   |   |  |  | 17   | % 
|Unrealized gains (losses) on securities, net of reclassification
    adjustment and taxes           |  |                         | (7,231  | ) |           |   | (110,068 | )         |  |   | 77,257  |   |  |         | 102,837 |   |        |  | 93   | %       |  |   | (187,325 | ) |  |  | (242 | )%
|Unrealized gains (losses) on cash flow hedges, net net of
    reclassification adjustment and taxes |  |                         | 146     |   |           |   | 1,575    |           |  |   | (2,054  | ) |  |         | (1,429  | ) |        |  | (91  | )%      |  |   | 3,629    |   |  |  | 177  | % 
|Minimum pension liability, net of tax                                                               |  |                         | (1,079  | ) |           |   | (446     | )         |  |   | (825    | ) |  |         | (633    | ) |        |  | (142 | )%      |  |   | 379      |   |  |  | 46   | % 
|                                                                                                    |  |                         |         |   |           |   |          |           |  |   |         |   |  |         |         |   |        |  |      |         | 
|Comprehensive income                                                                                |  | $                       | 296,479 |   |           | $ | 241,820  |           |  | $ | 373,016 |   |  | $       | 54,659  |   |        |  | 23   | %       |  | $ | (131,196 | ) |  |  | (35  | )%
|                                                                                                    |  |                         |         |   |           |   |          |           |  |   |         |   |  |         |         |   |        |  |      |         | 





Segment Reporting




25



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Table 10  Business Segment Information




|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |        |        |  |   |            |         | 
|--------------------------------------------------------------------------- | -------------------------- | ---------------------------- | ---------- | ------- | --------- | - | ------ | ---------- |  | - | ---------- | ------ |  | ----- | ------ | ------ |  | - | ---------- | ------- | 
|                                                                            |                            | Year Ended December 31, 2004 |           
|                                                                            |                            |                              |           
|                                                                            |                            | Community                    |            |         | Insurance |   |        | Investment |  |   | Wealth     |        |  |      
|                                                                            |                            | Banking                      |            |         | Agency    |   |        | Planning   |  |   | Management |        |  | Total |       
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Net interest income (expense)                                               |                            | $                            | 934,244    |         |           | $ | (574   | )          |  | $ | 55         |        |  | $     | (343   | )      |  | $ | 933,382    |        
|Provision for loan and lease losses                                         |                            |                              | 40,340     |         |           |   |       |            |  |   |           |        |  |       |       |        |  |   | 40,340     |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Net interest income (expense) after provision for loan and
    lease losses |                            |                              | 893,904    |         |           |   | (574   | )          |  |   | 55         |        |  |       | (343   | )      |  |   | 893,042    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Noninterest income                                                          |                            |                              | 227,787    |         |           |   | 51,389 |            |  |   | 19,418     |        |  |       | 41,205 |        |  |   | 339,799    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Noninterest expense:                                                        |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |        |        |  |   |            |        
|Compensation and employee benefits                                          |                            |                              | 290,970    |         |           |   | 32,624 |            |  |   | 13,269     |        |  |       | 19,748 |        |  |   | 356,611    |        
|Occupancy and equipment                                                     |                            |                              | 105,966    |         |           |   | 4,695  |            |  |   | 765        |        |  |       | 946    |        |  |   | 112,372    |        
|Data processing                                                             |                            |                              | 35,721     |         |           |   | 492    |            |  |   | 1,758      |        |  |       | 5,170  |        |  |   | 43,141     |        
|Advertising and marketing                                                   |                            |                              | 24,878     |         |           |   | 275    |            |  |   | 45         |        |  |       | 352    |        |  |   | 25,550     |        
|Amortization of intangibles                                                 |                            |                              | 8,263      |         |           |   | 364    |            |  |   |           |        |  |       |       |        |  |   | 8,627      |        
|Merger and consolidation costs                                              |                            |                              | 49,635     |         |           |   |       |            |  |   |           |        |  |       |       |        |  |   | 49,635     |        
|Other                                                                       |                            |                              | 159,170    |         |           |   | 5,026  |            |  |   | 1,601      |        |  |       | 3,368  |        |  |   | 169,165    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|                                                                            | Total non-interest expense |                              |            | 674,603 |           |   |        | 43,476     |  |   |            | 17,438 |  |       |        | 29,584 |  |   |            | 765,101 | 
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Pre-tax income                                                              |                            | $                            | 447,088    |         |           | $ | 7,339  |            |  | $ | 2,035      |        |  | $     | 11,278 |        |  | $ | 467,740    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Total assets                                                                |                            | $                            | 28,536,436 |         |           | $ | 77,179 |            |  | $ | 7,110      |        |  | $     | 67,085 |        |  | $ | 28,687,810 |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Net interest income and noninterest income as a percent of total
    income |                            |                              | 91.3       | %       |           |   | 4.0    | %          |  |   | 1.5        | %      |  |       | 3.2    | %      |  |   | 100.0      | %      
|Percent of pre-tax income to total pre-tax income                           |                            |                              | 95.6       | %       |           |   | 1.6    | %          |  |   | 0.4        | %      |  |       | 2.4    | %      |  |   | 100.0      | %      
|Percent of assets to total consolidated assets                              |                            |                              | 99.5       | %       |           |   | 0.3    | %          |  |   | 0.0        | %      |  |       | 0.2    | %      |  |   | 100.0      | %      

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|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |        |        |  |   |            |         | 
|--------------------------------------------------------------------------- | -------------------------- | ---------------------------- | ---------- | ------- | --------- | - | ------ | ---------- |  | - | ---------- | ------ |  | ----- | ------ | ------ |  | - | ---------- | ------- | 
|                                                                            |                            | Year Ended December 31, 2003 |           
|                                                                            |                            |                              |           
|                                                                            |                            | Community                    |            |         | Insurance |   |        | Investment |  |   | Wealth     |        |  |      
|                                                                            |                            | Banking                      |            |         | Agency    |   |        | Planning   |  |   | Management |        |  | Total |       
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Net interest income (expense)                                               |                            | $                            | 842,058    |         |           | $ | (367   | )          |  | $ | 10         |        |  | $     | (870   | )      |  | $ | 840,831    |        
|Provision for loan and lease losses                                         |                            |                              | 42,301     |         |           |   |       |            |  |   |           |        |  |       |       |        |  |   | 42,301     |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Net interest income (expense) after provision for loan and
    lease losses |                            |                              | 799,757    |         |           |   | (367   | )          |  |   | 10         |        |  |       | (870   | )      |  |   | 798,530    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Noninterest income                                                          |                            |                              | 271,975    |         |           |   | 46,687 |            |  |   | 15,692     |        |  |       | 32,805 |        |  |   | 367,159    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Noninterest expense:                                                        |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |        |        |  |   |            |        
|Compensation and employee benefits                                          |                            |                              | 271,395    |         |           |   | 29,506 |            |  |   | 10,305     |        |  |       | 15,415 |        |  |   | 326,621    |        
|Occupancy and equipment                                                     |                            |                              | 100,632    |         |           |   | 3,755  |            |  |   | 684        |        |  |       | 1,588  |        |  |   | 106,659    |        
|Data processing                                                             |                            |                              | 34,960     |         |           |   | 473    |            |  |   | 1,301      |        |  |       | 4,206  |        |  |   | 40,940     |        
|Advertising and marketing                                                   |                            |                              | 21,262     |         |           |   | 448    |            |  |   | 95         |        |  |       | 195    |        |  |   | 22,000     |        
|Amortization of intangibles                                                 |                            |                              | 8,642      |         |           |   | 304    |            |  |   |           |        |  |       |       |        |  |   | 8,946      |        
|Merger and consolidation costs                                              |                            |                              | 8,104      |         |           |   |       |            |  |   |           |        |  |       |       |        |  |   | 8,104      |        
|Other                                                                       |                            |                              | 118,638    |         |           |   | 5,316  |            |  |   | 1,173      |        |  |       | 2,873  |        |  |   | 128,000    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|                                                                            | Total non-interest expense |                              |            | 563,633 |           |   |        | 39,802     |  |   |            | 13,558 |  |       |        | 24,277 |  |   |            | 641,270 | 
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Pre-tax income                                                              |                            | $                            | 508,099    |         |           | $ | 6,518  |            |  | $ | 2,144      |        |  | $     | 7,658  |        |  | $ | 524,419    |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Total assets                                                                |                            | $                            | 26,352,435 |         |           | $ | 69,664 |            |  | $ | 4,622      |        |  | $     | 27,013 |        |  | $ | 26,453,734 |        
|                                                                            |                            |                              |            |         |           |   |        |            |  |   |            |        |  |       |       
|Net interest income and noninterest income as a percent of total
    income |                            |                              | 92.3       | %       |           |   | 3.8    | %          |  |   | 1.3        | %      |  |       | 2.6    | %      |  |   | 100.0      | %      
|Percent of pre-tax income to total pre-tax income                           |                            |                              | 96.9       | %       |           |   | 1.2    | %          |  |   | 0.4        | %      |  |       | 1.5    | %      |  |   | 100.0      | %      
|Percent of assets to total consolidated assets                              |                            |                              | 99.6       | %       |           |   | 0.3    | %          |  |   | 0.0        | %      |  |       | 0.1    | %      |  |   | 100.0      | %      

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Fourth Quarter Summary




Table 11  Fourth Quarter Summary


|                                                          |  |                    |         |   |        |   |         |        |  |   |         |     |  |  |     |   
|--------------------------------------------------------- |  | ------------------ | ------- | - | ------ | - | ------- | ------ |  | - | ------- | --- |  |  | --- | --
|                                                          |  | Three Months Ended |         |   |       
|                                                          |  | December 31,       |         |   | Change |  
|                                                          |  |                    |         |   |        |  
|                                                          |  | 2004               |         |   | 2003   |   |         | Amount |  |   | Percent |    
|                                                          |  |                    |         |   |        |   |         |        |  |   |         |    
|Condensed Income Statement                                |  |                    |         |   |        |   |         |        |  |   |         |     |  |  |     |   
|Net interest income                                       |  | $                  | 246,063 |   |        | $ | 213,288 |        |  | $ | 32,775  |     |  |  | 15  | % 
|Provision for loan and lease losses                       |  |                    | 10,670  |   |        |   | 10,400  |        |  |   | 270     |     |  |  | 3   | % 
|                                                          |  |                    |         |   |        |   |         |        |  |   |         |    
|Net interest income after loan and lease losses provision |  |                    | 235,393 |   |        |   | 202,888 |        |  |   | 32,505  |     |  |  | 16  | % 
|Noninterest income(1)                                     |  |                    | 70,591  |   |        |   | 84,435  |        |  |   | (13,844 | )   |  |  | (16 | )%
|Noninterest expense(2)                                    |  |                    | 267,359 |   |        |   | 155,676 |        |  |   | 111,683 |     |  |  | 72  | % 
|                                                          |  |                    |         |   |        |   |         |        |  |   |         |    
|Income before income taxes                                |  |                    | 38,625  |   |        |   | 131,647 |        |  |   | (93,022 | )   |  |  | (71 | )%
|Income tax expense                                        |  |                    | 17,927  |   |        |   | 40,085  |        |  |   | (22,158 | )   |  |  | (55 | )%
|                                                          |  |                    |         |   |        |   |         |        |  |   |         |    
|Net income                                                |  | $                  | 20,698  |   |        | $ | 91,562  |        |  | $ | (70,864 | )   |  |  | (77 | )%
|                                                          |  |                    |         |   |        |   |         |        |  |   |         |    
|Per Common Share                                          |  |                    |         |   |        |   |         |        |  |   |         |     |  |  |     |   
|Basic earnings per share                                  |  | $                  | 0.12    |   |        | $ | 0.56    |        |  | $ | (0.45   | )   |  |  | (79 | )%
|Diluted earnings per share                                |  | $                  | 0.12    |   |        | $ | 0.55    |        |  | $ | (0.43   | )   |  |  | (78 | )%
|Financial Ratios                                          |  |                    |         |   |        |   |         |        |  |   |         |     |  |  |     |   
|Return on average assets(3)                               |  |                    | 0.29    | % |        |   | 1.39    | %      |  |   | (1.11   | )bp |  |  |     |   
|Return on average equity(3)                               |  |                    | 2.66    | % |        |   | 14.72   | %      |  |   | (12.06  | )bp |  |  |     |   
|Net interest margin (fully-taxable equivalent)(3)         |  |                    | 3.87    | % |        |   | 3.65    | %      |  |   | 0.22    | bp  |  |  |     |   
|Noninterest income as a percent of total income           |  |                    | 22.29   | % |        |   | 28.36   | %      |  |   | (6.07   | )bp |  |  |     |   
|Efficiency ratio(4)                                       |  |                    | 84.43   | % |        |   | 52.29   | %      |  |   | 32.14   | bp  |  |  |     |   








|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Noninterest income included net securities losses of
    $17.8 million in the fourth quarter of 2004 incurred as
    part of the deleveraging program.              
|   
|(2) | Noninterest expense included prepayment penalties on borrowings
    of $61.5 million in the fourth quarter of 2004 incurred as
    part of the deleveraging program.
|   
|(3) | Annualized.                                                                                                                                                         
|   
|(4) | Represents noninterest expense as a percentage of net interest
    income and noninterest income.                                                                   





28



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##### Table of Contents











Comparison of 2003 and 2002












29



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##### Table of Contents









Financial Condition






| |                      
| | ---------------------
| | Investment Securities





30



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##### Table of Contents



Table 12  Investment Securities




|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |   |           |           |  |  |        |       |  
|--------------------------------------------- | ----------------------- | ------------ | --------- | --------- | ----- |  | ------ | ------ | ---- | - | --------- | --------- |  | ------ | ------ | ----- | ----- | - | --------- | --------- |  |  | ------ | ----- | -
|                                              |                         | December 31, |          
|                                              |                         |              |          
|                                              |                         | 2004         |           |           | 2003  |  |        | 2002   |     
|                                              |                         |              |           |           |       |  |        |        |     
|                                              |                         |              |           | % of      |       |  |        |        | % of |   |           |           |  | % of   |       
|                                              |                         | Amount       |           |           | Total |  |        | Amount |      |   | Total     |           |  | Amount |        |       | Total |  
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Securities available for sale:                |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |   |           |           |  |  |        |      
|U.S. Government and federal agencies          |                         | $            | 528,973   |           |       |  | 7.66   | %      |      | $ | 2,359,347 |           |  |        | 33.18  | %     |       | $ | 1,539,447 |           |  |  | 23.50  | %    
|Tax-exempt bonds and notes                    |                         |              | 166,901   |           |       |  | 2.42   | %      |      |   | 138,280   |           |  |        | 1.94   | %     |       |   | 95,332    |           |  |  | 1.46   | %    
|Other bonds and notes                         |                         |              | 285,742   |           |       |  | 4.14   | %      |      |   | 365,109   |           |  |        | 5.13   | %     |       |   | 356,551   |           |  |  | 5.44   | %    
|Mortgage-backed securities                    |                         |              | 5,130,478 |           |       |  | 74.30  | %      |      |   | 3,834,958 |           |  |        | 53.93  | %     |       |   | 3,659,334 |           |  |  | 55.86  | %    
|Collateralized mortgage obligations           |                         |              | 599,304   |           |       |  | 8.68   | %      |      |   | 264,545   |           |  |        | 3.72   | %     |       |   | 581,357   |           |  |  | 8.88   | %    
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|                                              | Total debt securities   |              |           | 6,711,398 |       |  |        | 97.20  | %    |   |           | 6,962,239 |  |        |        | 97.90 | %     |   |           | 6,232,021 |  |  |        | 95.14 | %
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Federal Home Loan Bank stock                  |                         |              | 116,904   |           |       |  | 1.69   | %      |      |   | 104,397   |           |  |        | 1.47   | %     |       |   | 275,768   |           |  |  | 4.21   | %    
|Federal Reserve Bank stock                    |                         |              | 60,338    |           |       |  | 0.87   | %      |      |   | 37,666    |           |  |        | 0.53   | %     |       |   | 35,250    |           |  |  | 0.54   | %    
|Other equity securities                       |                         |              | 16,456    |           |       |  | 0.24   | %      |      |   | 6,868     |           |  |        | 0.10   | %     |       |   | 7,177     |           |  |  | 0.11   | %    
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|                                              | Total equity securities |              |           | 193,698   |       |  |        | 2.80   | %    |   |           | 148,931   |  |        |        | 2.10  | %     |   |           | 318,195   |  |  |        | 4.86  | %
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Total securities available for sale           |                         |              | 6,905,096 |           |       |  | 100.00 | %      |      |   | 7,111,170 |           |  |        | 100.00 | %     |       |   | 6,550,216 |           |  |  | 100.00 | %    
|Net unrealized gain                           |                         |              | 669       |           |       |  |        |        |      |   | 11,822    |           |  |        |        |       |       |   | 181,251   |           |  |  |        |      
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Fair value of securities available for sale   |                         | $            | 6,905,765 |           |       |  |        |        |      | $ | 7,122,992 |           |  |        |        |       |       | $ | 6,731,467 |           |  |  |        |      
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Securities held to maturity:                  |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |   |           |           |  |  |        |      
|Collateralized mortgage obligations           |                         | $            | 87,013    |           |       |  |        |        |      | $ | 124,240   |           |  |        |        |       |       | $ | 216,409   |           |  |  |        |      
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Amortized cost of securities held to maturity |                         | $            | 87,013    |           |       |  |        |        |      | $ | 124,240   |           |  |        |        |       |       | $ | 216,409   |           |  |  |        |      
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Fair value of securities held to maturity     |                         | $            | 87,507    |           |       |  |        |        |      | $ | 124,344   |           |  |        |        |       |       | $ | 221,571   |           |  |  |        |      
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Excess of fair value over recorded value      |                         | $            | 494       |           |       |  |        |        |      | $ | 104       |           |  |        |        |       |       | $ | 5,162     |           |  |  |        |      
|                                              |                         |              |           |           |       |  |        |        |      |   |           |           |  |        |        |       |       |  
|Fair value as a % of amortized cost           |                         |              | 100.6     | %         |       |  |        |        |      |   | 100.1     | %         |  |        |        |       |       |   | 102.4     | %         |  |  |        |      

31



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##### Table of Contents



Table 13  Maturities of Debt Securities




|                                     |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |       |  |       |   |         |        |  |  |       |  |  |        |           |  |       |  |       |  |  |   |           |  |  |  |       | 
|------------------------------------ |  | -------------------------- | ------- |  | ------------ |  | -------------- | -------- |  | --------- | -------- |  |  | ------ | ----- |  | ----- | - | ------- | ------ |  |  | ----- |  |  | ------ | --------- |  | ----- |  | ----- |  |  | - | --------- |  |  |  | ----- | 
|                                     |  | Amortized Cost Maturing in |        
|                                     |  |                            |        
|                                     |  | Less Than                  |         |  |              |  | More than 5 to |          |  | More than |          |  | 
|                                     |  | 1 Year                     |         |  | 1 to 5 Years |  |                | 10 Years |  |           | 10 Years |  |  | Total  |      
|                                     |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |      
|                                     |  | Amount                     |         |  | Yield        |  |                | Amount   |  |           | Yield    |  |  | Amount |       |  | Yield |   |         | Amount |  |  | Yield |  |  | Amount |           |  | Yield | 
|                                     |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |       |  |       |   |         |        |  |  |       |  |  |        |           |  |       | 
|Available for Sale:                  |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |       |  |       |   |         |        |  |  |       |  |  |        |           |  |       |  |       |  |  |   |           |  |  |  |       | 
|U.S. Government and federal agencies |  | $                          | 15,157  |  |              |  | 5.03%          |          |  | $         | 463,816  |  |  |        | 3.08% |  |       | $ | 50,000  |        |  |  | 3.40% |  |  | $      |          |  |       |  | 0.00% |  |  | $ | 528,973   |  |  |  | 3.16% | 
|Tax-exempt bonds and notes           |  |                            | 89,036  |  |              |  | 1.89%          |          |  |           | 8,386    |  |  |        | 4.24% |  |       |   | 11,538  |        |  |  | 4.44% |  |  |        | 57,941    |  |       |  | 4.42% |  |  |   | 166,901   |  |  |  | 3.06% | 
|Other bonds and notes                |  |                            | 49,195  |  |              |  | 5.54%          |          |  |           | 45,315   |  |  |        | 4.91% |  |       |   | 8,382   |        |  |  | 6.18% |  |  |        | 182,850   |  |       |  | 5.97% |  |  |   | 285,742   |  |  |  | 5.74% | 
|Mortgage-backed securities           |  |                            | 38      |  |              |  | 5.86%          |          |  |           | 35,589   |  |  |        | 5.63% |  |       |   | 306,335 |        |  |  | 5.76% |  |  |        | 4,788,516 |  |       |  | 4.60% |  |  |   | 5,130,478 |  |  |  | 4.68% | 
|Collateralized mortgage obligations  |  |                            |        |  |              |  | 0.00%          |          |  |           | 3,773    |  |  |        | 6.35% |  |       |   | 13,994  |        |  |  | 4.06% |  |  |        | 581,537   |  |       |  | 4.27% |  |  |   | 599,304   |  |  |  | 4.28% | 
|                                     |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |       |  |       |   |         |        |  |  |       |  |  |        |           |  |       | 
|Total                                |  | $                          | 153,426 |  |              |  | 3.37%          |          |  | $         | 556,879  |  |  |        | 3.43% |  |       | $ | 390,249 |        |  |  | 5.37% |  |  | $      | 5,610,844 |  |       |  | 4.61% |  |  | $ | 6,711,398 |  |  |  | 4.53% | 
|                                     |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |       |  |       |   |         |        |  |  |       |  |  |        |           |  |       | 
|Held to Maturity:                    |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |       |  |       |   |         |        |  |  |       |  |  |        |           |  |       |  |       |  |  |   |           |  |  |  |       | 
|Collateralized mortgage obligations  |  | $                          | 118     |  |              |  | 7.23%          |          |  | $         | 5,315    |  |  |        | 6.53% |  |       | $ | 26,703  |        |  |  | 6.22% |  |  | $      | 54,877    |  |       |  | 5.98% |  |  | $ | 87,013    |  |  |  | 6.09% | 
|                                     |  |                            |         |  |              |  |                |          |  |           |          |  |  |        |       |  |       |   |         |        |  |  |       |  |  |        |           |  |       | 





| |      
| | -----
| | Loans



32



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##### Table of Contents



Table 14  Composition of Loan and Lease
Portfolio




|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       |  |        |       |   |   |            |           |  |  |        |       |  
|------------------------------------ | ---------------------------------- | ------------ | ---------- | --------- | ----- |  | ------ | ------ | ---- | - | ---------- | --------- |  | ------ | ------ | ----- | ----- | - | ---------- | --------- |  |  | ------ | ----- | - | ------ | ---------- | --------- | ----- |  | ------ | ----- | - | - | ---------- | --------- |  |  | ------ | ----- | -
|                                     |                                    | December 31, |           
|                                     |                                    |              |           
|                                     |                                    | 2004         |            |           | 2003  |  |        | 2002   |      |   | 2001       |           |  | 2000   |       
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |       
|                                     |                                    |              |            | % of      |       |  |        |        | % of |   |            |           |  | % of   |        |       |       |   | % of       |           |  |  |        | % of  |  
|                                     |                                    | Amount       |            |           | Loans |  |        | Amount |      |   | Loans      |           |  | Amount |        |       | Loans |   |            | Amount    |  |  | Loans  |       |   | Amount |            |           | Loans | 
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 
|Residential real estate loans        |                                    | $            | 3,081,217  |           |       |  | 16.57  | %      |      | $ | 2,710,483  |           |  |        | 16.58  | %     |       | $ | 2,382,197  |           |  |  | 16.95  | %     |   | $      | 2,627,125  |           |       |  | 20.66  | %     |   | $ | 2,248,714  |           |  |  | 20.73  | %    
|Commercial real estate loans:        |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       |  |        |       |   |   |            |           |  |  |        |      
|                                     | Permanent first mortgage loans     |              |            | 5,297,812 |       |  |        | 28.49  | %    |   |            | 4,696,428 |  |        |        | 28.73 | %     |   |            | 4,151,674 |  |  |        | 29.54 | % |        |            | 3,509,311 |       |  |        | 27.60 | % |   |            | 2,663,775 |  |  |        | 24.56 | %
|                                     | Construction and development loans |              |            | 951,701   |       |  |        | 5.12   | %    |   |            | 832,434   |  |        |        | 5.09  | %     |   |            | 640,375   |  |  |        | 4.55  | % |        |            | 584,728   |       |  |        | 4.60  | % |   |            | 291,388   |  |  |        | 2.69  | %
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 
|                                     | Total                              |              |            | 6,249,513 |       |  |        | 33.61  | %    |   |            | 5,528,862 |  |        |        | 33.82 | %     |   |            | 4,792,049 |  |  |        | 34.09 | % |        |            | 4,094,039 |       |  |        | 32.20 | % |   |            | 2,955,163 |  |  |        | 27.25 | %
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 
|Commercial business loans and leases |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       |  |        |       |   |   |            |           |  |  |        |      
|                                     | Commercial business loans          |              |            | 3,838,366 |       |  |        | 20.64  | %    |   |            | 3,188,504 |  |        |        | 19.51 | %     |   |            | 2,865,617 |  |  |        | 20.39 | % |        |            | 2,353,933 |       |  |        | 18.51 | % |   |            | 2,244,648 |  |  |        | 20.70 | %
|                                     | Commercial business leases         |              |            | 90,228    |       |  |        | 0.49   | %    |   |            | 98,590    |  |        |        | 0.60  | %     |   |            | 102,857   |  |  |        | 0.73  | % |        |            | 108,720   |       |  |        | 0.86  | % |   |            | 64,256    |  |  |        | 0.59  | %
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 
|                                     | Total                              |              |            | 3,928,594 |       |  |        | 21.13  | %    |   |            | 3,287,094 |  |        |        | 20.11 | %     |   |            | 2,968,474 |  |  |        | 21.12 | % |        |            | 2,462,653 |       |  |        | 19.37 | % |   |            | 2,308,904 |  |  |        | 21.29 | %
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 
|Consumer loans and leases            |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       |  |        |       |   |   |            |           |  |  |        |      
|                                     | Consumer loans                     |              |            | 5,333,448 |       |  |        | 28.69  | %    |   |            | 4,816,217 |  |        |        | 29.47 | %     |   |            | 3,898,638 |  |  |        | 27.74 | % |        |            | 3,494,979 |       |  |        | 27.48 | % |   |            | 3,251,268 |  |  |        | 29.98 | %
|                                     | Consumer leases                    |              |            | 222       |       |  |        | 0.00   | %    |   |            | 3,306     |  |        |        | 0.02  | %     |   |            | 14,650    |  |  |        | 0.10  | % |        |            | 36,534    |       |  |        | 0.29  | % |   |            | 81,613    |  |  |        | 0.75  | %
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 
|                                     | Total                              |              |            | 5,333,670 |       |  |        | 28.69  | %    |   |            | 4,819,523 |  |        |        | 29.49 | %     |   |            | 3,913,288 |  |  |        | 27.84 | % |        |            | 3,531,513 |       |  |        | 27.77 | % |   |            | 3,332,881 |  |  |        | 30.73 | %
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 
|Total loans receivable               |                                    | $            | 18,592,994 |           |       |  | 100.00 | %      |      | $ | 16,345,962 |           |  |        | 100.00 | %     |       | $ | 14,056,008 |           |  |  | 100.00 | %     |   | $      | 12,715,330 |           |       |  | 100.00 | %     |   | $ | 10,845,662 |           |  |  | 100.00 | %    
|                                     |                                    |              |            |           |       |  |        |        |      |   |            |           |  |        |        |       |       |   |            |           |  |  |        |       |   |        |            |           |       | 

Table 15  Scheduled Contractual Amortization of
Certain Loans and Leases at December 31, 2004




|                                                   |                                   |                 |   |         |                |  |   |           |  |  |   |           | 
|-------------------------------------------------- | --------------------------------- | --------------- | - | ------- | -------------- |  | - | --------- |  |  | - | --------- | 
|                                                   |                                   | Commercial      |   |         |                |  |  
|                                                   |                                   | Real Estate     |   |         |                |  |  
|                                                   |                                   | Construction    |   |         | Commercial     |  |   |          
|                                                   |                                   | and Development |   |         | Business Loans |  |   |          
|                                                   |                                   | Loans           |   |         | and Leases     |  |   | Total     | 
|                                                   |                                   |                 |   |         |                |  |   |           | 
|Amounts due:                                       |                                   |                 |   |         |                |  |   |           |  |  |   |          
|                                                   | Within one year                   |                 | $ | 370,026 |                |  | $ | 2,046,306 |  |  | $ | 2,416,332 | 
|                                                   | After one year through five years |                 |   | 345,650 |                |  |   | 1,393,134 |  |  |   | 1,738,784 | 
|                                                   | Beyond five years                 |                 |   | 236,025 |                |  |   | 489,154   |  |  |   | 725,179   | 
|                                                   |                                   |                 |   |         |                |  |   |           | 
|                                                   | Total                             |                 | $ | 951,701 |                |  | $ | 3,928,594 |  |  | $ | 4,880,295 | 
|                                                   |                                   |                 |   |         |                |  |   |           | 
|Interest rate terms on amounts due after one year: |                                   |                 |   |         |                |  |   |           |  |  |   |          
|                                                   | Fixed                             |                 | $ | 55,808  |                |  | $ | 691,938   |  |  | $ | 747,746   | 
|                                                   | Adjustable                        |                 |   | 525,867 |                |  |   | 1,190,350 |  |  |   | 1,716,217 | 

33



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##### Table of Contents



Table 16  Average Loans and Leases




|                                     |                                |                         |           |            |        |   |           |            |  |   |         |           |  |  |    |    |  
|------------------------------------ | ------------------------------ | ----------------------- | --------- | ---------- | ------ | - | --------- | ---------- |  | - | ------- | --------- |  |  | -- | -- | -
|                                     |                                | Year Ended December 31, |           |            | Change |  
|                                     |                                |                         |           |            |        |  
|                                     |                                | 2004                    |           |            | 2003   |   |           | Amount     |  |   | Percent |          
|                                     |                                |                         |           |            |        |   |           |            |  |   |         |          
|Residential real estate mortgages    |                                | $                       | 2,997,572 |            |        | $ | 2,839,969 |            |  | $ | 157,603 |           |  |  | 6  | % 
|Commercial real estate mortgages     |                                |                         | 5,959,510 |            |        |   | 5,162,413 |            |  |   | 797,097 |           |  |  | 15 | % 
|Commercial business loans and leases |                                |                         | 3,686,919 |            |        |   | 3,153,293 |            |  |   | 533,626 |           |  |  | 17 | % 
|Consumer loans and leases            |                                |                         | 5,090,536 |            |        |   | 4,477,532 |            |  |   | 613,004 |           |  |  | 14 | % 
|                                     |                                |                         |           |            |        |   |           |            |  |   |         |          
|                                     | Total average loans and leases |                         | $         | 17,734,537 |        |   | $         | 15,633,207 |  |   | $       | 2,101,330 |  |  |    | 13 | %
|                                     |                                |                         |           |            |        |   |           |            |  |   |         |          









Table 17  Commercial Loans by State




|              |       |                              |           |           |                                      |   |           |              |  |   |         |         |  |      |    |    |      |   |           |           |  |   |           |           |  |   |         |         |  |  |     |    |  
|------------- | ----- | ---------------------------- | --------- | --------- | ------------------------------------ | - | --------- | ------------ |  | - | ------- | ------- |  | ---- | -- | -- | ---- | - | --------- | --------- |  | - | --------- | --------- |  | - | ------- | ------- |  |  | --- | -- | -
|              |       | Commercial Real Estate Loans |           |           | Commercial Business Loans and Leases |  
|              |       |                              |           |           |                                      |  
|              |       | December 31,                 |           |           | Change                               |   |           | December 31, |  |   | Change  |        
|              |       |                              |           |           |                                      |   |           |              |  |   |         |        
|              |       | 2004                         |           |           | 2003                                 |   |           | Amount       |  |   | Percent |         |  | 2004 |    |    | 2003 |   |           | Amount    |  |   | Percent   |          
|              |       |                              |           |           |                                      |   |           |              |  |   |         |         |  |      |    |    |      |   |           |           |  |   |           |          
|Massachusetts |       | $                            | 3,085,278 |           |                                      | $ | 2,565,064 |              |  | $ | 520,214 |         |  |      | 20 | %  |      | $ | 1,569,911 |           |  | $ | 1,173,803 |           |  | $ | 396,108 |         |  |  | 34  | % 
|Maine         |       |                              | 933,677   |           |                                      |   | 885,791   |              |  |   | 47,886  |         |  |      | 5  | %  |      |   | 787,822   |           |  |   | 658,902   |           |  |   | 128,920 |         |  |  | 20  | % 
|New Hampshire |       |                              | 767,590   |           |                                      |   | 732,249   |              |  |   | 35,341  |         |  |      | 5  | %  |      |   | 564,604   |           |  |   | 494,811   |           |  |   | 69,793  |         |  |  | 14  | % 
|Vermont       |       |                              | 664,063   |           |                                      |   | 645,608   |              |  |   | 18,455  |         |  |      | 3  | %  |      |   | 433,055   |           |  |   | 438,483   |           |  |   | (5,428  | )       |  |  | (1  | )%
|Connecticut   |       |                              | 583,907   |           |                                      |   | 504,624   |              |  |   | 79,283  |         |  |      | 16 | %  |      |   | 412,601   |           |  |   | 332,749   |           |  |   | 79,852  |         |  |  | 24  | % 
|New York      |       |                              | 214,998   |           |                                      |   | 195,526   |              |  |   | 19,472  |         |  |      | 10 | %  |      |   | 160,601   |           |  |   | 188,346   |           |  |   | (27,745 | )       |  |  | (15 | )%
|              |       |                              |           |           |                                      |   |           |              |  |   |         |         |  |      |    |    |      |   |           |           |  |   |           |          
|              | Total |                              | $         | 6,249,513 |                                      |   | $         | 5,528,862    |  |   | $       | 720,651 |  |      |    | 13 | %    |   | $         | 3,928,594 |  |   | $         | 3,287,094 |  |   | $       | 641,500 |  |  |     | 20 | %
|              |       |                              |           |           |                                      |   |           |              |  |   |         |         |  |      |    |    |      |   |           |           |  |   |           |          



34



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##### Table of Contents





Table 18  Composition of Consumer Loans and
Leases




|                                         |       |              |           |           |        |  |       |           |      |   |           |           |  |        |       |        |         |   |         |         |  |  |        |       |  
|---------------------------------------- | ----- | ------------ | --------- | --------- | ------ |  | ----- | --------- | ---- | - | --------- | --------- |  | ------ | ----- | ------ | ------- | - | ------- | ------- |  |  | ------ | ----- | -
|                                         |       | December 31, |           |           | Change | 
|                                         |       |              |           |           |        | 
|                                         |       | 2004         |           |           | 2003   |  |       | 2004-2003 |     
|                                         |       |              |           |           |        |  |       |           |     
|                                         |       |              |           | % of      |        |  |       |           | % of |   |           |          
|                                         |       | Amount       |           |           | Total  |  |       | Amount    |      |   | Total     |           |  | Amount |       |        | Percent |  
|                                         |       |              |           |           |        |  |       |           |      |   |           |           |  |        |       |        |         |  
|Home equity                              |       | $            | 3,123,525 |           |        |  | 58.55 | %         |      | $ | 2,472,471 |           |  |        | 51.31 | %      |         | $ | 651,054 |         |  |  | 26.33  | %    
|Automobile                               |       |              | 1,678,817 |           |        |  | 31.48 | %         |      |   | 1,596,504 |           |  |        | 33.13 | %      |         |   | 82,313  |         |  |  | 5.16   | %    
|Mobile home                              |       |              | 111,874   |           |        |  | 2.10  | %         |      |   | 141,407   |           |  |        | 2.93  | %      |         |   | (29,533 | )       |  |  | (20.89 | )%   
|Vision, dental, and orthodontia fee plan |       |              | 49,934    |           |        |  | 0.94  | %         |      |   | 120,694   |           |  |        | 2.50  | %      |         |   | (70,760 | )       |  |  | (58.63 | )%   
|Education                                |       |              | 159,314   |           |        |  | 2.99  | %         |      |   | 234,226   |           |  |        | 4.86  | %      |         |   | (74,912 | )       |  |  | (31.98 | )%   
|Other                                    |       |              | 210,206   |           |        |  | 3.94  | %         |      |   | 254,221   |           |  |        | 5.27  | %      |         |   | (44,015 | )       |  |  | (17.31 | )%   
|                                         |       |              |           |           |        |  |       |           |      |   |           |           |  |        |       |        |         |  
|                                         | Total |              | $         | 5,333,670 |        |  |       | 100.00    | %    |   | $         | 4,819,523 |  |        |       | 100.00 | %       |   | $       | 514,147 |  |  |        | 10.67 | %
|                                         |       |              |           |           |        |  |       |           |      |   |           |           |  |        |       |        |         |  



| |         
| | --------
| | Deposits





Table 19  Change in Average Deposit Balances by
Category of Deposit




|                             |                            |                                 |           |           |            |   |           |           |            |   |         |           |           |  |    |     |    |  
|---------------------------- | -------------------------- | ------------------------------- | --------- | --------- | ---------- | - | --------- | --------- | ---------- | - | ------- | --------- | --------- |  | -- | --- | -- | -
|                             |                            | Year Ended December 31,         |           |           | Change     |  
|                             |                            |                                 |           |           |            |  
|                             |                            | 2004                            |           |           | 2003       |   |           | Amount    |            |   | Percent |          
|                             |                            |                                 |           |           |            |   |           |           |            |   |         |          
|Noninterest-bearing deposits |                            | $                               | 3,987,311 |           |            | $ | 3,224,035 |           |            | $ | 763,276 |           |           |  | 24 | %  
|Interest-bearing deposits:   |                            |                                 |           |           |            |   |           |           |            |   |         |           |           |  |    |    
|                             | Money market/ NOW accounts |                                 |           | 7,678,644 |            |   |           | 6,652,030 |            |   |         | 1,026,614 |           |  |    | 15  | % 
|                             | Savings accounts           |                                 |           | 2,563,838 |            |   |           | 2,399,179 |            |   |         | 164,659   |           |  |    | 7   | % 
|                             | Certificates of deposit    |                                 |           | 4,647,746 |            |   |           | 5,027,739 |            |   |         | (379,993  | )         |  |    | (8  | )%
|                             | Brokered deposits          |                                 |           | 272       |            |   |           |          |            |   |         | 272       |           |  |    | 100 | % 
|                             |                            |                                 |           |           |            |   |           |           |            |   |         |          
|                             |                            | Total interest-bearing deposits |           |           | 14,890,500 |   |           |           | 14,078,948 |   |         |           | 811,552   |  |    |     | 6  | %
|                             |                            |                                 |           |           |            |   |           |           |            |   |         |          
|                             |                            | Total average deposits          |           | $         | 18,877,811 |   |           | $         | 17,302,983 |   |         | $         | 1,574,828 |  |    |     | 9  | %
|                             |                            |                                 |           |           |            |   |           |           |            |   |         |          



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Table 20  Maturity of Certificates of Deposits of
$100,000 or more




|                    |  |                   |           |  |         |  |     |  
|------------------- |  | ----------------- | --------- |  | ------- |  | --- | -
|                    |  | December 31, 2004 |          
|                    |  |                   |          
|                    |  | Balance           |           |  | Percent | 
|                    |  |                   |           |  |         | 
|3 months or less    |  | $                 | 320,776   |  |         |  | 28  | %
|Over 3 to 6 months  |  |                   | 236,327   |  |         |  | 21  | %
|Over 6 to 12 months |  |                   | 236,136   |  |         |  | 21  | %
|More than 12 months |  |                   | 336,121   |  |         |  | 30  | %
|                    |  |                   |           |  |         | 
|                    |  | $                 | 1,129,360 |  |         |  | 100 | %
|                    |  |                   |           |  |         | 



| |                      
| | ---------------------
| | Other Funding Sources















36



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Off-Balance Sheet Arrangements






Table 21  Contractual Obligations and
Commitments




|                                        |                               |       |           |                        |        |   |         |           |       |   |           |         |  |         |         |         |  |   |         |         | 
|--------------------------------------- | ----------------------------- | ----- | --------- | ---------------------- | ------ | - | ------- | --------- | ----- | - | --------- | ------- |  | ------- | ------- | ------- |  | - | ------- | ------- | 
|                                        |                               |       |           | Payments Due By Period |       
|                                        |                               |       |           |                        |       
|                                        |                               |       |           | Less than              |        |   |         |           | After |  
|Contractual Obligations(1)              |                               | Total |           |                        | 1 Year |   |         | 1-3 Years |       |   | 4-5 Years |         |  | 5 Years |        
|                                        |                               |       |           |                        |        |   |         |           |       |   |           |         |  |         |        
|Long-term debt                          |                               | $     | 1,086,162 |                        |        | $ | 278,516 |           |       | $ | 32,600    |         |  | $       | 158,819 |         |  | $ | 616,227 |        
|Capital lease obligations               |                               |       | 6,720     |                        |        |   | 62      |           |       |   | 471       |         |  |         | 1,281   |         |  |   | 4,906   |        
|Repurchase agreements  wholesale       |                               |       | 1,100,000 |                        |        |   | 350,000 |           |       |   | 750,000   |         |  |         |        |         |  |   |        |        
|                                        |                               |       |           |                        |        |   |         |           |       |   |           |         |  |         |        
|                                        | Total long-term debt          |       |           | 2,192,882              |        |   |         | 628,578   |       |   |           | 783,071 |  |         |         | 160,100 |  |   |         | 621,133 | 
|Operating lease obligations             |                               |       | 123,862   |                        |        |   | 24,396  |           |       |   | 38,531    |         |  |         | 26,702  |         |  |   | 34,233  |        
|Pension plan contribution(2)            |                               |       | 20,000    |                        |        |   | 20,000  |           |       |   |          |         |  |         |        |         |  |   |        |        
|Other benefit plan payments  estimated |                               |       | 46,875    |                        |        |   | 4,318   |           |       |   | 9,055     |         |  |         | 12,602  |         |  |   | 20,900  |        
|Other vendor obligations                |                               |       | 25,683    |                        |        |   | 10,290  |           |       |   | 10,290    |         |  |         | 5,103   |         |  |   |        |        
|                                        |                               |       |           |                        |        |   |         |           |       |   |           |         |  |         |        
|                                        | Total contractual obligations |       | $         | 2,409,302              |        |   | $       | 687,582   |       |   | $         | 840,947 |  |         | $       | 204,507 |  |   | $       | 676,266 | 
|                                        |                               |       |           |                        |        |   |         |           |       |   |           |         |  |         |        






|    |                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other liabilities are short term in nature, except for
    liabilities related to employee benefit plans.                                                                                   
|   
|(2) | Funding requirements for pension benefits after 2005 are
    excluded due to the significant variability in the assumptions
    required to project the timing of future cash contributions.

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|                                   |                   |           |           |                                              |           |   |           |           |  |       |           |         |  |         |        |         |  |   |           |           | 
|---------------------------------- | ----------------- | --------- | --------- | -------------------------------------------- | --------- | - | --------- | --------- |  | ----- | --------- | ------- |  | ------- | ------ | ------- |  | - | --------- | --------- | 
|                                   |                   |           |           | Amount of Commitment Expiration  Per Period |          
|                                   |                   | Total     |           |                                              |           |  
|                                   |                   | Amounts   |           |                                              | Less than |   |           |           |  | After |          
|Other Commitments                  |                   | Committed |           |                                              | 1 Year    |   |           | 1-3 Years |  |       | 4-5 Years |         |  | 5 Years |       
|                                   |                   |           |           |                                              |           |   |           |           |  |       |           |         |  |         |       
|Unused portions on lines of credit |                   | $         | 4,857,077 |                                              |           | $ | 1,334,860 |           |  | $     | 304,656   |         |  | $       | 57,889 |         |  | $ | 3,159,672 |          
|Standby letters of credit          |                   |           | 464,299   |                                              |           |   | 115,737   |           |  |       | 89,087    |         |  |         | 82,479 |         |  |   | 176,996   |          
|Commercial letters of credit       |                   |           | 23,094    |                                              |           |   | 18,378    |           |  |       | 1,656     |         |  |         | 304    |         |  |   | 2,756     |          
|Commitments to originate loans     |                   |           | 1,924,832 |                                              |           |   | 1,180,640 |           |  |       | 391,645   |         |  |         | 37,071 |         |  |   | 315,476   |          
|Other commitments                  |                   |           | 263,199   |                                              |           |   | 12,378    |           |  |       | 7,668     |         |  |         | 2,684  |         |  |   | 240,469   |          
|                                   |                   |           |           |                                              |           |   |           |           |  |       |           |         |  |         |       
|                                   | Total commitments |           | $         | 7,532,501                                    |           |   | $         | 2,661,993 |  |       | $         | 794,712 |  |         | $      | 180,427 |  |   | $         | 3,895,369 | 
|                                   |                   |           |           |                                              |           |   |           |           |  |       |           |         |  |         |       

|                                       |                                      |                                                  |        |                                              |           |  |        |           |        |       |           |   |        |         |   |         |         |  |   |         |         | 
|-------------------------------------- | ------------------------------------ | ------------------------------------------------ | ------ | -------------------------------------------- | --------- |  | ------ | --------- | ------ | ----- | --------- | - | ------ | ------- | - | ------- | ------- |  | - | ------- | ------- | 
|                                       |                                      |                                                  |        | Amount of Commitment Expiration  Per Period |          
|                                       |                                      | Total                                            |        |                                              |           | 
|                                       |                                      | Amounts                                          |        |                                              | Less than |  |        |           |        | After |          
|Derivative Financial Instruments       |                                      | Committed                                        |        |                                              | 1 Year    |  |        | 1-3 Years |        |       | 4-5 Years |   |        | 5 Years |  
|                                       |                                      |                                                  |        |                                              |           |  |        |           |        |       |           |   |        |         |  
|Interest rate swaps (notional amount): |                                      |                                                  |        |                                              |           |  |        |           |        |       |           |   |        |         |   |         |         |  |   |        
|                                       | Commercial loan swap program:        |                                                  |        |                                              |           |  |        |           |        |       |           |   |        |         |   |         |         |  |   |         |        
|                                       |                                      | Interest rate swaps with commercial borrowers(1) |        | $                                            | 690,856   |  |        | $         | 2,000  |       |           | $ | 28,858 |         |   | $       | 141,350 |  |   | $       | 518,648 | 
|                                       |                                      | Interest rate swaps with dealers(2)              |        |                                              | 690,856   |  |        |           | 2,000  |       |           |   | 28,858 |         |   |         | 141,350 |  |   |         | 518,648 | 
|                                       | Interest rate swaps on borrowings(3) |                                                  |        | 566,500                                      |           |  |        | 216,500   |        |       |           |  |        |         |   | 150,000 |         |  |   | 200,000 |        
|Forward commitments to sell loans      |                                      |                                                  | 83,016 |                                              |           |  | 83,016 |           |        |       |          |   |        |         |  |         |         |  |  |        
|Foreign currency rate contracts(4):    |                                      |                                                  |        |                                              |           |  |        |           |        |       |           |   |        |         |   |         |         |  |   |        
|                                       |                                      | Forward contracts with customers                 |        |                                              | 33,575    |  |        |           | 26,760 |       |           |   | 6,815  |         |   |         |        |  |   |         |        | 
|                                       |                                      | Forward contracts with dealers                   |        |                                              | 33,747    |  |        |           | 26,913 |       |           |   | 6,834  |         |   |         |        |  |   |         |        | 
|                                       |                                      | Foreign exchange options to purchase             |        |                                              | 35,713    |  |        |           | 25,716 |       |           |   | 9,997  |         |   |         |        |  |   |         |        | 
|                                       |                                      | Foreign exchange options to sell                 |        |                                              | 35,713    |  |        |           | 25,716 |       |           |   | 9,997  |         |   |         |        |  |   |         |        | 
|Rate-locked loan commitments           |                                      |                                                  | 35,961 |                                              |           |  | 35,961 |           |        |       |          |   |        |         |  |         |         |  |  |        






|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Swaps with commercial loan customers (Banknorth receives fixed,
    pays variable).                                                             
|   
|(2) | Offsetting swaps with dealers (Banknorth pays fixed, receives
    variable), which offset the interest rate swaps with commercial
    borrowers.
|   
|(3) | Swaps on borrowings (Banknorth pays variable, receives fixed).                                                                                  
|   
|(4) | Forward contracts for customer accommodations.                                                                                                  

Risk Management






38



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##### Table of Contents





Credit Risk Management




| |        
| | -------
| | General

Table 15






Table 17




39



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Table 18




| |                     
| | --------------------
| | Nonperforming Assets



Table 22  Five-Year Schedule of Nonperforming
Assets




|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |        |        |        |   |        |        |        | 
|-------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                                             |                                                  | December 31,              |       
|                                                                                             |                                                  |                           |       
|                                                                                             |                                                  | 2004                      |        |        | 2003   |   |        | 2002   |        |   | 2001   |        |        | 2000 |       
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|Nonaccrual loans                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |        |        |        |   |        |       
|                                                                                             | Residential real estate loans                    |                           | $      | 7,846  |        |   | $      | 7,157  |        |   | $      | 5,781  |        |      | $      | 8,311  |        |   | $      | 9,894  |       
|                                                                                             | Commercial real estate loans                     |                           |        | 29,948 |        |   |        | 19,700 |        |   |        | 17,649 |        |      |        | 17,124 |        |   |        | 12,155 |       
|                                                                                             | Commercial business loans and leases             |                           |        | 32,421 |        |   |        | 24,412 |        |   |        | 32,693 |        |      |        | 40,341 |        |   |        | 32,583 |       
|                                                                                             | Consumer loans and leases                        |                           |        | 7,344  |        |   |        | 8,493  |        |   |        | 9,194  |        |      |        | 9,470  |        |   |        | 6,329  |       
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|                                                                                             |                                                  | Total nonaccrual loans    |        |        | 77,559 |   |        |        | 59,762 |   |        |        | 65,317 |      |        |        | 75,246 |   |        |        | 60,961 | 
|                                                                                             | Troubled debt restructurings                     |                           |        |       |        |   |        |       |        |   |        |       |        |      |        |       |        |   |        | 673    |       
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|                                                                                             |                                                  | Total nonperforming loans |        |        | 77,559 |   |        |        | 59,762 |   |        |        | 65,317 |      |        |        | 75,246 |   |        |        | 61,634 | 
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|Other nonperforming assets:                                                                  |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |        |        |        |   |        |       
|                                                                                             | Other real estate owned, net of related reserves |                           |        | 1,878  |        |   |        | 529    |        |   |        | 100    |        |      |        | 1,861  |        |   |        | 4,074  |       
|                                                                                             | Repossessions, net of related reserves           |                           |        | 1,666  |        |   |        | 2,812  |        |   |        | 3,536  |        |      |        | 2,016  |        |   |        | 1,424  |       
|                                                                                             | Securities available for sale                    |                           |        |       |        |   |        |       |        |   |        |       |        |      |        | 2,104  |        |   |        |       |       
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|                                                                                             |                                                  | Total                     |        |        | 3,544  |   |        |        | 3,341  |   |        |        | 3,636  |      |        |        | 5,981  |   |        |        | 5,498  | 
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|Total nonperforming assets                                                                   |                                                  | $                         | 81,103 |        |        | $ | 63,103 |        |        | $ | 68,953 |        |        | $    | 81,227 |        |        | $ | 67,132 |       
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|Accruing loans 90 days or more overdue                                                       |                                                  | $                         | 5,254  |        |        | $ | 4,915  |        |        | $ | 3,373  |        |        | $    | 6,227  |        |        | $ | 5,973  |       
|                                                                                             |                                                  |                           |        |        |        |   |        |        |        |   |        |        |        |      |       
|Total nonperforming loans as a percentage of total loans                                     |                                                  |                           | 0.42   | %      |        |   | 0.37   | %      |        |   | 0.46   | %      |        |      | 0.59   | %      |        |   | 0.57   | %     
|Total nonperforming assets as a percentage of total assets                                   |                                                  |                           | 0.28   | %      |        |   | 0.24   | %      |        |   | 0.29   | %      |        |      | 0.39   | %      |        |   | 0.37   | %     
|Total nonperforming assets as a percentage of total loans and
    other nonperforming assets |                                                  |                           | 0.44   | %      |        |   | 0.39   | %      |        |   | 0.49   | %      |        |      | 0.64   | %      |        |   | 0.62   | %     



40



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| |                
| | ---------------
| | Net Charge-offs



Table 23  Five-Year Table of Activity in the
Allowance for Loan and Lease Losses




|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |         |        |        |   |         |        |        | 
|----------------------------------------------- | ----------------------------------------- | ---------------------------------- | ------- | ------- | ------ | - | ------- | ------ | ------ | - | ------- | ------ | ------ | ---- | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                                |                                           | Year Ended December 31,            |        
|                                                |                                           |                                    |        
|                                                |                                           | 2004                               |         |         | 2003   |   |         | 2002   |        |   | 2001    |        |        | 2000 |        
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|Allowance at the beginning of period            |                                           | $                                  | 232,287 |         |        | $ | 208,273 |        |        | $ | 189,837 |        |        | $    | 153,550 |        |        | $ | 155,048 |       
|Additions due to acquisitions                   |                                           |                                    | 13,665  |         |        |   | 19,008  |        |        |   | 12,794  |        |        |      | 31,277  |        |        |   |        |       
|Charge-offs:                                    |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |         |        |        |   |         |       
|                                                | Residential real estate mortgages         |                                    |         | 613     |        |   |         | 197    |        |   |         | (138   | )      |      |         | 626    |        |   |         | 1,828  |       
|                                                | Commercial real estate mortgages          |                                    |         | 17      |        |   |         | 577    |        |   |         | 1,290  |        |      |         | 2,267  |        |   |         | 3,566  |       
|                                                | Commercial business loans and leases      |                                    |         | 20,159  |        |   |         | 16,272 |        |   |         | 24,455 |        |      |         | 20,899 |        |   |         | 7,790  |       
|                                                | Consumer loans and leases                 |                                    |         | 29,898  |        |   |         | 32,563 |        |   |         | 26,395 |        |      |         | 21,860 |        |   |         | 21,508 |       
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|                                                |                                           | Total loans and leases charged off |         |         | 50,687 |   |         |        | 49,609 |   |         |        | 52,002 |      |         |        | 45,652 |   |         |        | 34,692 | 
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|Recoveries:                                     |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |         |        |        |   |         |       
|                                                | Residential real estate mortgages         |                                    |         | 2,741   |        |   |         | 64     |        |   |         | 122    |        |      |         | 241    |        |   |         | 107    |       
|                                                | Commercial real estate mortgages          |                                    |         | 54      |        |   |         | 1,761  |        |   |         | 117    |        |      |         | 222    |        |   |         | 2,371  |       
|                                                | Commercial business loans and leases      |                                    |         | 6,452   |        |   |         | 6,367  |        |   |         | 8,972  |        |      |         | 4,800  |        |   |         | 2,334  |       
|                                                | Consumer loans and leases                 |                                    |         | 4,900   |        |   |         | 4,122  |        |   |         | 4,119  |        |      |         | 3,510  |        |   |         | 4,563  |       
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|                                                |                                           | Total loans and leases recovered   |         |         | 14,147 |   |         |        | 12,314 |   |         |        | 13,330 |      |         |        | 8,773  |   |         |        | 9,375  | 
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|                                                |                                           | Net charge-offs                    |         |         | 36,540 |   |         |        | 37,295 |   |         |        | 38,672 |      |         |        | 36,879 |   |         |        | 25,317 | 
|Transfer for off-balance sheet loan commitments |                                           |                                    | (6,600  | )       |        |   |        |        |        |   |        |        |        |      |        |        |        |   |        |       
|Provision for loan and lease losses             |                                           |                                    | 40,340  |         |        |   | 42,301  |        |        |   | 44,314  |        |        |      | 41,889  |        |        |   | 23,819  |       
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|Allowance at the end of the period              |                                           | $                                  | 243,152 |         |        | $ | 232,287 |        |        | $ | 208,273 |        |        | $    | 189,837 |        |        | $ | 153,550 |       
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|Total allowances for credit losses:             |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |         |        |        |   |         |       
|                                                | Allowance for loan and lease losses       |                                    | $       | 243,152 |        |   |         |        |        |   |         |        |        |      |         |        |        |   |         |        |       
|                                                | Liability for unfunded credit commitments |                                    |         | 6,600   |        |   |         |        |        |   |         |        |        |      |         |        |        |   |         |        |       
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        
|                                                | Total allowances for credit losses        |                                    | $       | 249,752 |        |   |         |        |        |   |         |        |        |      |         |        |        |   |         |        |       
|                                                |                                           |                                    |         |         |        |   |         |        |        |   |         |        |        |      |        

41



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|                                                                                                 |                                      |                         |            |       |      |   |            |       |    |   |            |       |    |      |            |      |   |   |            |      |  
|------------------------------------------------------------------------------------------------ | ------------------------------------ | ----------------------- | ---------- | ----- | ---- | - | ---------- | ----- | -- | - | ---------- | ----- | -- | ---- | ---------- | ---- | - | - | ---------- | ---- | -
|                                                                                                 |                                      | Year Ended December 31, |           
|                                                                                                 |                                      |                         |           
|                                                                                                 |                                      | 2004                    |            |       | 2003 |   |            | 2002  |    |   | 2001       |       |    | 2000 |           
|                                                                                                 |                                      |                         |            |       |      |   |            |       |    |   |            |       |    |      |           
|Ratio of net charge-offs to average loans and leases outstanding                                 |                                      |                         | 0.21       | %     |      |   | 0.24       | %     |    |   | 0.29       | %     |    |      | 0.33       | %    |   |   | 0.24       | %   
|Ratio of allowance for credit losses to total portfolio loans
    and leases at end of period    |                                      |                         | 1.34       | %     |      |   | 1.42       | %     |    |   | 1.48       | %     |    |      | 1.49       | %    |   |   | 1.42       | %   
|Ratio of allowance for credit losses to nonperforming loans and
    leases at end of period      |                                      |                         | 322.02     | %     |      |   | 388.69     | %     |    |   | 318.86     | %     |    |      | 252.29     | %    |   |   | 249.13     | %   
|Ratio of net chargeoffs (recoveries) as a percent of
    outstanding average loans and leases(1) |                                      |                         |            |       |      |   |            |       |    |   |            |       |    |      |            |      |   |   |            |     
|                                                                                                 | Residential real estate mortgages    |                         |            | (0.07 | )%   |   |            | 0.00  | %  |   |            | (0.01 | )% |      |            | 0.02 | % |   |            | 0.08 | %
|                                                                                                 | Commercial real estate mortgages     |                         |            | 0.00  | %    |   |            | (0.02 | )% |   |            | 0.03  | %  |      |            | 0.06 | % |   |            | 0.04 | %
|                                                                                                 | Commercial business loans and leases |                         |            | 0.37  | %    |   |            | 0.31  | %  |   |            | 0.58  | %  |      |            | 0.69 | % |   |            | 0.26 | %
|                                                                                                 | Consumer loans and leases            |                         |            | 0.49  | %    |   |            | 0.64  | %  |   |            | 0.61  | %  |      |            | 0.54 | % |   |            | 0.54 | %
|Total portfolio loans and leases at end of period                                                |                                      | $                       | 18,592,994 |       |      | $ | 16,345,962 |       |    | $ | 14,056,008 |       |    | $    | 12,715,330 |      |   | $ | 10,845,662 |     
|Total nonperforming loans and leases at end of period                                            |                                      |                         | 77,559     |       |      |   | 59,762     |       |    |   | 65,317     |       |    |      | 75,246     |      |   |   | 61,634     |     
|Average loans and leases outstanding (excluding loans held for
    sale)                         |                                      |                         | 17,697,737 |       |      |   | 15,574,078 |       |    |   | 13,182,785 |       |    |      | 11,173,723 |      |   |   | 10,449,753 |     






|    |                                                     
|--- | ----------------------------------------------------
|(1) | Excludes residential real estate loans held for sale

Table 24  Foregone Interest




|                                                                                  |  |              |        |   |      |   |        |  
|--------------------------------------------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                                                                                  |  | Year Ended   |       
|                                                                                  |  | December 31, |       
|                                                                                  |  |              |       
|                                                                                  |  | 2004         |        |   | 2003 |  
|                                                                                  |  |              |        |   |      |  
|Interest income that would have been recognized at original
    contractual terms |  | $            | 7,424  |   |      | $ | 4,748  |  
|Amount recognized as interest income on a cash basis                              |  |              | (3,291 | ) |      |   | (2,746 | )
|                                                                                  |  |              |        |   |      |  
|Foregone interest                                                                 |  | $            | 4,133  |   |      | $ | 2,002  |  
|                                                                                  |  |              |        |   |      |  



| |                        
| | -----------------------
| | Potential Problem Loans





| |                                                                          
| | -------------------------------------------------------------------------
| | Analysis and Determination of the Allowance for Loan and
    Lease Losses



42



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Table 25  Allocation of the Allowance for
Loan and Lease Losses  Five-Year Schedule




|                                     |  |              |         |               |             |  |        |        |               |   |             |  |  |               |        |   |             |   |               |        |  |  |             |               |  |        |         |  |             |  |        |   |  |   |         |  |  |  |        |  
|------------------------------------ |  | ------------ | ------- | ------------- | ----------- |  | ------ | ------ | ------------- | - | ----------- |  |  | ------------- | ------ | - | ----------- | - | ------------- | ------ |  |  | ----------- | ------------- |  | ------ | ------- |  | ----------- |  | ------ | - |  | - | ------- |  |  |  | ------ | -
|                                     |  | December 31, |        
|                                     |  |              |        
|                                     |  | 2004         |         |               | 2003        |  |        | 2002   |               |   | 2001        |  |  | 2000          |       
|                                     |  |              |         |               |             |  |        |        |               |   |             |  |  |               |       
|                                     |  |              |         | Percent of    |             |  |        |        | Percent of    |   |             |  |  | Percent of    |        |   |             |   | Percent of    |        |  |  |             | Percent of    | 
|                                     |  |              |         | Loans in Each |             |  |        |        | Loans in Each |   |             |  |  | Loans in Each |        |   |             |   | Loans in Each |        |  |  |             | Loans in Each | 
|                                     |  |              |         | Category to   |             |  |        |        | Category to   |   |             |  |  | Category to   |        |   |             |   | Category to   |        |  |  |             | Category to   | 
|                                     |  | Amount       |         |               | Total Loans |  |        | Amount |               |   | Total Loans |  |  | Amount        |        |   | Total Loans |   |               | Amount |  |  | Total Loans |               |  | Amount |         |  | Total Loans | 
|                                     |  |              |         |               |             |  |        |        |               |   |             |  |  |               |        |   |             |   |               |        |  |  |             |               |  |        |         |  |             | 
|Residential real estate loans        |  | $            | 6,705   |               |             |  | 16.57  | %      |               | $ | 6,850       |  |  |               | 16.58  | % |             | $ | 5,800         |        |  |  | 16.95       | %             |  | $      | 5,000   |  |             |  | 20.66  | % |  | $ | 7,600   |  |  |  | 20.73  | %
|Commercial real estate loans         |  |              | 103,530 |               |             |  | 33.61  | %      |               |   | 115,333     |  |  |               | 33.82  | % |             |   | 102,294       |        |  |  | 34.09       | %             |  |        | 98,271  |  |             |  | 32.20  | % |  |   | 73,423  |  |  |  | 27.25  | %
|Commercial business loans and leases |  |              | 87,483  |               |             |  | 21.13  | %      |               |   | 70,383      |  |  |               | 20.11  | % |             |   | 63,940        |        |  |  | 21.12       | %             |  |        | 58,090  |  |             |  | 19.37  | % |  |   | 50,486  |  |  |  | 21.29  | %
|Consumer loans and leases            |  |              | 45,434  |               |             |  | 28.69  | %      |               |   | 39,721      |  |  |               | 29.49  | % |             |   | 36,239        |        |  |  | 27.84       | %             |  |        | 28,476  |  |             |  | 27.77  | % |  |   | 22,038  |  |  |  | 30.73  | %
|                                     |  |              |         |               |             |  |        |        |               |   |             |  |  |               |        |   |             |   |               |        |  |  |             |               |  |        |         |  |             | 
|                                     |  | $            | 243,152 |               |             |  | 100.00 | %      |               | $ | 232,287     |  |  |               | 100.00 | % |             | $ | 208,273       |        |  |  | 100.00      | %             |  | $      | 189,837 |  |             |  | 100.00 | % |  | $ | 153,547 |  |  |  | 100.00 | %
|                                     |  |              |         |               |             |  |        |        |               |   |             |  |  |               |        |   |             |   |               |        |  |  |             |               |  |        |         |  |             | 



43



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Table 26  Composition of Allowance for Loan and
Lease Losses




|                                        |  |              |         |  |      |   |         |      |  |   |         | 
|--------------------------------------- |  | ------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                        |  | December 31, |        
|                                        |  |              |        
|                                        |  | 2004         |         |  | 2003 |   |         | 2002 | 
|                                        |  |              |         |  |      |   |         |      | 
|Residential real estate loans           |  | $            | 6,705   |  |      | $ | 6,850   |      |  | $ | 5,800   | 
|Specifically evaluated commercial loans |  |              | 44,671  |  |      |   | 41,800  |      |  |   | 27,000  | 
|Other commercial loans                  |  |              | 146,342 |  |      |   | 143,916 |      |  |   | 139,234 | 
|Consumer loans and leases               |  |              | 45,434  |  |      |   | 39,721  |      |  |   | 36,239  | 
|                                        |  |              |         |  |      |   |         |      | 
|                                        |  | $            | 243,152 |  |      | $ | 232,287 |      |  | $ | 208,273 | 
|                                        |  |              |         |  |      |   |         |      | 

Asset-Liability Management






| |                   
| | ------------------
| | Interest Rate Risk





44



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| |                           
| | --------------------------
| | Assessment and Measurement







| |                                
| | -------------------------------
| | Net Interest Income Sensitivity



table 27 Table 27


45



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Table 27  Sensitivity of Net Interest
Income




|                  |  |                 |       |    |                 |  |       |                 |  |  |                 |    |  |  |       |   
|----------------- |  | --------------- | ----- | -- | --------------- |  | ----- | --------------- |  |  | --------------- | -- |  |  | ----- | --
|                  |  | 200 Basis Point |       |    | 100 Basis Point |  |       | 100 Basis Point |  |  | 200 Basis Point |   
|                  |  | Rate Increase   |       |    | Rate Increase   |  |       | Rate Decrease   |  |  | Rate Decrease   |   
|                  |  |                 |       |    |                 |  |       |                 |  |  |                 |   
|December 31, 2004 |  |                 | (2.13 | )% |                 |  | (0.68 | )%              |  |  | 0.20            | %  |  |  | (1.51 | )%
|                  |  |                 |       |    |                 |  |       |                 |  |  |                 |   
|December 31, 2003 |  |                 | (0.26 | )% |                 |  | 0.24  | %               |  |  | (0.71           | )% |  |  | N/M   |   
|                  |  |                 |       |    |                 |  |       |                 |  |  |                 |   










Derivative Instruments




| |                     
| | --------------------
| | Purpose and Benefits









46



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Table 28  Mortgage Loans Held for Sale and Related
Hedges




|                                         |  |              |        |  |      |   |         | 
|---------------------------------------- |  | ------------ | ------ |  | ---- | - | ------- | 
|                                         |  | Year Ended   |       
|                                         |  | December 31, |       
|                                         |  |              |       
|                                         |  | 2004         |        |  | 2003 |  
|                                         |  |              |        |  |      |  
|Residential mortgage loans held for sale |  | $            | 48,567 |  |      | $ | 79,878  | 
|Rate-locked loan commitments             |  |              | 50,710 |  |      |   | 88,492  | 
|Forward sales contracts                  |  |              | 86,149 |  |      |   | 155,698 | 

.




| |                                
| | -------------------------------
| | Foreign Exchange or Market Risk





47



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Table 29  Derivative Positions




Asset-Liability Management Positions


|                                  |                             |                          |        |         |      |  |      |   |      |  |   |            |  |  |       |         |  |       |   |         |  |  |        |         |  |  |      |        |  
|--------------------------------- | --------------------------- | ------------------------ | ------ | ------- | ---- |  | ---- | - | ---- |  | - | ---------- |  |  | ----- | ------- |  | ----- | - | ------- |  |  | ------ | ------- |  |  | ---- | ------ | -
|                                  |                             | Notional Amount Maturing |        |         |      |  |     
|                                  |                             |                          |        |         |      |  | Fair |  
|December 31, 2004                 |                             | 2005                     |        |         | 2006 |  | 2007 |   | 2008 |  |   | Thereafter |  |  | Total |         |  | Value |  
|                                  |                             |                          |        |         |      |  |      |   |      |  |   |            |  |  |       |         |  |       |  
|Interest rate contracts           |                             |                          |        |         |      |  |      |   |      |  |   |            |  |  |       |         |  |       |   |         |  |  |        |         |  |  |      |       
|                                  | Pay variable, receive fixed |                          | $      | 216,500 |      |  | $    |  |      |  | $ |           |  |  | $     | 150,000 |  |       | $ | 200,000 |  |  | $      | 566,500 |  |  | $    | (4,420 | )
|Forward commitments to sell loans |                             |                          | 83,016 |         |      |  |     |   |      |  |  |            |  |  |      |         |  |       |  |         |  |  | 83,016 |         |  |  | (149 | )     

Customer-related Positions


|                                |                                      |                          |        |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |            |  |  |        |         |  |  |     |         |  
|------------------------------- | ------------------------------------ | ------------------------ | ------ | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  | ---------- | - | ------ | ----- |  | - | ---------- |  |  | ------ | ------- |  |  | --- | ------- | -
|                                |                                      | Notional Amount Maturing |        |        |      |  |  
|                                |                                      |                          |        |        |      |  |  
|December 31, 2004               |                                      | 2005                     |        |        | 2006 |  |   | 2007   |  |  | 2008 |        |  | Thereafter |   |        | Total |  |   | Fair Value | 
|                                |                                      |                          |        |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |            | 
|Interest rate contracts         |                                      |                          |        |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |            |  |  |        |         |  |  |     |        
|                                | Receive fixed, pay variable          |                          | $      | 2,000  |      |  | $ | 13,250 |  |  | $    | 15,608 |  |            | $ | 49,489 |       |  | $ | 610,510    |  |  | $      | 690,857 |  |  | $   | 17,836  |  
|                                | Pay fixed, receive variable          |                          |        | 2,000  |      |  |   | 13,250 |  |  |      | 15,608 |  |            |   | 49,489 |       |  |   | 610,510    |  |  |        | 690,857 |  |  |     | (17,836 | )
|Foreign currency rate contracts |                                      |                          |        |        |      |  |   |        |  |  |      |        |  |            |   |        |       |  |   |            |  |  |        |         |  |  |     |        
|                                | Forward contracts with customers     |                          |        | 26,760 |      |  |   | 6,815  |  |  |      |       |  |            |   |       |       |  |   |           |  |  |        | 33,575  |  |  |     | 3,307   |  
|                                | Forward contracts with dealers       |                          |        | 26,913 |      |  |   | 6,834  |  |  |      |       |  |            |   |       |       |  |   |           |  |  |        | 33,747  |  |  |     | (3,056  | )
|                                | Foreign exchange options to purchase |                          |        | 25,716 |      |  |   | 9,997  |  |  |      |       |  |            |   |       |       |  |   |           |  |  |        | 35,713  |  |  |     | 1,727   |  
|                                | Foreign exchange options to sell     |                          |        | 25,716 |      |  |   | 9,997  |  |  |      |       |  |            |   |       |       |  |   |           |  |  |        | 35,713  |  |  |     | (1,727  | )
|Rate-locked loan commitments(1) |                                      |                          | 35,961 |        |      |  |  |        |  |  |     |        |  |            |  |        |       |  |  |            |  |  | 35,961 |         |  |  | 147 |        






|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | No value has been assigned to potential mortgage servicing
    rights related to rate-locked loan commitments.



| |                                        
| | ---------------------------------------
| | 2004 Asset Liability Management Actions



Table 27




48



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##### Table of Contents



Liquidity










| |                   
| | ------------------
| | Banking Subsidiary











49



---



##### Table of Contents











Capital














50



---



##### Table of Contents







Table 30  Capital Securities




|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          |  |        |  |  |  |           | 
|-------------------------------- |  | -------- | --------- |  | ---------- | - | ------- | ---------- |  | - | ------------- |  |  | ------ | ------- |  | -------- |  | ------ |  |  |  | --------- | 
|                                 |  |          |           |  |            |   |         | Junior     |  |   |               |  | 
|                                 |  | Issuance |           |  | Capital    |   |         | Common     |  |   | Subordinated  |  |  | Stated |         |  | Maturity | 
|Name                             |  | Date     |           |  | Securities |   |         | Securities |  |   | Debentures(1) |  |  | Rate   |         |  | Date     | 
|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          | 
|Peoples Heritage Capital Trust I |  |          | 1/31/1997 |  |            | $ | 61,775  |            |  | $ | 3,093         |  |  | $      | 64,868  |  |          |  | 9.06%  |  |  |  | 2/1/2027  | 
|Banknorth Capital Trust I        |  |          | 5/1/1997  |  |            |   | 30,000  |            |  |   | 928           |  |  |        | 30,928  |  |          |  | 10.52% |  |  |  | 5/1/2027  | 
|Ipswich Statutory Trust I        |  |          | 2/22/2001 |  |            |   | 3,500   |            |  |   | 109           |  |  |        | 3,609   |  |          |  | 10.20% |  |  |  | 2/22/2031 | 
|CCBT Statutory Trust I           |  |          | 7/31/2001 |  |            |   | 5,000   |            |  |   | 155           |  |  |        | 5,155   |  |          |  | 5.74%  |  |  |  | 7/31/2031 | 
|Banknorth Capital Trust II       |  |          | 2/22/2002 |  |            |   | 200,000 |            |  |   | 6,186         |  |  |        | 206,186 |  |          |  | 8.00%  |  |  |  | 4/1/2032  | 
|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          | 
|                                 |  |          |           |  |            | $ | 300,275 |            |  | $ | 10,471        |  |  | $      | 310,746 |  |          |  |        |  |  |  |           | 
|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          | 






|    |                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts include junior subordinated debentures acquired by
    affiliated trusts from us with the capital contributed by us in
    exchange for the common securities of such trusts. Junior
    subordinated debentures are equal to capital securities plus
    common securities.



51



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Critical Accounting Policies






| |                                    
| | -----------------------------------
| | Allowance for Loan and Lease Losses







52



---



##### Table of Contents







| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | historical loss experience;                                              
|
| |  | trends in delinquency and nonperforming loans;                           
|
| |  | changes in product offerings or loan terms;                              
|
| |  | changes in underwriting and/or collections policies;                     
|
| |  | changes in management of underwriting and collection
    departments; and
|
| |  | regional and national economic conditions and trends.                    



| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Accounting for Acquisitions and Review of Goodwill and
    Other Intangible Assets





| |                             
| | ----------------------------
| | Accounting for Pension Plans





53



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##### Table of Contents









| |                     
| | --------------------
| | Accrued Income Taxes



Accounting Changes




Forward Looking Statements







Item 7A. Quantitative and Qualitative Disclosures
about Market Risk




54



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

BANKNORTH GROUP, INC.


CONSOLIDATED BALANCE SHEETS


|                                                                                   |                                                                                                                                                 |                                            |           |           |            |   |           |           |            | 
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | --------- | ---------- | - | --------- | --------- | ---------- | 
|                                                                                   |                                                                                                                                                 | December 31,                               |          
|                                                                                   |                                                                                                                                                 |                                            |          
|                                                                                   |                                                                                                                                                 | 2004                                       |           |           | 2003       |  
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|Assets                                                                             |                                                                                                                                                 |                                            |           |           |            |   |           |          
|Cash and due from banks                                                            |                                                                                                                                                 | $                                          | 541,994   |           |            | $ | 669,686   |          
|Federal funds sold and other short-term investments                                |                                                                                                                                                 |                                            | 2,312     |           |            |   | 4,645     |          
|Securities available for sale, at market value                                     |                                                                                                                                                 |                                            | 6,905,765 |           |            |   | 7,122,992 |          
|Securities held to maturity, market value $87,507 in 2004 and
    $124,344 in 2003 |                                                                                                                                                 |                                            | 87,013    |           |            |   | 124,240   |          
|Loans held for sale, market value $52,936 in 2004 and $42,801 in
    2003          |                                                                                                                                                 |                                            | 51,693    |           |            |   | 41,696    |          
|Loans and leases:                                                                  |                                                                                                                                                 |                                            |           |           |            |   |           |          
|                                                                                   | Residential real estate mortgages                                                                                                               |                                            |           | 3,081,217 |            |   |           | 2,710,483 |           
|                                                                                   | Commercial real estate mortgages                                                                                                                |                                            |           | 6,249,513 |            |   |           | 5,528,862 |           
|                                                                                   | Commercial business loans and leases                                                                                                            |                                            |           | 3,928,594 |            |   |           | 3,287,094 |           
|                                                                                   | Consumer loans and leases                                                                                                                       |                                            |           | 5,333,670 |            |   |           | 4,819,523 |           
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|                                                                                   |                                                                                                                                                 | Total loans and leases                     |           |           | 18,592,994 |   |           |           | 16,345,962 | 
|                                                                                   | Less: Allowance for loan and lease losses                                                                                                       |                                            |           | 243,152   |            |   |           | 232,287   |           
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|                                                                                   |                                                                                                                                                 | Net loans and leases                       |           |           | 18,349,842 |   |           |           | 16,113,675 | 
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|Premises and equipment, net                                                        |                                                                                                                                                 |                                            | 300,120   |           |            |   | 264,818   |          
|Goodwill                                                                           |                                                                                                                                                 |                                            | 1,365,780 |           |            |   | 1,126,639 |          
|Identifiable intangible assets                                                     |                                                                                                                                                 |                                            | 50,376    |           |            |   | 36,415    |          
|Bank-owned life insurance                                                          |                                                                                                                                                 |                                            | 523,129   |           |            |   | 488,756   |          
|Other assets                                                                       |                                                                                                                                                 |                                            | 509,786   |           |            |   | 460,173   |          
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|                                                                                   |                                                                                                                                                 | Total assets                               |           | $         | 28,687,810 |   |           | $         | 26,453,735 | 
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|Liabilities and Shareholders Equity                                               |                                                                                                                                                 |                                            |           |           |            |   |           |          
|Deposits:                                                                          |                                                                                                                                                 |                                            |           |           |            |   |           |          
|                                                                                   | Savings accounts                                                                                                                                |                                            | $         | 2,546,018 |            |   | $         | 2,460,522 |           
|                                                                                   | Money market and NOW accounts                                                                                                                   |                                            |           | 7,907,513 |            |   |           | 7,130,534 |           
|                                                                                   | Certificates of deposit (including certificates of $100 thousand
    or more of $1,129,360 in 2004 and $998,546 in 2003)                        |                                            |           | 4,484,370 |            |   |           | 4,733,104 |           
|                                                                                   | Brokered deposits                                                                                                                               |                                            |           | 576       |            |   |           |          |           
|                                                                                   | Noninterest-bearing deposits                                                                                                                    |                                            |           | 4,289,104 |            |   |           | 3,577,025 |           
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|                                                                                   |                                                                                                                                                 | Total deposits                             |           |           | 19,227,581 |   |           |           | 17,901,185 | 
|Short-term borrowings                                                              |                                                                                                                                                 |                                            | 3,797,823 |           |            |   | 2,336,947 |          
|Long-term debt                                                                     |                                                                                                                                                 |                                            | 2,192,882 |           |            |   | 3,545,917 |          
|Other liabilities                                                                  |                                                                                                                                                 |                                            | 293,410   |           |            |   | 149,167   |          
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|                                                                                   |                                                                                                                                                 | Total liabilities                          |           |           | 25,511,696 |   |           |           | 23,933,216 | 
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|Commitments and contingencies                                                      |                                                                                                                                                 |                                            |           |           |            |   |           |          
|Shareholders equity:                                                              |                                                                                                                                                 |                                            |           |           |            |   |           |          
|                                                                                   | Preferred stock, par value $0.01; 5,000,000 shares
    authorized, none issued                                                                  |                                            |           |          |            |   |           |          |           
|                                                                                   | Common stock, par value $0.01; 400,000,000 and
    200,000,000 shares authorized, 191,672,502 issued in 2004
    and 182,292,973 issued in 2003 |                                            |           | 1,917     |            |   |           | 1,823     |           
|                                                                                   | Paid-in capital                                                                                                                                 |                                            |           | 1,763,572 |            |   |           | 1,435,005 |           
|                                                                                   | Retained earnings                                                                                                                               |                                            |           | 1,677,802 |            |   |           | 1,508,292 |           
|                                                                                   | Treasury stock at cost (12,374,515 shares in 2004 and
    20,105,254 shares in 2003)                                                            |                                            |           | (265,020  | )          |   |           | (430,608  | )         
|                                                                                   | Accumulated other comprehensive (loss) income                                                                                                   |                                            |           | (2,157    | )          |   |           | 6,007     |           
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|                                                                                   |                                                                                                                                                 | Total shareholders equity                 |           |           | 3,176,114  |   |           |           | 2,520,519  | 
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  
|                                                                                   |                                                                                                                                                 | Total liabilities and shareholders equity |           | $         | 28,687,810 |   |           | $         | 26,453,735 | 
|                                                                                   |                                                                                                                                                 |                                            |           |           |            |  



55



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##### Table of Contents



BANKNORTH GROUP, INC.


CONSOLIDATED STATEMENTS OF INCOME


|                                     |                                                |                                                               |         |         |           |   |         |         |           |   |         |         |           | 
|------------------------------------ | ---------------------------------------------- | ------------------------------------------------------------- | ------- | ------- | --------- | - | ------- | ------- | --------- | - | ------- | ------- | --------- | 
|                                     |                                                | Year Ended December 31,                                       |        
|                                     |                                                |                                                               |        
|                                     |                                                | 2004                                                          |         |         | 2003      |   |         | 2002    |          
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|Interest and dividend income:        |                                                |                                                               |         |         |           |   |         |         |           |   |         |        
|                                     | Interest and fees on loans and leases          |                                                               | $       | 933,833 |           |   | $       | 880,185 |           |   | $       | 882,190 |          
|                                     | Interest and dividends on securities           |                                                               |         | 323,172 |           |   |         | 312,784 |           |   |         | 352,927 |          
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     |                                                | Total interest and dividend income                            |         |         | 1,257,005 |   |         |         | 1,192,969 |   |         |         | 1,235,117 | 
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|Interest expense:                    |                                                |                                                               |         |         |           |   |         |         |           |   |         |        
|                                     | Interest on deposits                           |                                                               |         | 161,004 |           |   |         | 188,836 |           |   |         | 244,648 |          
|                                     | Interest on borrowed funds                     |                                                               |         | 162,619 |           |   |         | 163,302 |           |   |         | 193,952 |          
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     |                                                | Total interest expense                                        |         |         | 323,623   |   |         |         | 352,138   |   |         |         | 438,600   | 
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     |                                                | Net interest income                                           |         |         | 933,382   |   |         |         | 840,831   |   |         |         | 796,517   | 
|Provision for loan and lease losses  |                                                |                                                               | 40,340  |         |           |   | 42,301  |         |           |   | 44,314  |        
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     |                                                | Net interest income after provision for loan and lease losses |         |         | 893,042   |   |         |         | 798,530   |   |         |         | 752,203   | 
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|Noninterest income:                  |                                                |                                                               |         |         |           |   |         |         |           |   |         |        
|                                     | Deposit services                               |                                                               |         | 109,321 |           |   |         | 97,323  |           |   |         | 82,139  |          
|                                     | Insurance agency commissions                   |                                                               |         | 50,311  |           |   |         | 45,714  |           |   |         | 44,439  |          
|                                     | Merchant and electronic banking income, net    |                                                               |         | 50,564  |           |   |         | 41,778  |           |   |         | 37,643  |          
|                                     | Wealth management services                     |                                                               |         | 39,788  |           |   |         | 31,956  |           |   |         | 32,453  |          
|                                     | Bank-owned life insurance                      |                                                               |         | 23,282  |           |   |         | 22,930  |           |   |         | 20,002  |          
|                                     | Investment planning services                   |                                                               |         | 19,418  |           |   |         | 15,692  |           |   |         | 11,572  |          
|                                     | Net securities (losses) gains                  |                                                               |         | (7,701  | )         |   |         | 42,460  |           |   |         | 7,282   |          
|                                     | Other noninterest income                       |                                                               |         | 54,816  |           |   |         | 69,306  |           |   |         | 38,978  |          
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     |                                                |                                                               | 339,799 |         |           |   | 367,159 |         |           |   | 274,508 |        
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|Noninterest expense:                 |                                                |                                                               |         |         |           |   |         |         |           |   |         |        
|                                     | Compensation and employee benefits             |                                                               |         | 356,611 |           |   |         | 326,621 |           |   |         | 311,385 |          
|                                     | Occupancy                                      |                                                               |         | 63,892  |           |   |         | 59,200  |           |   |         | 52,422  |          
|                                     | Equipment                                      |                                                               |         | 48,480  |           |   |         | 47,459  |           |   |         | 40,933  |          
|                                     | Data processing                                |                                                               |         | 43,141  |           |   |         | 40,940  |           |   |         | 40,702  |          
|                                     | Advertising and marketing                      |                                                               |         | 25,550  |           |   |         | 22,000  |           |   |         | 17,239  |          
|                                     | Amortization of identifiable intangible assets |                                                               |         | 8,627   |           |   |         | 8,946   |           |   |         | 6,492   |          
|                                     | Merger and consolidation costs                 |                                                               |         | 49,635  |           |   |         | 8,104   |           |   |         | 14,691  |          
|                                     | Prepayment penalties on borrowings             |                                                               |         | 61,546  |           |   |         | 30,490  |           |   |         |        |          
|                                     | Write-off of branch automation project         |                                                               |         |        |           |   |         |        |           |   |         | 6,170   |          
|                                     | Other noninterest expense                      |                                                               |         | 107,619 |           |   |         | 97,510  |           |   |         | 89,358  |          
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     |                                                |                                                               | 765,101 |         |           |   | 641,270 |         |           |   | 579,392 |        
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|Income before income tax expense     |                                                |                                                               | 467,740 |         |           |   | 524,419 |         |           |   | 447,319 |        
|Applicable income tax expense        |                                                |                                                               | 163,097 |         |           |   | 173,660 |         |           |   | 148,681 |        
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     |                                                | Net income                                                    |         | $       | 304,643   |   |         | $       | 350,759   |   |         | $       | 298,638   | 
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|Basic earnings per share             |                                                | $                                                             | 1.78    |         |           | $ | 2.18    |         |           | $ | 2.01    |        
|Diluted earnings per share           |                                                | $                                                             | 1.75    |         |           | $ | 2.15    |         |           | $ | 1.99    |        
|Weighted average shares outstanding: |                                                |                                                               |         |         |           |   |         |         |           |   |         |        
|                                     | Basic                                          |                                                               |         | 170,766 |           |   |         | 160,914 |           |   |         | 148,213 |          
|                                     | Dilutive effect of stock options               |                                                               |         | 3,392   |           |   |         | 2,606   |           |   |         | 1,616   |          
|                                     |                                                |                                                               |         |         |           |   |         |         |          
|                                     | Diluted                                        |                                                               |         | 174,158 |           |   |         | 163,520 |           |   |         | 149,829 |          
|                                     |                                                |                                                               |         |         |           |   |         |         |          



56



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##### Table of Contents



BANKNORTH GROUP, INC.


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |   |  |   |          |   |  |   |           |         | 
|--------------------------------------------------------------------------------------- | -------------------- | ----------- | ------- | - | ----- | - | ----- | ------- |  | - | --------- | - |  | ----------- | --------- | ------------- | -------- | - | ------ | ------ |  | - | -------- | - |  | - | -------- | - |  | - | --------- | ------- | 
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  | Accumulated |           |               |         
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  | Other       |           |               |         
|                                                                                        |                      | Common      |         |   |       |   |       |         |  |   | Unearned  |   |  |             |           | Comprehensive |          |   |       
|                                                                                        |                      | Shares      |         |   | Par   |   |       | Paid-in |  |   | Retained  |   |  | Compen-     |           |               | Treasury |   |        | Income |  |   |         
|                                                                                        |                      | Outstanding |         |   | Value |   |       | Capital |  |   | Earnings  |   |  | sation      |           |               | Stock    |   |        | (Loss) |  |   | Total    |  
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|Balances at December 31, 2001                                                           |                      |             | 151,221 |   |       | $ | 1,651 |         |  | $ | 958,764   |   |  | $           | 1,056,678 |               |          | $ | (1,017 | )      |  | $ | (267,529 | ) |  | $ | 40,568   |   |  | $ | 1,789,115 |        
|Net income                                                                              |                      |             |        |   |       |   |      |         |  |   |          |   |  |             | 298,638   |               |          |   |       |        |  |   |         |   |  |   |         |   |  |   | 298,638   |        
|Unrealized gains on securities, net of reclassification
    adjustment and taxes        |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | 77,257   |   |  |   | 77,257    |        
|Unrealized losses on cash flow hedges, net of reclassification
    adjustment and taxes |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | (2,054   | ) |  |   | (2,054    | )      
|Minimum pension liability, net of tax                                                   |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | (825     | ) |  |   | (825      | )      
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|                                                                                        | Comprehensive income |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |   |  |   |          |   |  |   |           | 373,016 | 
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|Treasury stock issued for employee benefit plans                                        |                      |             | 1,939   |   |       |   |      |         |  |   | (6,989    | ) |  |             |          |               |          |   |       |        |  |   | 37,395   |   |  |   |         |   |  |   | 30,406    |        
|Treasury stock purchased                                                                |                      |             | (6,350  | ) |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   | (154,054 | ) |  |   |         |   |  |   | (154,054  | )      
|Distribution of restricted stock                                                        |                      |             |        |   |       |   |      |         |  |   | (963      | ) |  |             |          |               |          |   |       |        |  |   | 1,838    |   |  |   |         |   |  |   | 875       |        
|Common stock issued for acquisitions                                                    |                      |             | 3,769   |   |       |   | 38    |         |  |   | 102,829   |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   |         |   |  |   | 102,867   |        
|Decrease in unearned compensation  ESOP                                                |                      |             |        |   |       |   |      |         |  |   | 6,137     |   |  |             |          |               |          |   | 1,017  |        |  |   |         |   |  |   |         |   |  |   | 7,154     |        
|Cash dividends declared                                                                 |                      |             |        |   |       |   |      |         |  |   |          |   |  |             | (85,894   | )             |          |   |       |        |  |   |         |   |  |   |         |   |  |   | (85,894   | )      
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|Balances at December 31, 2002                                                           |                      |             | 150,579 |   |       |   | 1,689 |         |  |   | 1,059,778 |   |  |             | 1,269,422 |               |          |   |       |        |  |   | (382,350 | ) |  |   | 114,946  |   |  |   | 2,063,485 |        
|Net income                                                                              |                      |             |        |   |       |   |      |         |  |   |          |   |  |             | 350,759   |               |          |   |       |        |  |   |         |   |  |   |         |   |  |   | 350,759   |        
|Unrealized losses on securities, net of reclassification
    adjustment net of tax      |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | (110,068 | ) |  |   | (110,068  | )      
|Unrealized gains on cash flow hedges, net of reclassification
    adjustment net of tax |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | 1,575    |   |  |   | 1,575     |        
|Minimum pension liability, net of tax                                                   |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | (446     | ) |  |   | (446      | )      
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|                                                                                        | Comprehensive income |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |   |  |   |          |   |  |   |           | 241,820 | 
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|Treasury stock issued for employee benefit plans                                        |                      |             | 2,674   |   |       |   |      |         |  |   | (6,546    | ) |  |             |          |               |          |   |       |        |  |   | 55,223   |   |  |   |         |   |  |   | 48,677    |        
|Treasury stock purchased                                                                |                      |             | (4,466  | ) |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   | (105,071 | ) |  |   |         |   |  |   | (105,071  | )      
|Distribution of restricted stock                                                        |                      |             |        |   |       |   |      |         |  |   | (896      | ) |  |             |          |               |          |   |       |        |  |   | 1,590    |   |  |   |         |   |  |   | 694       |        
|Common stock issued for acquisitions                                                    |                      |             | 13,401  |   |       |   | 134   |         |  |   | 382,669   |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   |         |   |  |   | 382,803   |        
|Cash dividends declared                                                                 |                      |             |        |   |       |   |      |         |  |   |          |   |  |             | (111,889  | )             |          |   |       |        |  |   |         |   |  |   |         |   |  |   | (111,889  | )      
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|Balances at December 31, 2003                                                           |                      |             | 162,188 |   |       |   | 1,823 |         |  |   | 1,435,005 |   |  |             | 1,508,292 |               |          |   |       |        |  |   | (430,608 | ) |  |   | 6,007    |   |  |   | 2,520,519 |        
|Net income                                                                              |                      |             |        |   |       |   |      |         |  |   |          |   |  |             | 304,643   |               |          |   |       |        |  |   |         |   |  |   |         |   |  |   | 304,643   |        
|Unrealized losses on securities, net of reclassification
    adjustment net of tax      |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | (7,231   | ) |  |   | (7,231    | )      
|Unrealized gains on cash flow hedges, net of reclassification
    adjustment net of tax |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | 146      |   |  |   | 146       |        
|Minimum pension liability, net of tax                                                   |                      |             |        |   |       |   |      |         |  |   |          |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   | (1,079   | ) |  |   | (1,079    | )      
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|                                                                                        | Comprehensive income |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |   |  |   |          |   |  |   |           | 296,479 | 
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|Treasury stock issued for employee benefit plans, net of tax of
    $40.7 million       |                      |             | 7,729   |   |       |   |      |         |  |   | 24,797    |   |  |             |          |               |          |   |       |        |  |   | 164,837  |   |  |   |         |   |  |   | 189,634   |        
|Distribution of restricted stock                                                        |                      |             |        |   |       |   |      |         |  |   | (386      | ) |  |             |          |               |          |   |       |        |  |   | 751      |   |  |   |         |   |  |   | 365       |        
|Common stock issued for acquisitions                                                    |                      |             | 9,381   |   |       |   | 94    |         |  |   | 304,156   |   |  |             |          |               |          |   |       |        |  |   |         |   |  |   |         |   |  |   | 304,250   |        
|Cash dividends declared                                                                 |                      |             |        |   |       |   |      |         |  |   |          |   |  |             | (135,133  | )             |          |   |       |        |  |   |         |   |  |   |         |   |  |   | (135,133  | )      
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  
|Balances at December 31, 2004                                                           |                      |             | 179,298 |   |       | $ | 1,917 |         |  | $ | 1,763,572 |   |  | $           | 1,677,802 |               |          | $ |       |        |  | $ | (265,020 | ) |  | $ | (2,157   | ) |  | $ | 3,176,114 |        
|                                                                                        |                      |             |         |   |       |   |       |         |  |   |           |   |  |             |           |               |          |   |        |        |  |   |          |  



57



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##### Table of Contents



BANKNORTH GROUP, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |   |   |            |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ----------------------- | -------- | ---------- | ---- | - | -------- | ---------- | - | - | ---------- | ---------- | -
|                                                                                                                                                                                 |                                                                                        | Year Ended December 31, |         
|                                                                                                                                                                                 |                                                                                        |                         |         
|                                                                                                                                                                                 |                                                                                        | 2004                    |          |            | 2003 |   |          | 2002       |  
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|Cash flows from operating activities:                                                                                                                                            |                                                                                        |                         |          |            |      |   |          |            |   |   |            |           
|Net income                                                                                                                                                                       |                                                                                        | $                       | 304,643  |            |      | $ | 350,759  |            |   | $ | 298,638    |           
|Adjustments to reconcile net income to net cash provided by
    operating activities:                                                                                            |                                                                                        |                         |          |            |      |   |          |            |   |   |            |           
|                                                                                                                                                                                 | Provision for loan and lease losses                                                    |                         |          | 40,340     |      |   |          | 42,301     |   |   |            | 44,314     |  
|                                                                                                                                                                                 | Depreciation of banking premises and equipment                                         |                         |          | 44,199     |      |   |          | 43,368     |   |   |            | 36,360     |  
|                                                                                                                                                                                 | Net amortization of premium and discounts                                              |                         |          | 23,082     |      |   |          | 56,135     |   |   |            | 37,230     |  
|                                                                                                                                                                                 | Write-off of branch automation project                                                 |                         |          |           |      |   |          |           |   |   |            | 6,170      |  
|                                                                                                                                                                                 | Amortization of intangible assets                                                      |                         |          | 8,627      |      |   |          | 8,946      |   |   |            | 6,492      |  
|                                                                                                                                                                                 | Provision for deferred tax expense                                                     |                         |          | 16,498     |      |   |          | 26,073     |   |   |            | 12,522     |  
|                                                                                                                                                                                 | ESOP expense                                                                           |                         |          |           |      |   |          |           |   |   |            | 7,154      |  
|                                                                                                                                                                                 | Distribution of restricted stock units                                                 |                         |          | 365        |      |   |          | 694        |   |   |            | 875        |  
|                                                                                                                                                                                 | Net losses (gains) realized from sales of securities and
    loans                     |                         |          | 6,190      |      |   |          | (42,460    | ) |   |            | (9,456     | )
|                                                                                                                                                                                 | Prepayment penalties on borrowings                                                     |                         |          | 61,546     |      |   |          | 30,490     |   |   |            |           |  
|                                                                                                                                                                                 | Net (gains) realized from sales of loans held for sale                                 |                         |          | (3,660     | )    |   |          | (12,483    | ) |   |            | (12,577    | )
|                                                                                                                                                                                 | Increase in cash surrender value of bank owned life insurance                          |                         |          | (22,188    | )    |   |          | (22,930    | ) |   |            | (20,002    | )
|                                                                                                                                                                                 | Net decrease in mortgage servicing rights                                              |                         |          | 1,287      |      |   |          | 1,287      |   |   |            | 5,487      |  
|                                                                                                                                                                                 | Proceeds from sales of loans held for sale                                             |                         |          | 512,700    |      |   |          | 923,811    |   |   |            | 863,560    |  
|                                                                                                                                                                                 | Residential loans originated and purchased for sale                                    |                         |          | (511,053   | )    |   |          | (821,870   | ) |   |            | (865,068   | )
|                                                                                                                                                                                 | Net change in other assets                                                             |                         |          | (55,329    | )    |   |          | 29,195     |   |   |            | (70,583    | )
|                                                                                                                                                                                 | Net change in other liabilities                                                        |                         |          | 18,481     |      |   |          | (119,348   | ) |   |            | 63,619     |  
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|Net cash provided by operating activities                                                                                                                                        |                                                                                        |                         | 445,728  |            |      |   | 493,968  |            |   |   | 404,735    |           
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|Cash flows from investing activities:                                                                                                                                            |                                                                                        |                         |          |            |      |   |          |            |   |   |            |           
|                                                                                                                                                                                 | Proceeds from sales of securities available for sale                                   |                         |          | 3,380,300  |      |   |          | 3,392,506  |   |   |            | 1,001,605  |  
|                                                                                                                                                                                 | Proceeds from maturities and principal repayments of securities
    available for sale |                         |          | 1,303,648  |      |   |          | 3,066,107  |   |   |            | 2,263,728  |  
|                                                                                                                                                                                 | Purchases of securities available for sale                                             |                         |          | (4,067,304 | )    |   |          | (6,370,761 | ) |   |            | (4,110,201 | )
|                                                                                                                                                                                 | Proceeds from maturities and principal repayments of securities
    held to maturity   |                         |          | 37,227     |      |   |          | 92,169     |   |   |            | 123,214    |  
|                                                                                                                                                                                 | Net increase in loans and leases                                                       |                         |          | (1,300,987 | )    |   |          | (690,512   | ) |   |            | (582,280   | )
|                                                                                                                                                                                 | Proceeds from sales of loans                                                           |                         |          | 37,097     |      |   |          |           |   |   |            | 104,366    |  
|                                                                                                                                                                                 | Net additions to premises and equipment                                                |                         |          | (47,805    | )    |   |          | (20,901    | ) |   |            | (43,503    | )
|                                                                                                                                                                                 | Purchases of bank owned life insurance                                                 |                         |          |           |      |   |          |           |   |   |            | (40,000    | )
|                                                                                                                                                                                 | Proceeds from policy coverage on bank owned life insurance                             |                         |          | 1,725      |      |   |          | 182        |   |   |            |           |  
|                                                                                                                                                                                 | Cash (paid) for acquisitions, net of cash acquired                                     |                         |          | 49,061     |      |   |          | 10,903     |   |   |            | (12,074    | )
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|Net cash (used in) provided by investing activities                                                                                                                              |                                                                                        |                         | (607,038 | )          |      |   | (520,307 | )          |   |   | (1,295,145 | )         
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|Cash flows from financing activities:                                                                                                                                            |                                                                                        |                         |          |            |      |   |          |            |   |   |            |           
|                                                                                                                                                                                 | Net increase in deposits                                                               |                         |          | 148,206    |      |   |          | 95,039     |   |   |            | 380,379    |  
|                                                                                                                                                                                 | Net increase in short-term borrowings                                                  |                         |          | 1,200,876  |      |   |          | 755,480    |   |   |            | 182,248    |  
|                                                                                                                                                                                 | Proceeds from long-term debt                                                           |                         |          | 1,570      |      |   |          | 885,400    |   |   |            | 1,335,642  |  
|                                                                                                                                                                                 | Payments on long-term debt                                                             |                         |          | (1,633,868 | )    |   |          | (1,941,969 | ) |   |            | (952,525   | )
|                                                                                                                                                                                 | Treasury stock issued for employee benefit plans                                       |                         |          | 189,634    |      |   |          | 48,677     |   |   |            | 30,406     |  
|                                                                                                                                                                                 | Purchase of treasury stock                                                             |                         |          |           |      |   |          | (105,071   | ) |   |            | (154,054   | )
|                                                                                                                                                                                 | Cash dividends paid to shareholders                                                    |                         |          | (135,133   | )    |   |          | (111,889   | ) |   |            | (85,894    | )
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|Net cash (used) provided by financing activities                                                                                                                                 |                                                                                        |                         | (228,715 | )          |      |   | (374,333 | )          |   |   | 736,202    |           
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|(Decrease) increase in cash and cash equivalents                                                                                                                                 |                                                                                        |                         | (390,025 | )          |      |   | (400,672 | )          |   |   | (154,208   | )         
|Cash and cash equivalents at beginning of year                                                                                                                                   |                                                                                        |                         | 316,331  |            |      |   | 717,003  |            |   |   | 871,211    |           
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|Cash and cash equivalents at end of period                                                                                                                                       |                                                                                        | $                       | (73,694  | )          |      | $ | 316,331  |            |   | $ | 717,003    |           
|                                                                                                                                                                                 |                                                                                        |                         |          |            |      |   |          |            |  
|                                                                                                                                                                                
|Interest paid                                                                                                                                                                    |                                                                                        | $                       | 325,614  |            |      | $ | 358,555  |            |   | $ | 434,685    |           
|Income taxes paid                                                                                                                                                                |                                                                                        |                         | 90,298   |            |      |   | 145,600  |            |   |   | 104,810    |           
|                                                                                                                                                                                
|In conjunction with the purchase acquisitions detailed in
    Note 3 to the Consolidated Financial Statements, assets
    were acquired and liabilities were assumed as follows:
|                                                                                                                                                                                 | Fair value of assets acquired                                                          |                         | $        | 1,807,186  |      |   | $        | 3,347,137  |   |   | $          | 1,693,715  |  
|                                                                                                                                                                                 | Less liabilities assumed                                                               |                         |          | 1,420,086  |      |   |          | 2,586,080  |   |   |            | 1,355,197  |  



58



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(All dollar amounts expressed in thousands, except per share
data)




|   |                                           
|-- | ------------------------------------------
|1. | Summary of Significant Accounting Policies





| |                                 
| | --------------------------------
| | Financial Statement Presentation









| |                          
| | -------------------------
| | Cash and Cash Equivalents







| |           
| | ----------
| | Securities





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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)








| |                 
| | ----------------
| | Loans and Leases









| |                                    
| | -----------------------------------
| | Allowance for Loan and Lease Losses







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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)










| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | Historical loss experience;                                      
|
| |  | Trends in delinquency and nonperforming loans;                   
|
| |  | Changes in product offerings or loan terms;                      
|
| |  | Changes in underwriting and/or collections policies;             
|
| |  | Changes in management of underwriting and collection departments;
|
| |  | Regional and national economic conditions and trends.            





| |                          
| | -------------------------
| | Bank-Owned Life Insurance





| |                       
| | ----------------------
| | Premises and Equipment





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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)






| |                                            
| | -------------------------------------------
| | Goodwill and Identifiable Intangible Assets





|                         |  |                           
|------------------------ |  | --------------------------
|Core deposit intangibles |  | 7  10 years              
|Noncompete agreements    |  | 1  4 years               
|Customer lists           |  | estimated life of the list



| |                                                    
| | ---------------------------------------------------
| | Impairment of Long-Lived Assets Other than Goodwill





| |                                         
| | ----------------------------------------
| | Mortgage Banking and Loans Held for Sale



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)










| |                                 
| | --------------------------------
| | Derivative Financial Instruments









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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)










| |                                                  
| | -------------------------------------------------
| | Pension, 401(k), and Other Employee Benefit Plans









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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)










| |                         
| | ------------------------
| | Stock Compensation Plans



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)




|                                                                                                                                                    |                       |                         |          |      |      |      |         |      |      |      |         |      |      |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ----------------------- | -------- | ---- | ---- | ---- | ------- | ---- | ---- | ---- | ------- | ---- | ---- | ---- | 
|                                                                                                                                                    |                       | Year Ended December 31, |         
|                                                                                                                                                    |                       |                         |         
|                                                                                                                                                    |                       | 2004                    |          |      | 2003 |      |         | 2002 |     
|                                                                                                                                                    |                       |                         |          |      |      |      |         |      |     
|Net Income, as reported                                                                                                                             |                       | $                       | 304,643  |      |      | $    | 350,759 |      |      | $    | 298,638 |     
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |                       |                         | (16,089  | )    |      |      | (12,723 | )    |      |      | (8,354  | )   
|                                                                                                                                                    |                       |                         |          |      |      |      |         |      |     
|Proforma net income                                                                                                                                 |                       | $                       | 288,554  |      |      | $    | 338,036 |      |      | $    | 290,284 |     
|                                                                                                                                                    |                       |                         |          |      |      |      |         |      |     
|Earnings per share                                                                                                                                  |                       |                         |          |      |      |      |         |      |      |      |         |     
|                                                                                                                                                    | Basic  As reported   |                         | $        | 1.78 |      |      | $       | 2.18 |      |      | $       | 2.01 |     
|                                                                                                                                                    |                       | Proforma                |          | $    | 1.69 |      |         | $    | 2.10 |      |         | $    | 1.96 |     
|                                                                                                                                                    | Diluted  As reported |                         | $        | 1.75 |      |      | $       | 2.15 |      |      | $       | 1.99 |     
|                                                                                                                                                    |                       |                         | Proforma |      | $    | 1.67 |         |      | $    | 2.08 |         |      | $    | 1.94 | 



| |                                    
| | -----------------------------------
| | Investments in Limited Partnerships





| |             
| | ------------
| | Income Taxes



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1.     Summary of Significant
Accounting Policies  (Continued)






| |                   
| | ------------------
| | Earnings Per Share





| |                  
| | -----------------
| | Segment Reporting



2.     Accounting Changes






| |               
| | --------------
| | Consolidations





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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




2.     Accounting
Changes  (Continued)




| |                                    
| | -----------------------------------
| | Accounting for Share-Based Payments





| |                                                                          
| | -------------------------------------------------------------------------
| | Accounting for Certain Loan or Debt Securities Acquired in
    a Transfer





| |                 
| | ----------------
| | Loan Commitments





| |                                                  
| | -------------------------------------------------
| | Guidance on Other-Than-Temporary
    Impairment



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




2.     Accounting
Changes  (Continued)






| |                      
| | ---------------------
| | Business Combinations





|   |             
|-- | ------------
|3. | Acquisitions



|                                  |  |             |            |                  |        |                           |         |        |       |              |          |  |      |             |       |        |      |   |          |        |  |   |       |  |  |  |      |  |  |   |       | 
|--------------------------------- |  | ----------- | ---------- | ---------------- | ------ | ------------------------- | ------- | ------ | ----- | ------------ | -------- |  | ---- | ----------- | ----- | ------ | ---- | - | -------- | ------ |  | - | ----- |  |  |  | ---- |  |  | - | ----- | 
|                                  |  |             |            |                  |        | Transaction-Related Items |        
|                                  |  |             |            | Balance at       |        |                           |         |       
|                                  |  |             |            | Acquisition Date |        |                           |         |        | Other |              |          |  |      | Total       |      
|                                  |  | Acquisition |            |                  |        |                           |         |        |       | Identifiable |          |  | Cash |             |       | Shares |      |   | Purchase |       
|(Dollars and shares in millions)  |  | Date        |            |                  | Assets |                           |         | Equity |       |              | Goodwill |  |      | Intangibles |       |        | Paid |   |          | Issued |  |   | Price | 
|                                  |  |             |            |                  |        |                           |         |        |       |              |          |  |      |             |       |        |      |   |          |        |  |   |       | 
|CCBT Financial Companies, Inc.    |  |             | 4/30/2004  |                  |        | $                         | 1,292.9 |        |       | $            | 108.5    |  |      | $           | 178.2 |        |      | $ | 19.4     |        |  | $ |      |  |  |  | 9.2  |  |  | $ | 298.1 | 
|Foxbrough Savings Bank            |  |             | 4/30/2004  |                  |        |                           | 241.8   |        |       |              | 22.8     |  |      |             | 62.2  |        |      |   | 2.2      |        |  |   | 88.9  |  |  |  |     |  |  |   | 88.9  | 
|First & Ocean Bancorp             |  |             | 12/31/2003 |                  |        |                           | 274.4   |        |       |              | 15.6     |  |      |             | 35.1  |        |      |   | 1.8      |        |  |   | 49.7  |  |  |  |     |  |  |   | 49.7  | 
|American Financial Holdings, Inc. |  |             | 2/14/2003  |                  |        |                           | 2,690.3 |        |       |              | 408.2    |  |      |             | 422.2 |        |      |   | 9.3      |        |  |   | 328.5 |  |  |  | 13.4 |  |  |   | 711.4 | 
|Warren Bancorp, Inc.              |  |             | 12/31/2002 |                  |        |                           | 466.1   |        |       |              | 45.3     |  |      |             | 90.5  |        |      |   | 2.7      |        |  |   | 59.8  |  |  |  | 2.7  |  |  |   | 136.6 | 
|Bancorp Connecticut, Inc.         |  |             | 8/31/2002  |                  |        |                           | 661.7   |        |       |              | 61.4     |  |      |             | 96.9  |        |      |   | 8.7      |        |  |   | 161.2 |  |  |  |     |  |  |   | 161.2 | 
|Ipswich Bancshares, Inc.          |  |             | 7/26/2002  |                  |        |                           | 318.0   |        |       |              | 13.9     |  |      |             | 22.0  |        |      |   | 4.8      |        |  |   | 19.9  |  |  |  | 0.9  |  |  |   | 40.1  | 



69



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




3.     Acquisitions 
(Continued)




|                               |                      |   |           |           | 
|------------------------------ | -------------------- | - | --------- | --------- | 
|Assets:                        |                      |   |           |          
|Investments                    |                      | $ | 319,403   |          
|Loans held for sale            |                      |   | 7,758     |          
|Loans and leases, net          |                      |   | 1,026,915 |          
|Premises and equipment         |                      |   | 31,508    |          
|Other assets                   |                      |   | 159,610   |          
|                               |                      |   |          
|                               | Assets acquired      |   |           | 1,545,194 | 
|                               |                      |   |          
|Liabilities:                   |                      |   |           |          
|Deposits                       |                      |   | 1,188,294 |          
|Borrowings                     |                      |   | 210,903   |          
|Other liabilities              |                      |   | 20,889    |          
|                               |                      |   |          
|                               | Liabilities assumed  |   |           | 1,420,086 | 
|                               |                      |   |          
|                               | Net assets acquired  |   |           | 125,108   | 
|Goodwill                       |                      |   | 240,427   |          
|Identifiable intangible assets |                      |   | 21,565    |          
|                               |                      |   |          
|                               | Total purchase price |   | $         | 387,100   | 
|                               |                      |   |          

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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                                   
|-- | --------------------------------------------------
|4. | Securities Available for Sale and Held to Maturity



|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |         |         |   |   |           |           | 
|------------------ | -------------------------------------------------------------------------------------------- | ----------------------------------- | - | --------- | ---------- |  | ----- | ---------- | ------ |  | ------ | ------- | ------- | - | - | --------- | --------- | 
|                   |                                                                                              |                                     |   | Gross     |            |  | Gross |            |        | 
|                   |                                                                                              | Amortized                           |   |           | Unrealized |  |       | Unrealized |        |  | Market |        
|                   |                                                                                              | Cost                                |   |           | Gains      |  |       | Losses     |        |  | Value  |        
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|Available for Sale |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |         |         |   |   |          
|                   | December 31, 2004:                                                                           |                                     |   |           |            |  |       |            |        |  |        |         |         |   |   |           |          
|                   | U.S. Government obligations and obligations of
    U.S. Government agencies and corporations |                                     | $ | 528,973   |            |  | $     | 181        |        |  | $      | (12,722 | )       |   | $ | 516,432   |          
|                   | Tax-exempt bonds and notes                                                                   |                                     |   | 166,901   |            |  |       | 3,045      |        |  |        | (148    | )       |   |   | 169,798   |          
|                   | Other bonds and notes                                                                        |                                     |   | 285,742   |            |  |       | 10,674     |        |  |        | (644    | )       |   |   | 295,772   |          
|                   | Mortgage-backed securities                                                                   |                                     |   | 5,130,478 |            |  |       | 33,081     |        |  |        | (31,641 | )       |   |   | 5,131,918 |          
|                   | Collateralized mortgage obligations                                                          |                                     |   | 599,304   |            |  |       | 1,748      |        |  |        | (3,129  | )       |   |   | 597,923   |          
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total debt securities               |   |           | 6,711,398  |  |       |            | 48,729 |  |        |         | (48,284 | ) |   |           | 6,711,843 | 
|                   | Federal Home Loan Bank stock                                                                 |                                     |   | 116,904   |            |  |       |           |        |  |        |        |         |   |   | 116,904   |          
|                   | Federal Reserve Bank stock                                                                   |                                     |   | 60,338    |            |  |       |           |        |  |        |        |         |   |   | 60,338    |          
|                   | Other equity securities                                                                      |                                     |   | 16,456    |            |  |       | 247        |        |  |        | (23     | )       |   |   | 16,680    |          
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total equity securities             |   |           | 193,698    |  |       |            | 247    |  |        |         | (23     | ) |   |           | 193,922   | 
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total securities available for sale |   | $         | 6,905,096  |  |       | $          | 48,976 |  |        | $       | (48,307 | ) |   | $         | 6,905,765 | 
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   | December 31, 2003:                                                                           |                                     |   |           |            |  |       |            |        |  |        |         |         |   |   |           |          
|                   | U.S. Government obligations and obligations of
    U.S. Government agencies and corporations |                                     | $ | 2,359,347 |            |  | $     | 1,993      |        |  | $      | (41,165 | )       |   | $ | 2,320,175 |          
|                   | Tax-exempt bonds and notes                                                                   |                                     |   | 138,280   |            |  |       | 3,191      |        |  |        | (21     | )       |   |   | 141,450   |          
|                   | Other bonds and notes                                                                        |                                     |   | 365,109   |            |  |       | 16,279     |        |  |        | (886    | )       |   |   | 380,502   |          
|                   | Mortgage-backed securities                                                                   |                                     |   | 3,834,958 |            |  |       | 50,167     |        |  |        | (21,747 | )       |   |   | 3,863,378 |          
|                   | Collateralized mortgage obligations                                                          |                                     |   | 264,545   |            |  |       | 4,138      |        |  |        | (648    | )       |   |   | 268,035   |          
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total debt securities               |   |           | 6,962,239  |  |       |            | 75,768 |  |        |         | (64,467 | ) |   |           | 6,973,540 | 
|                   | Federal Home Loan Bank stock                                                                 |                                     |   | 104,397   |            |  |       |           |        |  |        |        |         |   |   | 104,397   |          
|                   | Federal Reserve Bank stock                                                                   |                                     |   | 37,666    |            |  |       |           |        |  |        |        |         |   |   | 37,666    |          
|                   | Other equity securities                                                                      |                                     |   | 6,868     |            |  |       | 521        |        |  |        |        |         |   |   | 7,389     |          
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total equity securities             |   |           | 148,931    |  |       |            | 521    |  |        |         |        |   |   |           | 149,452   | 
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total securities available for sale |   | $         | 7,111,170  |  |       | $          | 76,289 |  |        | $       | (64,467 | ) |   | $         | 7,122,992 | 
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|Held to Maturity:  |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |         |         |   |   |          
|                   | December 31, 2004:                                                                           |                                     |   |           |            |  |       |            |        |  |        |         |         |   |   |           |          
|                   | Collateralized mortgage obligations                                                          |                                     | $ | 87,013    |            |  | $     | 494        |        |  | $      |        |         |   | $ | 87,507    |          
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total securities held to maturity   |   | $         | 87,013     |  |       | $          | 494    |  |        | $       |        |   |   | $         | 87,507    | 
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   | December 31, 2003:                                                                           |                                     |   |           |            |  |       |            |        |  |        |         |         |   |   |           |          
|                   | Collateralized mortgage obligations                                                          |                                     | $ | 124,240   |            |  | $     | 104        |        |  | $      |        |         |   | $ | 124,344   |          
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        
|                   |                                                                                              | Total securities held to maturity   |   | $         | 124,240    |  |       | $          | 104    |  |        | $       |        |   |   | $         | 124,344   | 
|                   |                                                                                              |                                     |   |           |            |  |       |            |        |  |        |        

71



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


4.     Securities Available for Sale
and Held to Maturity  (Continued)






|                                                                                             |  |                  |     |  |                  |   |           |            |  |   |             |   |  |       |    |  |            |   |           |             |  |   |         |   |  |            |     |  |  |   |           |  |  |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---------------- | --- |  | ---------------- | - | --------- | ---------- |  | - | ----------- | - |  | ----- | -- |  | ---------- | - | --------- | ----------- |  | - | ------- | - |  | ---------- | --- |  |  | - | --------- |  |  | - | ------- | -
|                                                                                             |  | Less than 1 year |     |  | More than 1 year |   |           | Total      | 
|                                                                                             |  |                  |     |  |                  |   |           |            | 
|                                                                                             |  | Number of        |     |  | Fair             |   |           | Unrealized |  |   | Number of   |   |  | Fair  |    |  | Unrealized |   |           | Number of   |  |   | Fair    |   |  | Unrealized |    
|Available for Sale:                                                                          |  | Investments      |     |  | Value            |   |           | Losses     |  |   | Investments |   |  | Value |    |  | Losses     |   |           | Investments |  |   | Value   |   |  | Losses     |    
|                                                                                             |  |                  |     |  |                  |   |           |            |  |   |             |   |  |       |    |  |            |   |           |             |  |   |         |   |  |            |    
|U.S. Government obligations and obligations of
    U.S. Government agencies and corporations |  |                  | 6   |  |                  | $ | 140,522   |            |  | $ | (1,108      | ) |  |       | 5  |  |            | $ | 345,432   |             |  | $ | (11,614 | ) |  |            | 11  |  |  | $ | 485,954   |  |  | $ | (12,722 | )
|Tax-exempt bonds and notes                                                                   |  |                  | 54  |  |                  |   | 83,367    |            |  |   | (148        | ) |  |       |   |  |            |   |          |             |  |   |        |   |  |            | 54  |  |  |   | 83,367    |  |  |   | (148    | )
|Other bonds and notes                                                                        |  |                  | 10  |  |                  |   | 20,990    |            |  |   | (616        | ) |  |       | 2  |  |            |   | 4,434     |             |  |   | (28     | ) |  |            | 12  |  |  |   | 25,424    |  |  |   | (644    | )
|Mortgage-backed securities                                                                   |  |                  | 99  |  |                  |   | 2,125,235 |            |  |   | (16,495     | ) |  |       | 41 |  |            |   | 947,126   |             |  |   | (15,146 | ) |  |            | 140 |  |  |   | 3,072,361 |  |  |   | (31,641 | )
|Collateralized mortgage obligations                                                          |  |                  | 18  |  |                  |   | 377,830   |            |  |   | (3,128      | ) |  |       | 2  |  |            |   | 540       |             |  |   | (1      | ) |  |            | 20  |  |  |   | 378,370   |  |  |   | (3,129  | )
|Equity securities                                                                            |  |                  | 1   |  |                  |   | 5         |            |  |   | (10         | ) |  |       | 1  |  |            |   | 95        |             |  |   | (13     | ) |  |            | 2   |  |  |   | 100       |  |  |   | (23     | )
|                                                                                             |  |                  |     |  |                  |   |           |            |  |   |             |   |  |       |    |  |            |   |           |             |  |   |         |   |  |            |    
|                                                                                             |  |                  | 188 |  |                  | $ | 2,747,949 |            |  | $ | (21,505     | ) |  |       | 51 |  |            | $ | 1,297,627 |             |  | $ | (26,802 | ) |  |            | 239 |  |  | $ | 4,045,576 |  |  | $ | (48,307 | )
|                                                                                             |  |                  |     |  |                  |   |           |            |  |   |             |   |  |       |    |  |            |   |           |             |  |   |         |   |  |            |    





|                                       |                       |                    |           |           |                  |   |           |                |  |   |              |        |  |   |        |        | 
|-------------------------------------- | --------------------- | ------------------ | --------- | --------- | ---------------- | - | --------- | -------------- |  | - | ------------ | ------ |  | - | ------ | ------ | 
|                                       |                       | Available for Sale |           |           | Held to Maturity |  
|                                       |                       |                    |           |           |                  |  
|                                       |                       | Amortized Cost     |           |           | Market Value     |   |           | Amortized Cost |  |   | Market Value |       
|                                       |                       |                    |           |           |                  |   |           |                |  |   |              |       
|December 31, 2004:                     |                       |                    |           |           |                  |   |           |                |  |   |              |        |  |   |        |       
|Due in one year or less                |                       | $                  | 153,426   |           |                  | $ | 153,931   |                |  | $ | 118          |        |  | $ | 119    |       
|Due after one year through five years  |                       |                    | 556,879   |           |                  |   | 547,852   |                |  |   | 5,315        |        |  |   | 5,345  |       
|Due after five years through ten years |                       |                    | 390,249   |           |                  |   | 400,335   |                |  |   | 26,703       |        |  |   | 26,854 |       
|Due after ten years                    |                       |                    | 5,610,844 |           |                  |   | 5,609,725 |                |  |   | 54,877       |        |  |   | 55,189 |       
|                                       |                       |                    |           |           |                  |   |           |                |  |   |              |       
|                                       | Total debt securities |                    | $         | 6,711,398 |                  |   | $         | 6,711,843      |  |   | $            | 87,013 |  |   | $      | 87,507 | 
|                                       |                       |                    |           |           |                  |   |           |                |  |   |              |       

72



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




4.     Securities Available for Sale
and Held to Maturity  (Continued)




|     |  |          |        |  |        |   |        |     |  |   |        |  
|---- |  | -------- | ------ |  | ------ | - | ------ | --- |  | - | ------ | -
|     |  | Realized |       
|     |  |          |       
|     |  | Gains    |        |  | Losses |   |        | Net | 
|     |  |          |        |  |        |   |        |     | 
|2004 |  | $        | 10,230 |  |        | $ | 17,931 |     |  | $ | (7,701 | )
|2003 |  |          | 44,744 |  |        |   | 2,284  |     |  |   | 42,460 |  
|2002 |  |          | 9,823  |  |        |   | 2,541  |     |  |   | 7,282  |  



|   |                 
|-- | ----------------
|5. | Loans and Leases



|                                     |                                |              |           |            |      |  |           |            | 
|------------------------------------ | ------------------------------ | ------------ | --------- | ---------- | ---- |  | --------- | ---------- | 
|                                     |                                | December 31, |          
|                                     |                                |              |          
|                                     |                                | 2004         |           |            | 2003 | 
|                                     |                                |              |           |            |      | 
|Residential real estate loans        |                                |              |           |            |      |  |           |           
|                                     | Permanent first mortgage loans |              | $         | 3,024,799  |      |  | $         | 2,681,925  | 
|                                     | Construction and development   |              |           | 56,418     |      |  |           | 28,558     | 
|                                     |                                |              |           |            |      | 
|                                     |                                |              | 3,081,217 |            |      |  | 2,710,483 |           
|Commercial real estate loans:        |                                |              |           |            |      |  |           |           
|                                     | Permanent first mortgage loans |              |           | 5,297,812  |      |  |           | 4,696,428  | 
|                                     | Construction and development   |              |           | 951,701    |      |  |           | 832,434    | 
|                                     |                                |              |           |            |      | 
|                                     |                                |              | 6,249,513 |            |      |  | 5,528,862 |           
|Commercial business loans and leases |                                |              |           |            |      |  |           |           
|                                     | Commercial business loans      |              |           | 3,838,366  |      |  |           | 3,188,504  | 
|                                     | Commercial business leases     |              |           | 90,228     |      |  |           | 98,590     | 
|                                     |                                |              |           |            |      | 
|                                     |                                |              | 3,928,594 |            |      |  | 3,287,094 |           
|Consumer loans and leases            |                                |              |           |            |      |  |           |           
|                                     | Consumer loans                 |              |           | 5,333,448  |      |  |           | 4,816,217  | 
|                                     | Consumer leases                |              |           | 222        |      |  |           | 3,306      | 
|                                     |                                |              |           |            |      | 
|                                     |                                |              | 5,333,670 |            |      |  | 4,819,523 |           
|                                     |                                |              |           |            |      | 
|                                     | Total loans and leases         |              | $         | 18,592,994 |      |  | $         | 16,345,962 | 
|                                     |                                |              |           |            |      | 



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




5.     Loans and Leases 
(Continued)


Nonperforming Loans




|                                                 |                                      |              |        |        |      |   |        |        | 
|------------------------------------------------ | ------------------------------------ | ------------ | ------ | ------ | ---- | - | ------ | ------ | 
|                                                 |                                      | December 31, |       
|                                                 |                                      |              |       
|                                                 |                                      | 2004         |        |        | 2003 |  
|                                                 |                                      |              |        |        |      |  
|Nonaccrual loans                                 |                                      |              |        |        |      |   |        |       
|                                                 | Residential real estate mortgages    |              | $      | 7,846  |      |   | $      | 7,157  | 
|                                                 | Commercial real estate loans         |              |        | 29,948 |      |   |        | 19,700 | 
|                                                 | Commercial business loans and leases |              |        | 32,421 |      |   |        | 24,412 | 
|                                                 | Consumer loans and leases            |              |        | 7,344  |      |   |        | 8,493  | 
|                                                 |                                      |              |        |        |      |  
|Total nonperforming loans                        |                                      | $            | 77,559 |        |      | $ | 59,762 |       
|                                                 |                                      |              |        |        |      |  
|Accruing loans which are 90 days or more overdue |                                      | $            | 5,254  |        |      | $ | 4,915  |       
|                                                 |                                      |              |        |        |      |  





|                                                                                 |                                 |                                       |        |        |           |   |        |            |  |   |           |        |  |   |       |       | 
|-------------------------------------------------------------------------------- | ------------------------------- | ------------------------------------- | ------ | ------ | --------- | - | ------ | ---------- |  | - | --------- | ------ |  | - | ----- | ----- | 
|                                                                                 |                                 | At or For the Year Ended December 31, |       
|                                                                                 |                                 |                                       |       
|                                                                                 |                                 | 2004                                  |        |        | 2003      |  
|                                                                                 |                                 |                                       |        |        |           |  
|                                                                                 |                                 | Recorded                              |        |        | Valuation |   |        | Recorded   |  |   | Valuation |       
|                                                                                 |                                 | Investment                            |        |        | Allowance |   |        | Investment |  |   | Allowance |       
|                                                                                 |                                 |                                       |        |        |           |   |        |            |  |   |           |       
|Impaired loans                                                                   |                                 |                                       |        |        |           |   |        |            |  |   |           |        |  |   |       |      
|                                                                                 | Valuation allowance required    |                                       | $      | 51,620 |           |   | $      | 13,805     |  |   | $         | 28,781 |  |   | $     | 4,662 | 
|                                                                                 | No valuation allowance required |                                       |        | 10,749 |           |   |        |           |  |   |           | 15,331 |  |   |       |      | 
|                                                                                 |                                 |                                       |        |        |           |   |        |            |  |   |           |       
|Total impaired loans                                                             |                                 | $                                     | 62,369 |        |           | $ | 13,805 |            |  | $ | 44,112    |        |  | $ | 4,662 |      
|                                                                                 |                                 |                                       |        |        |           |   |        |            |  |   |           |       
|Average balance of impaired loans during the year                                |                                 | $                                     | 53,580 |        |           |   |        |            |  | $ | 48,917    |        |  |   |       |      
|                                                                                 |                                 |                                       |        |        |           |   |        |            |  |   |           |       
|Interest income recognized on a cash basis on impaired loans
    during the year |                                 | $                                     | 2,501  |        |           |   |        |            |  | $ | 1,675     |        |  |   |       |      
|                                                                                 |                                 |                                       |        |        |           |   |        |            |  |   |           |       

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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                    
|-- | -----------------------------------
|6. | Allowance for Loan and Lease Losses



|                                                |  |                         |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                |  | Year Ended December 31, |        
|                                                |  |                         |        
|                                                |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|                                                |  |                         |         |   |      |   |         |      | 
|Balance at beginning of period                  |  | $                       | 232,287 |   |      | $ | 208,273 |      |  | $ | 189,837 |  
|Allowance related to business combinations      |  |                         | 13,665  |   |      |   | 19,008  |      |  |   | 12,794  |  
|Provisions charged to income                    |  |                         | 40,340  |   |      |   | 42,301  |      |  |   | 44,314  |  
|Transfer for off-balance sheet loan commitments |  |                         | (6,600  | ) |      |   |        |      |  |   |        |  
|Charge-offs                                     |  |                         | (50,687 | ) |      |   | (49,609 | )    |  |   | (52,002 | )
|Recoveries                                      |  |                         | 14,147  |   |      |   | 12,314  |      |  |   | 13,330  |  
|                                                |  |                         |         |   |      |   |         |      | 
|Balance at end of period                        |  | $                       | 243,152 |   |      | $ | 232,287 |      |  | $ | 208,273 |  
|                                                |  |                         |         |   |      |   |         |      | 





|   |                       
|-- | ----------------------
|7. | Premises and Equipment



|                                           |  |              |          |   |      |   |          |  
|------------------------------------------ |  | ------------ | -------- | - | ---- | - | -------- | -
|                                           |  | December 31, |         
|                                           |  |              |         
|                                           |  | 2004         |          |   | 2003 |  
|                                           |  |              |          |   |      |  
|Land                                       |  | $            | 34,143   |   |      | $ | 27,558   |  
|Buildings and leasehold improvements       |  |              | 299,712  |   |      |   | 268,444  |  
|Capital leases on buildings                |  |              | 24,275   |   |      |   | 23,475   |  
|Furniture, fixtures and equipment          |  |              | 316,833  |   |      |   | 274,480  |  
|                                           |  |              |          |   |      |  
|                                           |  |              | 674,963  |   |      |   | 593,957  |  
|Accumulated depreciation and amortization  |  |              | (371,030 | ) |      |   | (326,922 | )
|Accumulated amortization on capital leases |  |              | (3,813   | ) |      |   | (2,217   | )
|                                           |  |              |          |   |      |  
|Net book value                             |  | $            | 300,120  |   |      | $ | 264,818  |  
|                                           |  |              |          |   |      |  



|                                                    |  |              |         |   |      |   |         |  
|--------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                    |  | December 31, |        
|                                                    |  |              |        
|                                                    |  | 2004         |         |   | 2003 |  
|                                                    |  |              |         |   |      |  
|Internally developed software in use  cost         |  | $            | 41,129  |   |      | $ | 32,367  |  
|Internally developed software in use  amortization |  |              | (25,386 | ) |      |   | (15,420 | )
|Internally developed software in development        |  |              | 11,933  |   |      |   | 4,350   |  
|                                                    |  |              |         |   |      |  
|                                                    |  | $            | 27,676  |   |      | $ | 21,297  |  
|                                                    |  |              |         |   |      |  



75



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                     
|-- | ------------------------------------
|8. | Goodwill and Other Intangible Assets



|                                                  |            |          |           |              |             |       |              |             |       |              |             |       |  |   |        |        | 
|------------------------------------------------- | ---------- | -------- | --------- | ------------ | ----------- | ----- | ------------ | ----------- | ----- | ------------ | ----------- | ----- |  | - | ------ | ------ | 
|                                                  |            |          |           |              |             | Other |              |             | Total |             
|                                                  |            |          |           | Core Deposit |             |       | Identifiable |             |       | Identifiable |            
|                                                  |            | Goodwill |           |              | Intangibles |       |              | Intangibles |       |              | Intangibles |      
|                                                  |            |          |           |              |             |       |              |             |       |              |             |      
|Balance, December 31, 2002                        |            | $        | 660,684   |              |             | $     | 28,438       |             |       | $            | 6,036       |       |  | $ | 34,474 |       
|Recorded during the year                          |            |          | 462,531   |              |             |       | 6,807        |             |       |              | 6,861       |       |  |   | 13,668 |       
|Adjust Warrens estimated CDI to actual           |            |          | 2,244     |              |             |       | (2,244       | )           |       |              |            |       |  |   | (2,244 | )     
|Amortization expense                              |            |          |          |              |             |       | (4,574       | )           |       |              | (4,372      | )     |  |   | (8,946 | )     
|Massachusetts REIT adjustment                     |            |          | 2,473     |              |             |       |             |             |       |              |            |       |  |   |       |       
|Other adjustment of purchase accounting estimates |            |          | (1,293    | )            |             |       | (262         | )           |       |              | (275        | )     |  |   | (537   | )     
|                                                  |            |          |           |              |             |       |              |             |       |              |             |      
|Balance, December 31, 2003                        |            |          | 1,126,639 |              |             |       | 28,165       |             |       |              | 8,250       |       |  |   | 36,415 |       
|Recorded during the year                          |            |          | 245,930   |              |             |       | 21,566       |             |       |              | 1,042       |       |  |   | 22,608 |       
|Amortization expense                              |            |          |          |              |             |       | (5,988       | )           |       |              | (2,639      | )     |  |   | (8,627 | )     
|Reclassification                                  |            |          |          |              |             |       |             |             |       |              |            |       |  |   |       |       
|Other adjustment of purchase accounting estimates |            |          | (6,789    | )            |             |       | (20          | )           |       |              |            |       |  |   | (20    | )     
|                                                  |            |          |           |              |             |       |              |             |       |              |             |      
|Balance, December 31, 2004                        |            | $        | 1,365,780 |              |             | $     | 43,723       |             |       | $            | 6,653       |       |  | $ | 50,376 |       
|                                                  |            |          |           |              |             |       |              |             |       |              |             |      
|Estimated Annual Amortization Expense:            |            |          |           |              |             |       |              |             |       |              |             |       |  |   |        |       
|                                                  | 2005       |          |           |             |             |       | $            | 6,350       |       |              | $           | 1,492 |  |   | $      | 7,842  | 
|                                                  | 2006       |          |           |             |             |       |              | 5,679       |       |              |             | 745   |  |   |        | 6,424  | 
|                                                  | 2007       |          |           |             |             |       |              | 5,194       |       |              |             | 745   |  |   |        | 5,939  | 
|                                                  | 2008       |          |           |             |             |       |              | 5,190       |       |              |             | 375   |  |   |        | 5,565  | 
|                                                  | 2009       |          |           |             |             |       |              | 5,190       |       |              |             | 375   |  |   |        | 5,565  | 
|                                                  | Thereafter |          |           |             |             |       |              | 16,120      |       |              |             | 484   |  |   |        | 16,604 | 



|                                |       |                   |        |        |              |   |        |              |  |   |        |        | 
|------------------------------- | ----- | ----------------- | ------ | ------ | ------------ | - | ------ | ------------ |  | - | ------ | ------ | 
|                                |       | December 31, 2004 |       
|                                |       |                   |       
|                                |       | Gross Carrying    |        |        | Accumulated  |   |        | Net Carrying | 
|                                |       | Amount            |        |        | Amortization |   |        | Amount       | 
|                                |       |                   |        |        |              |   |        |              | 
|Identifiable intangible assets: |       |                   |        |        |              |   |        |              |  |   |        |       
|Core deposit intangibles        |       | $                 | 57,858 |        |              | $ | 14,135 |              |  | $ | 43,723 |       
|Other identifiable intangibles  |       |                   | 14,746 |        |              |   | 8,093  |              |  |   | 6,653  |       
|                                |       |                   |        |        |              |   |        |              | 
|                                | Total |                   | $      | 72,604 |              |   | $      | 22,228       |  |   | $      | 50,376 | 
|                                |       |                   |        |        |              |   |        |              | 



76



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |             
|-- | ------------
|9. | Income Taxes



|         |         |                         |         |         |      |   |         |         |  |   |         |         | 
|-------- | ------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|         |         | Year Ended December 31, |        
|         |         |                         |        
|         |         | 2004                    |         |         | 2003 |   |         | 2002    | 
|         |         |                         |         |         |      |   |         |         | 
|Current  |         |                         |         |         |      |   |         |         |  |   |         |        
|         | Federal |                         | $       | 131,542 |      |   | $       | 138,722 |  |   | $       | 128,523 | 
|         | State   |                         |         | 15,057  |      |   |         | 8,865   |  |   |         | 7,636   | 
|Deferred |         |                         |         |         |      |   |         |         |  |   |         |        
|         | Federal |                         |         | 16,393  |      |   |         | 25,138  |  |   |         | 12,419  | 
|         | State   |                         |         | 105     |      |   |         | 935     |  |   |         | 103     | 
|         |         |                         |         |         |      |   |         |         | 
|         |         | $                       | 163,097 |         |      | $ | 173,660 |         |  | $ | 148,681 |        
|         |         |                         |         |         |      |   |         |         | 



|                                                   |  |                         |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                   |  | Year Ended December 31, |        
|                                                   |  |                         |        
|                                                   |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|                                                   |  |                         |         |   |      |   |         |      | 
|Computed federal tax expense                       |  | $                       | 163,709 |   |      | $ | 183,547 |      |  | $ | 156,561 |  
|State income tax, net of federal benefits          |  |                         | 9,855   |   |      |   | 6,370   |      |  |   | 5,030   |  
|Benefit of tax-exempt income                       |  |                         | (5,046  | ) |      |   | (3,412  | )    |  |   | (3,494  | )
|Low income/rehabilitation credits                  |  |                         | (4,270  | ) |      |   | (2,700  | )    |  |   | (1,540  | )
|Increase in cash surrender value of life insurance |  |                         | (8,149  | ) |      |   | (8,026  | )    |  |   | (7,000  | )
|Nondeductible compensation                         |  |                         | 6,931   |   |      |   |        |      |  |   |        |  
|Other, net                                         |  |                         | 67      |   |      |   | (2,119  | )    |  |   | (876    | )
|                                                   |  |                         |         |   |      |   |         |      | 
|Recorded income tax expense                        |  | $                       | 163,097 |   |      | $ | 173,660 |      |  | $ | 148,681 |  
|                                                   |  |                         |         |   |      |   |         |      | 

77



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                           
|-- | --------------------------
|9. | Income Taxes  (Continued)



|                         |                                                   |                                      |       |        |         |   |        |        |         | 
|------------------------ | ------------------------------------------------- | ------------------------------------ | ----- | ------ | ------- | - | ------ | ------ | ------- | 
|                         |                                                   | December 31,                         |      
|                         |                                                   |                                      |      
|                         |                                                   | 2004                                 |       |        | 2003    |  
|                         |                                                   |                                      |       |        |         |  
|Deferred tax assets      |                                                   |                                      |       |        |         |   |        |       
|                         | Allowance for loan and lease losses               |                                      | $     | 86,505 |         |   | $      | 83,061 |        
|                         | Compensation and employee benefits                |                                      |       | 20,268 |         |   |        | 18,597 |        
|                         | Loans distributed from subsidiary                 |                                      |       | 6,616  |         |   |        | 13,017 |        
|                         | Book reserves not yet realized for tax purposes   |                                      |       | 405    |         |   |        | 1,304  |        
|                         | Intangible assets                                 |                                      |       | 5,696  |         |   |        | 2,435  |        
|                         | Other                                             |                                      |       | 2,023  |         |   |        | 1,643  |        
|                         |                                                   |                                      |       |        |         |  
|                         |                                                   | Total gross deferred tax assets      |       |        | 121,513 |   |        |        | 120,057 | 
|                         |                                                   |                                      |       |        |         |  
|Deferred tax liabilities |                                                   |                                      |       |        |         |   |        |       
|                         | Pension plan                                      |                                      |       | 35,194 |         |   |        | 31,035 |        
|                         | Leases                                            |                                      |       | 7,488  |         |   |        | 7,820  |        
|                         | Premises and equipment                            |                                      |       | 24,930 |         |   |        | 26,563 |        
|                         | Partnership investments                           |                                      |       | 12,090 |         |   |        | 8,630  |        
|                         | Loan basis difference                             |                                      |       | 11,439 |         |   |        | 12,819 |        
|                         | Purchase accounting                               |                                      |       | 21,870 |         |   |        | 12,927 |        
|                         | Unrealized appreciation on securities and hedging |                                      |       | 105    |         |   |        | 3,920  |        
|                         | Other                                             |                                      |       | 760    |         |   |        | 1,148  |        
|                         |                                                   |                                      |       |        |         |  
|                         |                                                   | Total gross deferred tax liabilities |       |        | 113,876 |   |        |        | 104,862 | 
|                         |                                                   |                                      |       |        |         |  
|Net deferred tax asset   |                                                   | $                                    | 7,637 |        |         | $ | 15,195 |       
|                         |                                                   |                                      |       |        |         |  





| |                     
| | --------------------
| | State Tax Assessment



78



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                               
|--- | ------------------------------
|10. | Merger and Consolidation Costs



|                                                                              |  |                         |        |   |      |   |       |      |  |   |        |  
|----------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                                                              |  | Year-Ended December 31, |       
|                                                                              |  |                         |       
|                                                                              |  | 2004                    |        |   | 2003 |   |       | 2002 | 
|                                                                              |  |                         |        |   |      |   |       |      | 
|The Toronto-Dominion Bank Merger Charges                                      |  |                         |        |   |      |   |       |      |  |   |        |  
|Personnel costs                                                               |  | $                       | 34,986 |   |      | $ |      |      |  | $ |       |  
|Other costs                                                                   |  |                         | 3,890  |   |      |   |      |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|                                                                              |  |                         | 38,876 |   |      |   |      |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|Foxborough Savings Bank Merger Charges                                        |  |                         |        |   |      |   |       |      |  |   |        |  
|Personnel costs                                                               |  |                         | 611    |   |      |   |      |      |  |   |       |  
|Systems conversion and integration/customer communications                    |  |                         | 1,274  |   |      |   | 1     |      |  |   |       |  
|Other costs                                                                   |  |                         | 348    |   |      |   |      |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|                                                                              |  |                         | 2,233  |   |      |   | 1     |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|CCBT Financial Companies, Inc. Merger Charges                                 |  |                         |        |   |      |   |       |      |  |   |        |  
|Personnel costs                                                               |  |                         | 1,795  |   |      |   |      |      |  |   |       |  
|Systems conversion and integration/customer communications                    |  |                         | 2,720  |   |      |   |      |      |  |   |       |  
|Other costs                                                                   |  |                         | 1,324  |   |      |   |      |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|                                                                              |  |                         | 5,839  |   |      |   |      |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|BostonFed Bancorp, Inc. Merger Charges                                        |  |                         |        |   |      |   |       |      |  |   |        |  
|Personnel costs                                                               |  |                         | 26     |   |      |   |       |      |  |   |        |  
|Systems conversion and integration/customer communications                    |  |                         | 1,297  |   |      |   |      |      |  |   |       |  
|Other costs                                                                   |  |                         | 114    |   |      |   |      |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|                                                                              |  |                         | 1,437  |   |      |   |      |      |  |   |       |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|Other                                                                         |  |                         |        |   |      |   |       |      |  |   |        |  
|American Financial Holdings, Inc. merger charges                              |  |                         | 400    |   |      |   | 5,358 |      |  |   | 855    |  
|First & Ocean Bancorp merger charges                                          |  |                         | 1,342  |   |      |   | 458   |      |  |   |       |  
|Warren Bancorp, Inc. merger charges                                           |  |                         | 29     |   |      |   | 2,424 |      |  |   | 240    |  
|Bancorp Connecticut merger charges                                            |  |                         | 49     |   |      |   | 363   |      |  |   | 2,746  |  
|Ipswich Bancshares merger charges                                             |  |                         |       |   |      |   | 143   |      |  |   | 1,900  |  
|Andover Bancorp, Inc./MetroWest Bank merger charges                           |  |                         |       |   |      |   | 12    |      |  |   | 5,830  |  
|Banknorth Group, Inc. (Vermont) reverse reserves for auto lease
    residuals |  |                         | (570   | ) |      |   | (615  | )    |  |   | (574   | )
|Charter consolidation costs                                                   |  |                         |       |   |      |   |      |      |  |   | 3,601  |  
|Branch Closings                                                               |  |                         |       |   |      |   | (40   | )    |  |   | 93     |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|                                                                              |  |                         | 1,250  |   |      |   | 8,103 |      |  |   | 14,691 |  
|                                                                              |  |                         |        |   |      |   |       |      | 
|Total Merger and Consolidation Costs                                          |  | $                       | 49,635 |   |      | $ | 8,104 |      |  | $ | 14,691 |  
|                                                                              |  |                         |        |   |      |   |       |      | 



79



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                             
|--- | --------------------------------------------
|10. | Merger and Consolidation Costs  (Continued)





|                                  |  |            |     | 
|--------------------------------- |  | ---------- | --- | 
|                                  |  | Number of  |    
|                                  |  | Terminated |    
|Acquisition                       |  | Employees  |    
|                                  |  |            |    
|CCBT Financial Companies, Inc.    |  |            | 155 | 
|Foxborough Savings Bank           |  |            | 25  | 
|First & Ocean Bancorp             |  |            | 60  | 
|American Financial Holdings, Inc. |  |            | 330 | 
|Warren Bancorp, Inc.              |  |            | 85  | 
|Bancorp Connecticut, Inc.         |  |            | 90  | 
|Ipswich Bancshares, Inc.          |  |            | 60  | 







80



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                             
|--- | --------------------------------------------
|10. | Merger and Consolidation Costs  (Continued)



|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |   |      |   |  |   |       | 
|---------------------------------------- |  | -------- | ----- | ---------- | -------------- | - | ---------- | ------------- |  | - | -------- | ----------- |  | ----------- | ------- | - | -------- | - | ---- | - |  | - | ----- | 
|                                         |  |          |       | Purchase   |                |   |            |               |  |   | Non-cash |             |  |            
|                                         |  |          |       | Accounting |                |   | Merger and |               |  |   |          | Write Downs |  |             |        
|                                         |  | Balance  |       |            | Adjustments at |   |            | Consolidation |  |   | Cash     |             |  | and Other   |         |   | Balance  |  
|                                         |  | 12/31/03 |       |            | Acquisition    |   |            | Costs         |  |   | Payments |             |  | Adjustments |         |   | 12/31/04 |  
|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |  
|The Toronto-Dominion Bank Merger         |  | $        |      |            |                | $ | 623        |               |  | $ | 38,879   |             |  | $           | (39,070 | ) |          | $ |     |   |  | $ | 432   | 
|BostonFed Bancorp, Inc. Merger           |  |          |      |            |                |   |           |               |  |   | 1,436    |             |  |             | (1,436  | ) |          |   |     |   |  |   |      | 
|Foxborough Savings Bank Merger           |  |          |      |            |                |   | 1,196      |               |  |   | 2,232    |             |  |             | (2,880  | ) |          |   | (87  | ) |  |   | 461   | 
|CCBT Financial Companies, Inc. Merger    |  |          |      |            |                |   | 10,407     |               |  |   | 5,837    |             |  |             | (13,908 | ) |          |   | (370 | ) |  |   | 1,966 | 
|First & Ocean Bancorp Merger             |  |          | 250   |            |                |   | 1,715      |               |  |   | 1,342    |             |  |             | (3,101  | ) |          |   |     |   |  |   | 206   | 
|American Financial Holdings, Inc. Merger |  |          | 266   |            |                |   |           |               |  |   | 400      |             |  |             | (400    | ) |          |   | (266 | ) |  |   |      | 
|Warren Bancorp, Inc. Merger              |  |          | 27    |            |                |   |           |               |  |   | 29       |             |  |             | (29     | ) |          |   | (27  | ) |  |   |      | 
|Bancorp Connecticut, Inc. Merger         |  |          | 466   |            |                |   |           |               |  |   | 50       |             |  |             | (516    | ) |          |   |     |   |  |   |      | 
|Andover/ MetroWest Merger                |  |          | 84    |            |                |   |           |               |  |   |         |             |  |             | (6      | ) |          |   |     |   |  |   | 78    | 
|Other merger and consolidation costs     |  |          | 4     |            |                |   |           |               |  |   | (570     | )           |  |             | (2      | ) |          |   | 568  |   |  |   |      | 
|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |  
|Total                                    |  | $        | 1,097 |            |                | $ | 13,941     |               |  | $ | 49,635   |             |  | $           | (61,348 | ) |          | $ | (182 | ) |  | $ | 3,143 | 
|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |  

|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |   |        |   |  |   |       | 
|---------------------------------------- |  | -------- | ----- | ---------- | -------------- | - | ---------- | ------------- |  | - | -------- | ----------- |  | ----------- | ------- | - | -------- | - | ------ | - |  | - | ----- | 
|                                         |  |          |       | Purchase   |                |   |            |               |  |   | Non-cash |             |  |            
|                                         |  |          |       | Accounting |                |   | Merger and |               |  |   |          | Write Downs |  |             |        
|                                         |  | Balance  |       |            | Adjustments at |   |            | Consolidation |  |   | Cash     |             |  | and Other   |         |   | Balance  |  
|                                         |  | 12/31/02 |       |            | Acquisition    |   |            | Costs         |  |   | Payments |             |  | Adjustments |         |   | 12/31/03 |  
|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |  
|First & Ocean Bancorp Merger             |  | $        |      |            |                | $ | 585        |               |  | $ | 458      |             |  | $           | (793    | ) |          | $ |       |   |  | $ | 250   | 
|American Financial Holdings, Inc. Merger |  |          |      |            |                |   | 13,600     |               |  |   | 5,358    |             |  |             | (17,257 | ) |          |   | (1,435 | ) |  |   | 266   | 
|Warren Bancorp, Inc. Merger              |  |          | 2,052 |            |                |   |           |               |  |   | 2,424    |             |  |             | (4,670  | ) |          |   | 221    |   |  |   | 27    | 
|Bancorp Connecticut, Inc. Merger         |  |          | 3,097 |            |                |   |           |               |  |   | 363      |             |  |             | (1,196  | ) |          |   | (1,798 | ) |  |   | 466   | 
|Ipswich Bancshares, Inc. Merger          |  |          |      |            |                |   |           |               |  |   | 143      |             |  |             | (143    | ) |          |   |       |   |  |   |      | 
|Andover/ MetroWest Merger                |  |          | 321   |            |                |   |           |               |  |   | 12       |             |  |             | (60     | ) |          |   | (189   | ) |  |   | 84    | 
|Other Merger and Consolidation Costs     |  |          | 84    |            |                |   |           |               |  |   | (654     | )           |  |             | (37     | ) |          |   | 611    |   |  |   | 4     | 
|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |  
|Total                                    |  | $        | 5,554 |            |                | $ | 14,185     |               |  | $ | 8,104    |             |  | $           | (24,156 | ) |          | $ | (2,590 | ) |  | $ | 1,097 | 
|                                         |  |          |       |            |                |   |            |               |  |   |          |             |  |             |         |   |          |  

81



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                      
|--- | ---------------------
|11. | Short-term Borrowings



|                          |                                                                |                             |   |           |           |  |  |        |   |  |      |           |           |        |  |      |      |  |   |           |           |  |  |      |   | 
|------------------------- | -------------------------------------------------------------- | --------------------------- | - | --------- | --------- |  |  | ------ | - |  | ---- | --------- | --------- | ------ |  | ---- | ---- |  | - | --------- | --------- |  |  | ---- | - | 
|                          |                                                                | December 31,                |  
|                          |                                                                |                             |  
|                          |                                                                | 2004                        |   |           | 2003      |  |  | 2002   |  
|                          |                                                                |                             |   |           |           |  |  |        |  
|                          |                                                                | Amount                      |   |           | Rate      |  |  | Amount |   |  | Rate |           |           | Amount |  |      | Rate | 
|                          |                                                                |                             |   |           |           |  |  |        |   |  |      |           |           |        |  |      |      | 
|At year-end               |                                                                |                             |   |           |           |  |  |        |   |  |      |           |           |        |  |      |      |  |   |           |           |  |  |     
|                          | Securities sold under agreements to repurchase  retail        |                             | $ | 1,234,476 |           |  |  | 1.29   | % |  | $    | 1,086,900 |           |        |  | 0.59 | %    |  | $ | 1,222,466 |           |  |  | 1.22 | %
|                          | Securities sold under agreements to repurchase 
    wholesale |                             |   |          |           |  |  |       |   |  |      | 814,650   |           |        |  | 0.52 | %    |  |   |          |           |  |  |     |  
|                          | Federal funds purchased                                        |                             |   | 618,000   |           |  |  | 2.22   | % |  |      | 358,000   |           |        |  | 0.94 | %    |  |   | 53,000    |           |  |  | 1.16 | %
|                          | Treasury, tax and loan notes                                   |                             |   | 375,347   |           |  |  | 2.16   | % |  |      | 77,397    |           |        |  | 0.69 | %    |  |   | 1,001     |           |  |  | 0.91 | %
|                          | Federal Home Loan Bank Advances                                |                             |   | 1,570,000 |           |  |  | 2.25   | % |  |      |          |           |        |  |     |      |  |   |          |           |  |  |     |  
|                          |                                                                |                             |   |           |           |  |  |        |   |  |      |           |           |        |  |      |      | 
|                          |                                                                | Total Short-term borrowings |   | $         | 3,797,823 |  |  |        |   |  |      | $         | 2,336,947 |        |  |      |      |  |   | $         | 1,276,467 |  |  |      |   | 
|                          |                                                                |                             |   |           |           |  |  |        |   |  |      |           |           |        |  |      |      | 
|Average for the year      |                                                                |                             |   |           |           |  |  |        |   |  |      |           |           |        |  |      |      |  |   |           |           |  |  |     
|                          | Securities sold under agreements to repurchase  retail        |                             | $ | 1,094,309 |           |  |  | 0.99   | % |  | $    | 1,059,077 |           |        |  | 0.90 | %    |  | $ | 955,887   |           |  |  | 1.40 | %
|                          | Securities sold under agreements to repurchase 
    wholesale |                             |   | 948,711   |           |  |  | 1.07   | % |  |      | 295,618   |           |        |  | 0.60 | %    |  |   |          |           |  |  |     |  
|                          | Federal funds purchased                                        |                             |   | 609,218   |           |  |  | 1.44   | % |  |      | 264,062   |           |        |  | 1.20 | %    |  |   | 95,568    |           |  |  | 1.71 | %
|                          | Treasury, tax and loan notes                                   |                             |   | 143,529   |           |  |  | 1.74   | % |  |      | 10,207    |           |        |  | 1.07 | %    |  |   | 13,036    |           |  |  | 1.61 | %
|                          | Federal Home Loan Bank Advances                                |                             |   | 225,985   |           |  |  | 1.92   | % |  |      |          |           |        |  |     |      |  |   |          |           |  |  |     |  
|Maximum month-end balance |                                                                |                             |   |           |           |  |  |        |   |  |      |           |           |        |  |      |      |  |   |           |           |  |  |     
|                          | Securities sold under agreements to repurchase  retail        |                             | $ | 1,277,965 |           |  |  |        |   |  | $    | 1,167,325 |           |        |  |      |      |  | $ | 1,200,524 |           |  |  |      |  
|                          | Securities sold under agreements to repurchase 
    wholesale |                             |   | 1,764,729 |           |  |  |        |   |  |      | 814,650   |           |        |  |      |      |  |   |          |           |  |  |      |  
|                          | Federal funds purchased                                        |                             |   | 947,000   |           |  |  |        |   |  |      | 655,000   |           |        |  |      |      |  |   | 256,000   |           |  |  |      |  
|                          | Treasury, tax and loan notes                                   |                             |   | 1,196,423 |           |  |  |        |   |  |      | 89,287    |           |        |  |      |      |  |   | 94,354    |           |  |  |      |  
|                          | Federal Home Loan Bank Advances                                |                             |   | 1,570,000 |           |  |  |        |   |  |      |          |           |        |  |      |      |  |   |          |           |  |  |      |  





82



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


12.     Long-term Debt




|                                                               |  |              |           |   |      |   |           |  
|-------------------------------------------------------------- |  | ------------ | --------- | - | ---- | - | --------- | -
|                                                               |  | December 31, |          
|                                                               |  |              |          
|                                                               |  | 2004         |           |   | 2003 |  
|                                                               |  |              |           |   |      |  
|Federal Home Loan Bank advances                                |  | $            | 428,825   |   |      | $ | 1,495,821 |  
|Securities sold under agreements to repurchase 
    wholesale |  |              | 1,100,000 |   |      |   | 1,400,000 |  
|Junior subordinated debentures issued to affiliated trusts     |  |              | 310,746   |   |      |   |          |  
|Capital trust securities                                       |  |              |          |   |      |   | 295,275   |  
|Subordinated long-term debt 7.625%, due 2011                   |  |              | 200,000   |   |      |   | 200,000   |  
|Senior notes 3.75%, due 2008                                   |  |              | 149,810   |   |      |   | 149,753   |  
|Hedge-related basis adjustments on long-term debt              |  |              | (4,420    | ) |      |   | (1,896    | )
|Other long-term debt                                           |  |              | 7,921     |   |      |   | 6,964     |  
|                                                               |  |              |           |   |      |  
|Total                                                          |  | $            | 2,192,882 |   |      | $ | 3,545,917 |  
|                                                               |  |              |           |   |      |  



|                  |             |  |                   |   |           |                |  |          |              |   |           |         |             |  |                |   |           |  |  |  |              |  
|----------------- | ----------- |  | ----------------- | - | --------- | -------------- |  | -------- | ------------ | - | --------- | ------- | ----------- |  | -------------- | - | --------- |  |  |  | ------------ | -
|December 31, 2004 |             |  | December 31, 2003 |  
|                  |             |  |                   |  
|Maturity          |             |  | Principal         |   |           |                |  | Maturity |              |   | Principal |         |             | 
|Dates             |             |  | Amounts           |   |           | Interest Rates |  |          | Dates        |   |           | Amounts |             |  | Interest Rates |  
|                  |             |  |                   |   |           |                |  |          |              |   |           |         |             |  |                |  
|                  | 2005        |  |                   | $ | 723,843   |                |  |          | 3.21  7.45  | % |           |         | 2004        |  |                | $ | 1,879,358 |  |  |  | 0.17  8.09  | %
|                  | 2006        |  |                   |   | 769,726   |                |  |          | 2.77  6.39  | % |           |         | 2005        |  |                |   | 625,744   |  |  |  | 1.72  7.45  | %
|                  | 2007        |  |                   |   | 8,079     |                |  |          | 3.45  8.04  | % |           |         | 2006        |  |                |   | 291,063   |  |  |  | 2.24  6.39  | %
|                  | 2008        |  |                   |   | 149,585   |                |  |          | 3.75  6.42  | % |           |         | 2007        |  |                |   | 9,934     |  |  |  | 2.70  8.04  | %
|                  | 2009        |  |                   |   | 2,515     |                |  |          | 6.97  6.97  | % |           |         | 2008        |  |                |   | 151,253   |  |  |  | 3.07  6.42  | %
|                  | 2010  2032 |  |                   |   | 539,134   |                |  |          | 1.00  10.52 | % |           |         | 2009  2032 |  |                |   | 588,565   |  |  |  | 1.00  10.52 | %
|                  |             |  |                   |   |           |                |  |          |              |   |           |         |             |  |                |  
|                  |             |  |                   | $ | 2,192,882 |                |  |          |              |   |           |         |             |  |                | $ | 3,545,917 |  |  |  |              |  
|                  |             |  |                   |   |           |                |  |          |              |   |           |         |             |  |                |  





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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




12.     Long-term Debt 
(Continued)




|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          |  |        |  |  |  |           | 
|-------------------------------- |  | -------- | --------- |  | ---------- | - | ------- | ---------- |  | - | ------------- |  |  | ------ | ------- |  | -------- |  | ------ |  |  |  | --------- | 
|                                 |  |          |           |  |            |   |         | Junior     |  |   |               |  | 
|                                 |  | Issuance |           |  | Capital    |   |         | Common     |  |   | Subordinated  |  |  | Stated |         |  | Maturity | 
|Name                             |  | Date     |           |  | Securities |   |         | Securities |  |   | Debentures(1) |  |  | Rate   |         |  | Date     | 
|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          | 
|Peoples Heritage Capital Trust I |  |          | 1/31/1997 |  |            | $ | 61,775  |            |  | $ | 3,093         |  |  | $      | 64,868  |  |          |  | 9.06%  |  |  |  | 2/1/2027  | 
|Banknorth Capital Trust I        |  |          | 5/1/1997  |  |            |   | 30,000  |            |  |   | 928           |  |  |        | 30,928  |  |          |  | 10.52% |  |  |  | 5/1/2027  | 
|Ipswich Statutory Trust I        |  |          | 2/22/2001 |  |            |   | 3,500   |            |  |   | 109           |  |  |        | 3,609   |  |          |  | 10.20% |  |  |  | 2/22/2031 | 
|CCBT Statutory Trust I           |  |          | 7/31/2001 |  |            |   | 5,000   |            |  |   | 155           |  |  |        | 5,155   |  |          |  | 5.74%  |  |  |  | 7/31/2031 | 
|Banknorth Capital Trust II       |  |          | 2/22/2002 |  |            |   | 200,000 |            |  |   | 6,186         |  |  |        | 206,186 |  |          |  | 8.00%  |  |  |  | 4/1/2032  | 
|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          | 
|                                 |  |          |           |  |            | $ | 300,275 |            |  | $ | 10,471        |  |  | $      | 310,746 |  |          |  |        |  |  |  |           | 
|                                 |  |          |           |  |            |   |         |            |  |   |               |  |  |        |         |  |          | 






|    |                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts include junior subordinated debentures acquired by
    affiliated trusts from us with the capital contributed by us in
    exchange for the common securities of such trusts. Junior
    subordinated debentures are equal to capital securities plus
    common securities.





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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




12.     Long-term Debt 
(Continued)






|    |                   
|--- | ------------------
|13. | Regulatory Matters







|                        |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |           |  |  |  |       | 
|----------------------- | ------------------------------------------------- | ------ | - | --------- | -------------------- |  |  | ------ |  |  | ----- | --------- |  | ------ |  | ----- | ----- |  | - | --------- |  |  |  | ----- | 
|                        |                                                   | Actual |   |           | Capital Requirements |  |  | Excess | 
|                        |                                                   |        |   |           |                      |  |  |        | 
|                        |                                                   | Amount |   |           | Ratio                |  |  | Amount |  |  | Ratio |           |  | Amount |  |       | Ratio | 
|                        |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       | 
|As of December 31, 2004 |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |           |  |  |  |      
|Banknorth Group, Inc.   |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |           |  |  |  |      
|                        | Total capital (to risk weighted assets)           |        | $ | 2,510,570 |                      |  |  | 12.13% |  |  | $     | 1,655,428 |  |        |  | 8.00% |       |  | $ | 855,142   |  |  |  | 4.13% | 
|                        | Tier 1 capital (to risk weighted assets)          |        |   | 2,060,335 |                      |  |  | 9.96%  |  |  |       | 827,714   |  |        |  | 4.00% |       |  |   | 1,232,621 |  |  |  | 5.96% | 
|                        | Tier 1 leverage capital ratio (to average assets) |        |   | 2,060,335 |                      |  |  | 7.58%  |  |  |       | 1,087,190 |  |        |  | 4.00% |       |  |   | 973,145   |  |  |  | 3.58% | 
|Banknorth NA            |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |           |  |  |  |      
|                        | Total capital (to risk weighted assets)           |        |   | 2,387,678 |                      |  |  | 11.57% |  |  |       | 1,650,894 |  |        |  | 8.00% |       |  |   | 736,784   |  |  |  | 3.57% | 
|                        | Tier 1 capital (to risk weighted assets)          |        |   | 1,941,151 |                      |  |  | 9.41%  |  |  |       | 825,447   |  |        |  | 4.00% |       |  |   | 1,115,704 |  |  |  | 5.41% | 
|                        | Tier 1 leverage capital ratio (to average assets) |        |   | 1,941,151 |                      |  |  | 7.16%  |  |  |       | 1,084,507 |  |        |  | 4.00% |       |  |   | 856,644   |  |  |  | 3.16% | 

85



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




13.     Regulatory
Matters  (Continued)


|                        |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |         |  |  |  |       | 
|----------------------- | ------------------------------------------------- | ------ | - | --------- | -------------------- |  |  | ------ |  |  | ----- | --------- |  | ------ |  | ----- | ----- |  | - | ------- |  |  |  | ----- | 
|                        |                                                   | Actual |   |           | Capital Requirements |  |  | Excess | 
|                        |                                                   |        |   |           |                      |  |  |        | 
|                        |                                                   | Amount |   |           | Ratio                |  |  | Amount |  |  | Ratio |           |  | Amount |  |       | Ratio | 
|                        |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       | 
|As of December 31, 2003 |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |         |  |  |  |      
|Banknorth Group, Inc.   |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |         |  |  |  |      
|                        | Total capital (to risk weighted assets)           |        | $ | 2,088,061 |                      |  |  | 11.29% |  |  | $     | 1,479,352 |  |        |  | 8.00% |       |  | $ | 608,709 |  |  |  | 3.29% | 
|                        | Tier 1 capital (to risk weighted assets)          |        |   | 1,656,848 |                      |  |  | 8.96%  |  |  |       | 739,676   |  |        |  | 4.00% |       |  |   | 917,172 |  |  |  | 4.96% | 
|                        | Tier 1 leverage capital ratio (to average assets) |        |   | 1,656,848 |                      |  |  | 6.65%  |  |  |       | 996,777   |  |        |  | 4.00% |       |  |   | 660,071 |  |  |  | 2.65% | 
|Banknorth NA            |                                                   |        |   |           |                      |  |  |        |  |  |       |           |  |        |  |       |       |  |   |         |  |  |  |      
|                        | Total capital (to risk weighted assets)           |        |   | 1,970,705 |                      |  |  | 10.67% |  |  |       | 1,477,591 |  |        |  | 8.00% |       |  |   | 493,114 |  |  |  | 2.67% | 
|                        | Tier 1 capital (to risk weighted assets)          |        |   | 1,539,814 |                      |  |  | 8.34%  |  |  |       | 738,796   |  |        |  | 4.00% |       |  |   | 801,018 |  |  |  | 4.34% | 
|                        | Tier 1 leverage capital ratio (to average assets) |        |   | 1,539,814 |                      |  |  | 6.18%  |  |  |       | 995,893   |  |        |  | 4.00% |       |  |   | 543,921 |  |  |  | 2.18% | 



|    |                     
|--- | --------------------
|14. | Shareholders Equity





| |                     
| | --------------------
| | Dividend Limitations





| |                        
| | -----------------------
| | Stockholder Rights Plan



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




14.     Shareholders
Equity  (Continued)






|    |                                            
|--- | -------------------------------------------
|15. | Accumulated Other Comprehensive Income, Net



|                                                                       |  |         |          |   |            |   |         |            |  |   |          |  
|---------------------------------------------------------------------- |  | ------- | -------- | - | ---------- | - | ------- | ---------- |  | - | -------- | -
|                                                                       |  | Pre-tax |          |   |            |   |        
|                                                                       |  | Amount  |          |   | Tax Effect |   |         | Net of Tax | 
|                                                                       |  |         |          |   |            |   |         |            | 
|For the Year Ended December 31, 2004                                   |  |         |          |   |            |   |         |            |  |   |          |  
|Unrealized (loss) on securities available for sale                     |  | $       | (18,826  | ) |            | $ | 6,589   |            |  | $ | (12,237  | )
|Unrealized (loss) on cash flow hedges                                  |  |         | (1,929   | ) |            |   | 675     |            |  |   | (1,254   | )
|Minimum pension liability                                              |  |         | (1,660   | ) |            |   | 581     |            |  |   | (1,079   | )
|Reclassification adjustment for net losses realized in net income      |  |         | 9,855    |   |            |   | (3,449  | )          |  |   | 6,406    |  
|                                                                       |  |         |          |   |            |   |         |            | 
|Net change in unrealized (losses)                                      |  | $       | (12,560  | ) |            | $ | 4,396   |            |  | $ | (8,164   | )
|                                                                       |  |         |          |   |            |   |         |            | 
|For the Year Ended December 31, 2003                                   |  |         |          |   |            |   |         |            |  |   |          |  
|Unrealized (loss) on securities available for sale                     |  | $       | (126,873 | ) |            | $ | 44,405  |            |  | $ | (82,468  | )
|Unrealized (loss) on cash flow hedges                                  |  |         | (6,226   | ) |            |   | 2,179   |            |  |   | (4,047   | )
|Minimum pension liability                                              |  |         | (687     | ) |            |   | 241     |            |  |   | (446     | )
|Reclassification adjustment for net (gains) realized in net
    income |  |         | (33,812  | ) |            |   | 11,834  |            |  |   | (21,978  | )
|                                                                       |  |         |          |   |            |   |         |            | 
|Net change in unrealized (losses)                                      |  | $       | (167,598 | ) |            | $ | 58,659  |            |  | $ | (108,939 | )
|                                                                       |  |         |          |   |            |   |         |            | 
|For the Year Ended December 31, 2002                                   |  |         |          |   |            |   |         |            |  |   |          |  
|Unrealized gain on securities available for sale                       |  | $       | 126,028  |   |            | $ | (44,038 | )          |  | $ | 81,990   |  
|Unrealized (loss) on cash flow hedges                                  |  |         | (9,590   | ) |            |   | 3,355   |            |  |   | (6,235   | )
|Minimum pension liability                                              |  |         | (1,270   | ) |            |   | 445     |            |  |   | (825     | )
|Reclassification adjustment for net (gains) realized in net
    income |  |         | (850     | ) |            |   | 298     |            |  |   | (552     | )
|                                                                       |  |         |          |   |            |   |         |            | 
|Net change in unrealized gains                                         |  | $       | 114,318  |   |            | $ | (39,940 | )          |  | $ | 74,378   |  
|                                                                       |  |         |          |   |            |   |         |            | 



|    |                       
|--- | ----------------------
|16. | Derivative Instruments



87



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




16.     Derivative
Instruments  (Continued)






|    |                                                                          
|--- | -------------------------------------------------------------------------
|17. | Commitments, Contingent Liabilities and Other Off-Balance
    Sheet Risks





88



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




17.     Commitments, Contingent
Liabilities and Other Off-Balance Sheet Risks 
(Continued)




|                                                                                                    |                                                                                                                           |                                               |   |           |         |  |   |           |         | 
|--------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------- | - | --------- | ------- |  | - | --------- | ------- | 
|                                                                                                    |                                                                                                                           | Contract or Notional Amount                   |  
|                                                                                                    |                                                                                                                           | at December 31,                               |  
|                                                                                                    |                                                                                                                           |                                               |  
|                                                                                                    |                                                                                                                           | 2004                                          |   |           | 2003    | 
|                                                                                                    |                                                                                                                           |                                               |   |           |         | 
|Financial instruments with notional or contract amounts which
    represent credit risk:            |                                                                                                                           |                                               |   |           |         |  |   |          
|                                                                                                    | Commitments to originate loans, unused lines, standby letters of
    credit and unadvanced portions of construction loans |                                               | $ | 7,269,302 |         |  | $ | 6,245,086 |        
|                                                                                                    | Commitments to invest in real estate limited partnerships                                                                 |                                               |   | 22,729    |         |  |   | 24,971    |        
|                                                                                                    | Commitments to invest in small business investments limited
    partnerships                                              |                                               |   | 17,137    |         |  |   | 17,663    |        
|                                                                                                    | Loans serviced with recourse                                                                                              |                                               |   | 223,333   |         |  |   | 5,569     |        
|Financial instruments with notional or contract amounts which
    exceed the amount of credit risk: |                                                                                                                           |                                               |   |           |         |  |   |          
|                                                                                                    | Commercial loan swap program:                                                                                             |                                               |   |           |         |  |   |           |        
|                                                                                                    |                                                                                                                           | Interest rate swaps with commercial borrowers |   |           | 690,856 |  |   |           | 325,023 | 
|                                                                                                    |                                                                                                                           | Interest rate swaps with dealers              |   |           | 690,856 |  |   |           | 325,023 | 
|                                                                                                    | Interest rate swaps on borrowings                                                                                         |                                               |   | 566,500   |         |  |   | 566,500   |        
|                                                                                                    | Forward commitments to sell loans                                                                                         |                                               |   | 83,016    |         |  |   | 61,000    |        
|                                                                                                    | Foreign currency rate contracts:                                                                                          |                                               |   |           |         |  |   |           |        
|                                                                                                    |                                                                                                                           | Forward contracts with customers              |   |           | 33,575  |  |   |           | 23,438  | 
|                                                                                                    |                                                                                                                           | Forward contracts with dealers                |   |           | 33,747  |  |   |           | 23,438  | 
|                                                                                                    |                                                                                                                           | Foreign exchange options to purchase          |   |           | 35,713  |  |   |           |        | 
|                                                                                                    |                                                                                                                           | Foreign exchange options to sell              |   |           | 35,713  |  |   |           |        | 
|                                                                                                    | Rate-locked loan commitments                                                                                              |                                               |   | 35,961    |         |  |   | 30,779    |        







89



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




17.     Commitments, Contingent
Liabilities and Other Off-Balance Sheet Risks 
(Continued)
















| |                  
| | -----------------
| | Legal Proceedings



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




17.     Commitments, Contingent
Liabilities and Other Off-Balance Sheet Risks 
(Continued)






| |                            
| | ---------------------------
| | Operating Lease Obligations





|               |  |   |         | 
|-------------- |  | - | ------- | 
|2005           |  | $ | 24,396  | 
|2006           |  |   | 21,361  | 
|2007           |  |   | 17,170  | 
|2008           |  |   | 14,192  | 
|2009           |  |   | 12,510  | 
|2010 and after |  |   | 34,233  | 
|               |  |   |        
|               |  | $ | 123,862 | 
|               |  |   |        



|    |                         
|--- | ------------------------
|18. | Other Noninterest Income



|                                 |       |                         |        |        |      |   |        |        |  |   |        |        | 
|-------------------------------- | ----- | ----------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                 |       | Year Ended December 31, |       
|                                 |       |                         |       
|                                 |       | 2004                    |        |        | 2003 |   |        | 2002   | 
|                                 |       |                         |        |        |      |   |        |        | 
|Loan fee income                  |       | $                       | 26,453 |        |      | $ | 24,831 |        |  | $ | 21,893 |       
|Covered call premiums            |       |                         | 18,024 |        |      |   | 27,756 |        |  |   | 7,279  |       
|Mortgage banking services income |       |                         | 6,562  |        |      |   | 10,212 |        |  |   | 8,539  |       
|Venture capital write-downs      |       |                         | (2,880 | )      |      |   | (592   | )      |  |   | (2,753 | )     
|Miscellaneous income             |       |                         | 6,657  |        |      |   | 7,099  |        |  |   | 4,020  |       
|                                 |       |                         |        |        |      |   |        |        | 
|                                 | Total |                         | $      | 54,816 |      |   | $      | 69,306 |  |   | $      | 38,978 | 
|                                 |       |                         |        |        |      |   |        |        | 



|                                               |                               |                         |       |       |      |   |        |       |  |   |        |        | 
|---------------------------------------------- | ----------------------------- | ----------------------- | ----- | ----- | ---- | - | ------ | ----- |  | - | ------ | ------ | 
|                                               |                               | Year Ended December 31, |      
|                                               |                               |                         |      
|                                               |                               | 2004                    |       |       | 2003 |   |        | 2002  | 
|                                               |                               |                         |       |       |      |   |        |       | 
|Residential mortgage sales/fee income          |                               |                         |       |       |      |   |        |       |  |   |        |       
|                                               | Gains on sales and fee income |                         | $     | 5,358 |      |   | $      | 9,577 |  |   | $      | 11,371 | 
|                                               | Net effect of derivatives     |                         |       | 10    |      |   |        | 107   |  |   |        | 33     | 
|                                               |                               |                         |       |       |      |   |        |       | 
|                                               |                               |                         | 5,368 |       |      |   | 9,684  |       |  |   | 11,404 |       
|Residential mortgage servicing income          |                               |                         | 1,194 |       |      |   | 725    |       |  |   | (15    | )     
|Impairment charge on mortgage servicing rights |                               |                         |      |       |      |   | (197   | )     |  |   | (2,850 | )     
|                                               |                               |                         |       |       |      |   |        |       | 
|                                               |                               | $                       | 6,562 |       |      | $ | 10,212 |       |  | $ | 8,539  |       
|                                               |                               |                         |       |       |      |   |        |       | 

91



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                               
|--- | ------------------------------
|19. | Stock-Based Compensation Plans



| |                   
| | ------------------
| | Stock Option Plans









|                        |  |      |       |       |      |  |       |       |  |  |       |      
|----------------------- |  | ---- | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | -----
|                        |  | 2004 |       |       | 2003 |  |       | 2002  | 
|                        |  |      |       |       |      |  |       |       | 
|Expected dividend yield |  |      | 2.39  | %     |      |  | 2.65  | %     |  |  | 2.36  | %    
|Risk-free interest rate |  |      | 3.52  |       |      |  | 3.31  |       |  |  | 3.82  |      
|Expected life           |  |      | 5.00  | years |      |  | 5.00  | years |  |  | 5.00  | years
|Volatility              |  |      | 32.22 | %     |      |  | 32.22 | %     |  |  | 36.26 | %    



92



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                             
|--- | --------------------------------------------
|19. | Stock-Based Compensation Plans  (Continued)



|                                 |                                 |           |            |            |                |   |       |           |          |  |                |            |   |           |       |       |                |  |            |            |   |   |       |       | 
|-------------------------------- | ------------------------------- | --------- | ---------- | ---------- | -------------- | - | ----- | --------- | -------- |  | -------------- | ---------- | - | --------- | ----- | ----- | -------------- |  | ---------- | ---------- | - | - | ----- | ----- | 
|                                 |                                 | 2004      |            |            | 2003           |   |       | 2002      |         
|                                 |                                 |           |            |            |                |   |       |           |         
|                                 |                                 |           |            | Weighted   |                |   |       |           | Weighted |  |                |            |   | Weighted  |      
|                                 |                                 | Number of |            |            | Average        |   |       | Number of |          |  | Average        |            |   | Number of |       |       | Average        | 
|                                 |                                 | Shares    |            |            | Exercise Price |   |       | Shares    |          |  | Exercise Price |            |   | Shares    |       |       | Exercise Price | 
|                                 |                                 |           |            |            |                |   |       |           |          |  |                |            |   |           |       |       |                | 
|Outstanding at beginning of year |                                 |           | 16,379,053 |            |                | $ | 21.23 |           |          |  | 12,488,419     |            |   | $         | 19.23 |       |                |  | 9,655,231  |            |   | $ | 16.90 |      
|                                 | Granted                         |           |            | 119,075    |                |   |       | 31.63     |          |  |                | 4,185,340  |   |           |       | 27.84 |                |  |            | 3,898,047  |   |   |       | 23.45 | 
|                                 | Granted in purchase acquisition |           |            | 329,403    |                |   |       | 21.24     |          |  |                | 2,402,938  |   |           |       | 13.92 |                |  |            | 714,798    |   |   |       | 12.51 | 
|                                 | Exercised                       |           |            | (7,483,628 | )              |   |       | 19.26     |          |  |                | (2,441,520 | ) |           |       | 15.11 |                |  |            | (1,684,671 | ) |   |       | 12.58 | 
|                                 | Cancelled and forfeited         |           |            | (263,447   | )              |   |       | 25.84     |          |  |                | (256,124   | ) |           |       | 23.45 |                |  |            | (94,986    | ) |   |       | 20.71 | 
|                                 |                                 |           |            |            |                |   |       |           |          |  |                |            |   |           |       |       |                | 
|Outstanding at end of year       |                                 |           | 9,080,456  |            |                | $ | 22.87 |           |          |  | 16,379,053     |            |   | $         | 21.23 |       |                |  | 12,488,419 |            |   | $ | 19.23 |      
|                                 |                                 |           |            |            |                |   |       |           |          |  |                |            |   |           |       |       |                | 
|Options exercisable at year end  |                                 |           | 5,237,604  |            |                | $ | 20.29 |           |          |  | 8,947,350      |            |   | $         | 17.64 |       |                |  | 6,729,062  |            |   | $ | 16.46 |      
|                                 |                                 |           |            |            |                |   |       |           |          |  |                |            |   |           |       |       |                | 



|                |  |                     |           |  |                     |  |           |                  |  |        |               |  |  |                  |           |  |  |   |       | 
|--------------- |  | ------------------- | --------- |  | ------------------- |  | --------- | ---------------- |  | ------ | ------------- |  |  | ---------------- | --------- |  |  | - | ----- | 
|                |  | Options Outstanding |           |  | Options Exercisable | 
|                |  |                     |           |  |                     | 
|                |  | Number              |           |  | Weighted Average    |  |           |                  |  | Number |               |  | 
|Range of        |  | Outstanding         |           |  | Remaining           |  |           | Weighted Average |  |        | Outstanding   |  |  | Weighted Average |          
|Exercise Prices |  | at 12/31/2004       |           |  | Contractual Life    |  |           | Exercise Price   |  |        | at 12/31/2004 |  |  | Exercise Price   |          
|                |  |                     |           |  |                     |  |           |                  |  |        |               |  |  |                  |          
|up to $12.99    |  |                     | 195,858   |  |                     |  | 1.8 years |                  |  | $      | 9.89          |  |  |                  | 195,858   |  |  | $ | 9.89  | 
|$13.00  $16.24 |  |                     | 1,066,532 |  |                     |  | 5.1       |                  |  |        | 13.69         |  |  |                  | 1,066,532 |  |  |   | 13.69 | 
|$16.25  $19.49 |  |                     | 754,488   |  |                     |  | 4.6       |                  |  |        | 17.27         |  |  |                  | 754,488   |  |  |   | 17.27 | 
|$19.50  $22.74 |  |                     | 1,294,929 |  |                     |  | 6.2       |                  |  |        | 20.86         |  |  |                  | 1,144,929 |  |  |   | 20.93 | 
|$22.75  $25.98 |  |                     | 2,417,297 |  |                     |  | 7.7       |                  |  |        | 23.40         |  |  |                  | 1,218,260 |  |  |   | 23.38 | 
|$25.99  $29.23 |  |                     | 3,256,352 |  |                     |  | 8.7       |                  |  |        | 28.11         |  |  |                  | 772,877   |  |  |   | 27.94 | 
|$29.24  $32.48 |  |                     | 95,000    |  |                     |  | 9.3       |                  |  |        | 31.65         |  |  |                  | 84,660    |  |  |   | 31.58 | 
|                |  |                     |           |  |                     |  |           |                  |  |        |               |  |  |                  |          
|                |  |                     | 9,080,456 |  |                     |  | 7.2       |                  |  |        | 22.87         |  |  |                  | 5,237,604 |  |  |   | 20.29 | 
|                |  |                     |           |  |                     |  |           |                  |  |        |               |  |  |                  |          



| |            
| | -----------
| | 401(k) Plan





| |                             
| | ----------------------------
| | Employee Stock Purchase Plan



93



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


19.                        Stock-Based
Compensation Plans  (Continued)






| |                      
| | ---------------------
| | Restricted Stock Plan





| |                
| | ---------------
| | Incentive Plans







|    |                                   
|--- | ----------------------------------
|20. | Retirement and Other Benefit Plans



| |              
| | -------------
| | Pension Plans





94



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                 
|--- | ------------------------------------------------
|20. | Retirement and Other Benefit Plans  (Continued)



| |                                             
| | --------------------------------------------
| | Post-Retirement Benefits Other Than Pensions







|                                               |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |   |        |   |  |   |        |  
|---------------------------------------------- |  | ----------------- | ------- | - | -------------------- | -------------------- | ------- | -------- |  | - | ------ | - |  | ---- | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|                                               |  |                   |         |   |                      | Other Postretirement |        
|                                               |  | Qualified Pension |         |   | Nonqualified Pension |                      |         | Benefits | 
|                                               |  |                   |         |   |                      |                      |         |          | 
|                                               |  | 2004              |         |   | 2003                 |                      |         | 2004     |  |   | 2003   |   |  | 2004 |        |   | 2003 |  
|                                               |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |  
|Change in Benefit Obligation                   |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |   |        |   |  |   |        |  
|Benefit obligation at beginning of year        |  | $                 | 204,409 |   |                      | $                    | 147,666 |          |  | $ | 26,264 |   |  | $    | 21,288 |   |      | $ | 18,329 |   |  | $ | 15,813 |  
|Service cost                                   |  |                   | 12,326  |   |                      |                      | 9,251   |          |  |   | 576    |   |  |      | 311    |   |      |   | 195    |   |  |   | 123    |  
|Interest cost                                  |  |                   | 12,639  |   |                      |                      | 12,168  |          |  |   | 1,736  |   |  |      | 1,580  |   |      |   | 1,463  |   |  |   | 1,155  |  
|Assumption changes                             |  |                   | 17,825  |   |                      |                      | 14,916  |          |  |   | (70    | ) |  |      | (2,406 | ) |      |   | 2,307  |   |  |   | 517    |  
|Plan amendment                                 |  |                   |        |   |                      |                      |        |          |  |   | 957    |   |  |      |       |   |      |   |       |   |  |   |       |  
|Actuarial loss                                 |  |                   | 1,867   |   |                      |                      | 7,408   |          |  |   | 3,369  |   |  |      | 4,111  |   |      |   | (800   | ) |  |   | 653    |  
|Acquisitions                                   |  |                   | 91      |   |                      |                      | 21,698  |          |  |   | (1,343 | ) |  |      | 2,289  |   |      |   | 5,570  |   |  |   | 1,566  |  
|Benefits paid                                  |  |                   | (9,212  | ) |                      |                      | (8,268  | )        |  |   | (1,408 | ) |  |      | (909   | ) |      |   | (1,431 | ) |  |   | (1,498 | )
|Expenses paid                                  |  |                   | (621    | ) |                      |                      | (430    | )        |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|                                               |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |  
|Benefit obligation at end of year              |  | $                 | 239,324 |   |                      | $                    | 204,409 |          |  | $ | 30,081 |   |  | $    | 26,264 |   |      | $ | 25,633 |   |  | $ | 18,329 |  
|                                               |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |  
|Change in plan assets                          |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |   |        |   |  |   |        |  
|Fair value of plan assets at beginning of year |  | $                 | 237,536 |   |                      | $                    | 154,902 |          |  | $ |       |   |  | $    |       |   |      | $ |       |   |  | $ |       |  
|Actual return (loss) on plan assets            |  |                   | 19,128  |   |                      |                      | 25,929  |          |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Employer contribution                          |  |                   | 17,100  |   |                      |                      | 47,442  |          |  |   | 1,408  |   |  |      | 909    |   |      |   | 1,431  |   |  |   | 1,498  |  
|Benefits paid                                  |  |                   | (9,212  | ) |                      |                      | (8,268  | )        |  |   | (1,408 | ) |  |      | (909   | ) |      |   | (1,431 | ) |  |   | (1,498 | )
|Expenses paid                                  |  |                   | (621    | ) |                      |                      | (430    | )        |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|Acquisitions                                   |  |                   |        |   |                      |                      | 17,961  |          |  |   |       |   |  |      |       |   |      |   |       |   |  |   |       |  
|                                               |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |  
|Fair value of plan assets at end of year       |  | $                 | 263,931 |   |                      | $                    | 237,536 |          |  | $ |       |   |  | $    |       |   |      | $ |       |   |  | $ |       |  
|                                               |  |                   |         |   |                      |                      |         |          |  |   |        |   |  |      |        |   |      |  

95



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                 
|--- | ------------------------------------------------
|20. | Retirement and Other Benefit Plans  (Continued)

|                                                                          |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | ----------------- | ------- | - | -------------------- | -------------------- | ------- | -------- |  | - | ------- | - |  | ---- | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                                                          |  |                   |         |   |                      | Other Postretirement |        
|                                                                          |  | Qualified Pension |         |   | Nonqualified Pension |                      |         | Benefits | 
|                                                                          |  |                   |         |   |                      |                      |         |          | 
|                                                                          |  | 2004              |         |   | 2003                 |                      |         | 2004     |  |   | 2003    |   |  | 2004 |         |   | 2003 |  
|                                                                          |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |  
|Funded (unfunded) status                                                  |  | $                 | 24,607  |   |                      | $                    | 33,127  |          |  | $ | (30,081 | ) |  | $    | (26,264 | ) |      | $ | (25,633 | ) |  | $ | (18,329 | )
|Unrecognized net actuarial (gain) loss                                    |  |                   | 71,778  |   |                      |                      | 54,896  |          |  |   | 7,774   |   |  |      | 5,462   |   |      |   | 7,783   |   |  |   | 6,620   |  
|Unrecognized prior service cost                                           |  |                   | 43      |   |                      |                      | 50      |          |  |   | 2,327   |   |  |      | 1,607   |   |      |   | 937     |   |  |   | 1,076   |  
|Unrecognized net transition obligation                                    |  |                   | (498    | ) |                      |                      | (756    | )        |  |   | 110     |   |  |      | 121     |   |      |   | 3,292   |   |  |   | 3,685   |  
|                                                                          |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |  
|Prepaid (accrued) benefit cost                                            |  | $                 | 95,930  |   |                      | $                    | 87,317  |          |  | $ | (19,870 | ) |  | $    | (19,074 | ) |      | $ | (13,621 | ) |  | $ | (6,948  | )
|                                                                          |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |  
|Amounts recognized in the statement of financial position
    consist of: |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|Prepaid (accrued) benefit cost                                            |  | $                 | 95,930  |   |                      | $                    | 87,317  |          |  | $ | (19,870 | ) |  | $    | (19,074 | ) |      | $ | (13,621 | ) |  | $ | (6,948  | )
|Accrued benefit liability                                                 |  |                   |        |   |                      |                      |        |          |  |   | 25,925  |   |  |      | 22,758  |   |      |   |        |   |  |   |        |  
|Intangible asset                                                          |  |                   |        |   |                      |                      |        |          |  |   | (2,437  | ) |  |      | (1,728  | ) |      |   |        |   |  |   |        |  
|Accumulated other comprehensive income                                    |  |                   |        |   |                      |                      |        |          |  |   | (3,618  | ) |  |      | (1,956  | ) |      |   |        |   |  |   |        |  
|                                                                          |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |  
|Net amount recognized                                                     |  | $                 | 95,930  |   |                      | $                    | 87,317  |          |  | $ |        |   |  | $    |        |   |      | $ | (13,621 | ) |  | $ | (6,948  | )
|                                                                          |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |  
|Accumulated benefit obligation                                            |  | $                 | 223,488 |   |                      | $                    | 193,835 |          |  | $ | 25,925  |   |  | $    | 22,760  |   |      |   |         |   |  |   |         |  
|                                                                          |  |                   |         |   |                      |                      |         |          |  |   |         |   |  |      |         |   |      |  

|                                        |  |                         |         |   |      |   |         |      |  |   |         |  
|--------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                        |  | Year Ended December 31, |        
|                                        |  |                         |        
|                                        |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|                                        |  |                         |         |   |      |   |         |      | 
|Components of net periodic benefit cost |  |                         |         |   |      |   |         |      |  |   |         |  
|Qualified Pension                       |  |                         |         |   |      |   |         |      |  |   |         |  
|Service cost                            |  | $                       | 12,326  |   |      | $ | 9,251   |      |  | $ | 6,810   |  
|Interest cost                           |  |                         | 12,639  |   |      |   | 12,168  |      |  |   | 9,223   |  
|Expected (gain) on plan assets          |  |                         | (19,821 | ) |      |   | (14,343 | )    |  |   | (12,373 | )
|Recognized actuarial loss               |  |                         | 3,503   |   |      |   | 3,865   |      |  |   |        |  
|Net amortization and deferral           |  |                         | (251    | ) |      |   | (251    | )    |  |   | (251    | )
|Other                                   |  |                         | 91      |   |      |   |        |      |  |   |        |  
|                                        |  |                         |         |   |      |   |         |      | 
|Net periodic benefit cost               |  | $                       | 8,487   |   |      | $ | 10,690  |      |  | $ | 3,409   |  
|                                        |  |                         |         |   |      |   |         |      | 
|Nonqualified Pension                    |  |                         |         |   |      |   |         |      |  |   |         |  
|Service cost                            |  | $                       | 576     |   |      | $ | 311     |      |  | $ | 208     |  
|Interest cost                           |  |                         | 1,736   |   |      |   | 1,580   |      |  |   | 1,322   |  
|Expected return on plan assets          |  |                         |        |   |      |   |        |      |  |   |        |  
|Recognized actuarial loss               |  |                         | 413     |   |      |   | 124     |      |  |   | 70      |  
|Net amortization and deferral           |  |                         | 248     |   |      |   | 183     |      |  |   | 258     |  
|                                        |  |                         |         |   |      |   |         |      | 
|Net periodic benefit cost               |  | $                       | 2,973   |   |      | $ | 2,198   |      |  | $ | 1,858   |  
|                                        |  |                         |         |   |      |   |         |      | 

96



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                 
|--- | ------------------------------------------------
|20. | Retirement and Other Benefit Plans  (Continued)

|                               |  |                         |       |  |      |   |       |      |  |   |       | 
|------------------------------ |  | ----------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                               |  | Year Ended December 31, |      
|                               |  |                         |      
|                               |  | 2004                    |       |  | 2003 |   |       | 2002 | 
|                               |  |                         |       |  |      |   |       |      | 
|Other Postretirement Benefits  |  |                         |       |  |      |   |       |      |  |   |       | 
|Service cost                   |  | $                       | 195   |  |      | $ | 123   |      |  | $ | 99    | 
|Interest cost                  |  |                         | 1,463 |  |      |   | 1,155 |      |  |   | 1,001 | 
|Expected return on plan assets |  |                         |      |  |      |   |      |      |  |   |      | 
|Recognized actuarial loss      |  |                         | 344   |  |      |   | 310   |      |  |   | 132   | 
|Net amortization and deferral  |  |                         | 532   |  |      |   | 532   |      |  |   | 532   | 
|                               |  |                         |       |  |      |   |       |      | 
|Net periodic benefit cost      |  | $                       | 2,534 |  |      | $ | 2,120 |      |  | $ | 1,764 | 
|                               |  |                         |       |  |      |   |       |      | 

Weighted-average assumptions used to determine benefit
obligations as of December 31


|                              |  |      |      |   |      |  |      |  
|----------------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                              |  | 2004 |      |   | 2003 | 
|                              |  |      |      |   |      | 
|Discount rate                 |  |      | 5.75 | % |      |  | 6.25 | %
|Rate of compensation increase |  |      | 4.50 | % |      |  | 4.50 | %
|Medical inflation rate        |  |      | 8.00 | % |      |  | 9.00 | %

Weighted-average assumptions used to determine net periodic
benefit cost for years ended December 31


|                               |  |      |      |   |      |  |       |  
|------------------------------ |  | ---- | ---- | - | ---- |  | ----- | -
|                               |  | 2004 |      |   | 2003 | 
|                               |  |      |      |   |      | 
|Discount rate                  |  |      | 6.25 | % |      |  | 6.75  | %
|Expected return on plan assets |  |      | 8.50 | % |      |  | 8.50  | %
|Rate of compensation increase  |  |      | 4.50 | % |      |  | 4.50  | %
|Medical inflation rate         |  |      | 9.00 | % |      |  | 10.00 | %

|                                                               |  |      |      |   |      |  |      |  
|-------------------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                                                               |  | 2004 |      |   | 2003 | 
|                                                               |  |      |      |   |      | 
|Assumed health care cost trend rates at December 31            |  |      |      |   |      |  |      |  
|Health care cost trend rate assumed for next year              |  |      | 7.00 | % |      |  | 8.00 | %
|Rate that the cost trend rate gradually declines to            |  |      | 5.00 | % |      |  | 5.00 | %
|Year that the rate reaches the rate it is assumed to remain at |  |      | 2007 |   |      |  | 2007 |  

Effect of one-percentage change in assumed health care cost
trend rates in 2004


|                                                     |  |             |           |  |             |   |            |  
|---------------------------------------------------- |  | ----------- | --------- |  | ----------- | - | ---------- | -
|                                                     |  | 1% Increase |           |  | 1% Decrease |  
|                                                     |  |             |           |  |             |  
|Effect on total service and interest cost components |  | $           | 123,065   |  |             | $ | (105,563   | )
|Effect on postretirement benefit obligation          |  |             | 1,948,614 |  |             |   | (1,672,485 | )

97



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##### Table of Contents



BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                 
|--- | ------------------------------------------------
|20. | Retirement and Other Benefit Plans  (Continued)

Estimated Future Benefit Payments




|            |  |           |             |  |              |       |            |                |  |   |            | 
|----------- |  | --------- | ----------- |  | ------------ | ----- | ---------- | -------------- |  | - | ---------- | 
|            |  |           |             |  |              | Other |           
|            |  | Qualified |             |  | Nonqualified |       |            | Postretirement | 
|            |  | Pension   |             |  | Pension      |       |            | Benefits       | 
|            |  |           |             |  |              |       |            |                | 
|2005        |  | $         | 8,518,186   |  |              | $     | 2,191,582  |                |  | $ | 2,126,158  | 
|2006        |  |           | 8,681,680   |  |              |       | 2,273,333  |                |  |   | 2,106,161  | 
|2007        |  |           | 9,267,800   |  |              |       | 2,641,818  |                |  |   | 2,033,685  | 
|2008        |  |           | 10,019,916  |  |              |       | 2,716,953  |                |  |   | 1,946,149  | 
|2009        |  |           | 10,748,152  |  |              |       | 6,058,615  |                |  |   | 1,879,914  | 
|2010 - 2014 |  |           | 71,262,751  |  |              |       | 11,687,393 |                |  |   | 9,212,736  | 
|            |  |           |             |  |              |       |            |                | 
|            |  | $         | 118,498,485 |  |              | $     | 27,569,694 |                |  | $ | 19,304,803 | 
|            |  |           |             |  |              |       |            |                | 





|               |  |               |     |   |               |  |     |            |  |  |         |  
|-------------- |  | ------------- | --- | - | ------------- |  | --- | ---------- |  |  | ------- | -
|               |  | December 31,  |     |   |              
|               |  |               |     |   |              
|               |  | 2004          |     |   | 2003          |  |     |           
|               |  |               |     |   |               |  |     |           
|               |  | Actual        |     |   | Actual        |  |     | Target     | 
|               |  | Percentage    |     |   | Percentage    |  |     | Allocation | 
|Asset category |  | of Fair Value |     |   | of Fair Value |  |     | Percentage | 
|               |  |               |     |   |               |  |     |            | 
|Cash           |  |               | 1   | % |               |  | 20  | %          |  |  | 0 - 25  | %
|Equities       |  |               | 59  | % |               |  | 53  | %          |  |  | 40 - 75 | %
|Fixed Income   |  |               | 40  | % |               |  | 27  | %          |  |  | 25 - 60 | %
|               |  |               |     |   |               |  |     |            | 
|               |  |               | 100 | % |               |  | 100 | %          |  |  |         |  
|               |  |               |     |   |               |  |     |            | 





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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                 
|--- | ------------------------------------------------
|20. | Retirement and Other Benefit Plans  (Continued)







|    |                                    
|--- | -----------------------------------
|21. | Fair Value of Financial Instruments







Cash and cash equivalents, including cash and due from banks,
short-term investments and federal funds sold.


Securities and loans held for sale.


Loans and leases.






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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                      
|--- | -----------------------------------------------------
|21. | Fair Value of Financial Instruments 
    (Continued)



Mortgage Servicing Rights.


Deposits.




Borrowings, including federal funds purchased, securities
sold under repurchase agreements, borrowings from the Federal
Home Loan Bank and other borrowings.


Off-balance sheet financial
instruments:


Forward commitments to sell loans held for sale.


Rate-lock commitments to originate loans held for sale.


Commercial loan interest rate swaps.


Loans sold or serviced with recourse.


100



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                      
|--- | -----------------------------------------------------
|21. | Fair Value of Financial Instruments 
    (Continued)



|                                                               |                                                        |          |   |            |       |  |   |            |   |  |       |            |   |  |   |            |  
|-------------------------------------------------------------- | ------------------------------------------------------ | -------- | - | ---------- | ----- |  | - | ---------- | - |  | ----- | ---------- | - |  | - | ---------- | -
|                                                               |                                                        | 2004     |   |            | 2003  | 
|                                                               |                                                        |          |   |            |       | 
|                                                               |                                                        | Carrying |   |            | Fair  |  |   | Carrying   |   |  | Fair  |           
|                                                               |                                                        | Value    |   |            | Value |  |   | Value      |   |  | Value |           
|                                                               |                                                        |          |   |            |       |  |   |            |   |  |       |           
|Assets:                                                        |                                                        |          |   |            |       |  |   |            |   |  |       |            |   |  |   |           
|                                                               | Cash and cash equivalents                              |          | $ | 544,306    |       |  | $ | 544,306    |   |  | $     | 674,331    |   |  | $ | 674,331    |  
|                                                               | Securities  available for sale                        |          |   | 6,905,765  |       |  |   | 6,905,765  |   |  |       | 7,122,992  |   |  |   | 7,122,992  |  
|                                                               | Securities  held to maturity                          |          |   | 87,013     |       |  |   | 87,507     |   |  |       | 124,240    |   |  |   | 124,344    |  
|                                                               | Loans held for sale                                    |          |   | 51,693     |       |  |   | 52,936     |   |  |       | 41,696     |   |  |   | 42,801     |  
|                                                               | Loans and leases, net                                  |          |   | 18,349,842 |       |  |   | 18,510,642 |   |  |       | 16,113,675 |   |  |   | 16,153,360 |  
|                                                               | Mortgage servicing rights                              |          |   | 5,155      |       |  |   | 5,888      |   |  |       | 2,783      |   |  |   | 3,115      |  
|Liabilities:                                                   |                                                        |          |   |            |       |  |   |            |   |  |       |            |   |  |   |           
|                                                               | Fed funds purchased                                    |          |   | 618,000    |       |  |   | 618,000    |   |  |       | 358,000    |   |  |   | 358,000    |  
|                                                               | Deposits (with no stated maturity)                     |          |   | 14,742,635 |       |  |   | 14,742,635 |   |  |       | 13,168,081 |   |  |   | 13,168,081 |  
|                                                               | Time deposits                                          |          |   | 4,484,946  |       |  |   | 4,474,769  |   |  |       | 4,733,104  |   |  |   | 4,763,865  |  
|                                                               | Borrowings                                             |          |   | 5,372,705  |       |  |   | 5,438,189  |   |  |       | 5,524,864  |   |  |   | 5,674,074  |  
|Financial instruments with off-balance sheet notional amounts: |                                                        |          |   |            |       |  |   |            |   |  |       |            |   |  |   |           
|                                                               | Forward commitments to sell loans                      |          |   | (149       | )     |  |   | (149       | ) |  |       | (425       | ) |  |   | (425       | )
|                                                               | Rate-lock commitments to originate loans held for sale |          |   | 147        |       |  |   | 147        |   |  |       | 188        |   |  |   | 188        |  
|                                                               | Commercial loan interest rate swaps with borrower      |          |   | 17,836     |       |  |   | 17,836     |   |  |       | 7,357      |   |  |   | 7,357      |  
|                                                               | Commercial loan interest rate swaps with broker        |          |   | (17,836    | )     |  |   | (17,836    | ) |  |       | (7,357     | ) |  |   | (7,357     | )
|                                                               | Interest rate contracts on borrowings                  |          |   | (4,420     | )     |  |   | (4,420     | ) |  |       | (1,896     | ) |  |   | (1,896     | )
|                                                               | Foreign currency forward contracts with customers      |          |   | 3,307      |       |  |   | 3,307      |   |  |       | 3,132      |   |  |   | 3,132      |  
|                                                               | Foreign currency forward contracts with dealers        |          |   | (3,056     | )     |  |   | (3,056     | ) |  |       | (3,132     | ) |  |   | (3,132     | )
|                                                               | Foreign exchange options to purchase                   |          |   | 1,727      |       |  |   | 1,727      |   |  |       |           |   |  |   |           |  
|                                                               | Foreign exchange options to sell                       |          |   | (1,727     | )     |  |   | (1,727     | ) |  |       |           |   |  |   |           |  

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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                          
|--- | ---------------------------------------------------------
|22. | Condensed Financial Information  Parent Company
    Only

Condensed Financial Statements of Banknorth


|                                     |                                                                              |                                            |   |           |           |  |   |           |           | 
|------------------------------------ | ---------------------------------------------------------------------------- | ------------------------------------------ | - | --------- | --------- |  | - | --------- | --------- | 
|                                     |                                                                              | December 31,                               |  
|                                     |                                                                              |                                            |  
|                                     |                                                                              | 2004                                       |   |           | 2003      | 
|                                     |                                                                              |                                            |   |           |           | 
|Balance Sheets                       |                                                                              |                                            |   |           |           |  |   |          
|Assets:                              |                                                                              |                                            |   |           |           |  |   |          
|                                     | Cash and due from banks                                                      |                                            | $ | 55,674    |           |  | $ | 27,492    |          
|                                     | Interest bearing deposits with subsidiaries                                  |                                            |   | 193,942   |           |  |   | 225,492   |          
|                                     | Securities available for sale                                                |                                            |   | 54,387    |           |  |   | 45,216    |          
|                                     | Investment in subsidiaries                                                   |                                            |   | 3,361,786 |           |  |   | 2,710,080 |          
|                                     | Goodwill and other intangibles                                               |                                            |   | 618       |           |  |   | 618       |          
|                                     | Amounts receivable from subsidiaries                                         |                                            |   | 10,917    |           |  |   |          |          
|                                     | Other assets                                                                 |                                            |   | 25,295    |           |  |   | 16,679    |          
|                                     |                                                                              |                                            |   |           |           | 
|                                     |                                                                              | Total assets                               |   | $         | 3,702,619 |  |   | $         | 3,025,577 | 
|                                     |                                                                              |                                            |   |           |           | 
|Liabilities and shareholders equity |                                                                              |                                            |   |           |           |  |   |          
|                                     | Amounts payable to subsidiaries                                              |                                            | $ |          |           |  | $ | 978       |          
|                                     | Senior notes, net of hedge                                                   |                                            |   | 148,330   |           |  |   | 149,991   |          
|                                     | Subordinated debentures supporting mandatory redeemable trust
    securities |                                            |   | 349,854   |           |  |   | 344,403   |          
|                                     | Other liabilities                                                            |                                            |   | 28,321    |           |  |   | 9,686     |          
|                                     | Shareholders equity                                                         |                                            |   | 3,176,114 |           |  |   | 2,520,519 |          
|                                     |                                                                              |                                            |   |           |           | 
|                                     |                                                                              | Total liabilities and shareholders equity |   | $         | 3,702,619 |  |   | $         | 3,025,577 | 
|                                     |                                                                              |                                            |   |           |           | 

|                                                                                      |                                           |                         |         |        |      |   |         |         |  |   |         |         | 
|------------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------- | ------- | ------ | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                                      |                                           | Year Ended December 31, |        
|                                                                                      |                                           |                         |        
|                                                                                      |                                           | 2004                    |         |        | 2003 |   |         | 2002    | 
|                                                                                      |                                           |                         |         |        |      |   |         |         | 
|Operating income:                                                                     |                                           |                         |         |        |      |   |         |         |  |   |         |        
|                                                                                      | Dividends from subsidiaries               |                         | $       |       |      |   | $       | 193,950 |  |   | $       | 112,331 | 
|                                                                                      | Net gains (losses) on sales of securities |                         |         | (6     | )    |   |         | 53      |  |   |         | 648     | 
|                                                                                      | Other operating income                    |                         |         | 6,680  |      |   |         | 6,226   |  |   |         | 6,456   | 
|                                                                                      |                                           |                         |         |        |      |   |         |         | 
|                                                                                      | Total operating income                    |                         |         | 6,674  |      |   |         | 200,229 |  |   |         | 119,435 | 
|                                                                                      |                                           |                         |         |        |      |   |         |         | 
|Operating expenses:                                                                   |                                           |                         |         |        |      |   |         |         |  |   |         |        
|                                                                                      | Interest on borrowings                    |                         |         | 32,716 |      |   |         | 31,266  |  |   |         | 26,994  | 
|                                                                                      | Merger and consolidation costs            |                         |         | 5,447  |      |   |         |        |  |   |         |        | 
|                                                                                      | Write-off of branch automation project    |                         |         |       |      |   |         |        |  |   |         | 6,170   | 
|                                                                                      | Other operating expenses                  |                         |         | 5,104  |      |   |         | 3,944   |  |   |         | 3,603   | 
|                                                                                      |                                           |                         |         |        |      |   |         |         | 
|                                                                                      | Total operating expenses                  |                         |         | 43,267 |      |   |         | 35,210  |  |   |         | 36,767  | 
|                                                                                      |                                           |                         |         |        |      |   |         |         | 
|Income before income taxes and equity in undistributed net
    income of subsidiaries |                                           |                         | (36,593 | )      |      |   | 165,019 |         |  |   | 82,668  |        
|Income tax benefit                                                                    |                                           |                         | (12,811 | )      |      |   | (10,126 | )       |  |   | (9,736  | )      
|                                                                                      |                                           |                         |         |        |      |   |         |         | 
|Income before equity in undistributed net income of subsidiaries                      |                                           |                         | (23,782 | )      |      |   | 175,145 |         |  |   | 92,404  |        
|Equity in undistributed net income of subsidiaries                                    |                                           |                         | 328,425 |        |      |   | 175,614 |         |  |   | 206,234 |        
|                                                                                      |                                           |                         |         |        |      |   |         |         | 
|Net income                                                                            |                                           | $                       | 304,643 |        |      | $ | 350,759 |         |  | $ | 298,638 |        
|                                                                                      |                                           |                         |         |        |      |   |         |         | 

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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                                        
|--- | -----------------------------------------------------------------------
|22. | Condensed Financial Information  Parent Company
    Only  (Continued)

|                                                    |                                                                                              |                         |         |          |      |   |          |          |   |   |         |          |  
|--------------------------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------- | ------- | -------- | ---- | - | -------- | -------- | - | - | ------- | -------- | -
|                                                    |                                                                                              | Year Ended December 31, |        
|                                                    |                                                                                              |                         |        
|                                                    |                                                                                              | 2004                    |         |          | 2003 |   |          | 2002     |  
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Cash flows from operating activities:               |                                                                                              |                         |         |          |      |   |          |          |   |   |         |         
|                                                    | Net income                                                                                   |                         | $       | 304,643  |      |   | $        | 350,759  |   |   | $       | 298,638  |  
|                                                    | Adjustments to reconcile net income to net cash (used) provided
    by operating activities: |                         |         |          |      |   |          |          |   |   |         |          |  
|                                                    | Undistributed net income from subsidiaries                                                   |                         |         | (328,425 | )    |   |          | (175,614 | ) |   |         | (206,234 | )
|                                                    | Write-off of branch automation project                                                       |                         |         |         |      |   |          |         |   |   |         | 6,170    |  
|                                                    | (Increase) decrease in amounts receivable from subsidiaries                                  |                         |         | (10,917  | )    |   |          | 83       |   |   |         | 23,618   |  
|                                                    | Decrease (increase) in other assets                                                          |                         |         | (8,380   | )    |   |          | 5,266    |   |   |         | (3,969   | )
|                                                    | Increase (decrease) in amounts payable to subsidiaries                                       |                         |         | (978     | )    |   |          | 978      |   |   |         | (1,029   | )
|                                                    | Increase (decrease) in other liabilities                                                     |                         |         | 19,164   |      |   |          | (10,920  | ) |   |         | 4,813    |  
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Net cash provided by operating activities           |                                                                                              |                         | (24,893 | )        |      |   | 170,552  |          |   |   | 122,007 |         
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Cash flows from investing activities:               |                                                                                              |                         |         |          |      |   |          |          |   |   |         |         
|                                                    | Net decrease (increase) in interest bearing deposits with
    subsidiaries                   |                         |         | 31,550   |      |   |          | (110,040 | ) |   |         | (97,097  | )
|                                                    | Purchase of available for sale securities                                                    |                         |         |         |      |   |          | (3,171   | ) |   |         | (3,037   | )
|                                                    | Sales of available for sale securities                                                       |                         |         | 28       |      |   |          | 840      |   |   |         |         |  
|                                                    | Capital contribution to subsidiaries                                                         |                         |         |         |      |   |          | (70,000  | ) |   |         |         |  
|                                                    | Cash acquired in acquisition                                                                 |                         |         | 1,518    |      |   |          | 36,022   |   |   |         | 6,110    |  
|                                                    | Proceeds from sale of investment to subsidiary                                               |                         |         | 6,150    |      |   |          |         |   |   |         |         |  
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Net cash (used in) provided by investing activities |                                                                                              |                         | 39,246  |          |      |   | (146,349 | )        |   |   | (94,024 | )       
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Cash flows from financing activities:               |                                                                                              |                         |         |          |      |   |          |          |   |   |         |         
|                                                    | Proceeds from line of credit                                                                 |                         |         |         |      |   |          |         |   |   |         | 25,000   |  
|                                                    | Payment of line of credit                                                                    |                         |         |         |      |   |          |         |   |   |         | (25,000  | )
|                                                    | Proceeds from sale of trust preferred securities                                             |                         |         |         |      |   |          |         |   |   |         | 193,150  |  
|                                                    | Proceeds from sale of senior notes                                                           |                         |         |         |      |   |          | 148,693  |   |   |         |         |  
|                                                    | Payment of notes payable                                                                     |                         |         |         |      |   |          |         |   |   |         | (1,068   | )
|                                                    | Dividends paid to shareholders                                                               |                         |         | (135,132 | )    |   |          | (111,889 | ) |   |         | (85,894  | )
|                                                    | Treasury stock acquired                                                                      |                         |         |         |      |   |          | (105,071 | ) |   |         | (154,054 | )
|                                                    | Proceeds from stock issued in connection with employee benefit
    plans                     |                         |         | 148,961  |      |   |          | 48,677   |   |   |         | 30,406   |  
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Net cash (used in) financing activities             |                                                                                              |                         | 13,829  |          |      |   | (19,590  | )        |   |   | (17,460 | )       
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Net increase in cash due from banks                 |                                                                                              |                         | 28,182  |          |      |   | 4,613    |          |   |   | 10,523  |         
|Cash and due from banks at beginning of year        |                                                                                              |                         | 27,492  |          |      |   | 22,879   |          |   |   | 12,356  |         
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Cash and due from banks at end of year              |                                                                                              | $                       | 55,674  |          |      | $ | 27,492   |          |   | $ | 22,879  |         
|                                                    |                                                                                              |                         |         |          |      |   |          |          |  
|Supplemental disclosure information:                |                                                                                              |                         |         |          |      |   |          |          |   |   |         |         
|                                                    | Interest paid on borrowings                                                                  |                         | $       | 32,666   |      |   | $        | 30,329   |   |   | $       | 22,867   |  

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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                                        
|--- | -----------------------------------------------------------------------
|22. | Condensed Financial Information  Parent Company
    Only  (Continued)







|    |                              
|--- | -----------------------------
|23. | Subsequent Events (unaudited)









104



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BANKNORTH GROUP INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                    
|--- | -----------------------------------
|24. | Selected Quarterly Data (unaudited)

|                                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |         |  |   |         |         |  |   |         |         | 
|---------------------------------------------------------------- | ------- | --- |  | ------- | ------- | ------- | ------- | - | ------- | ------- |  | - | ------- | ------- |  | ------- | ------- | ------- | ------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |         |     |  | 2004    |         |         | 2003    |  
|                                                                 |         |     |  |         |         |         |         |  
|                                                                 |         |     |  | Fourth  |         |         | Third   |   |         | Second  |  |   | First   |         |  | Fourth  |         |         | Third   |   |         | Second  |  |   | First   |        
|                                                                 |         |     |  | Quarter |         |         | Quarter |   |         | Quarter |  |   | Quarter |         |  | Quarter |         |         | Quarter |   |         | Quarter |  |   | Quarter |        
|                                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |        
|Condensed Income Statement                                       |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |         |  |   |         |         |  |   |         |        
|Interest income                                                  |         |     |  | $       | 329,846 |         |         | $ | 325,361 |         |  | $ | 309,146 |         |  | $       | 292,652 |         |         | $ | 290,414 |         |  | $ | 290,750 |         |  | $ | 302,478 |         |  | $ | 309,327 |        
|Interest expense                                                 |         |     |  |         | 83,783  |         |         |   | 85,701  |         |  |   | 79,096  |         |  |         | 75,043  |         |         |   | 77,126  |         |  |   | 80,918  |         |  |   | 90,904  |         |  |   | 103,190 |        
|                                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |        
|Net interest income                                              |         | (A) |  |         | 246,063 |         |         |   | 239,660 |         |  |   | 230,050 |         |  |         | 217,609 |         |         |   | 213,288 |         |  |   | 209,832 |         |  |   | 211,574 |         |  |   | 206,137 |        
|Provision for loan and lease losses                              |         |     |  |         | 10,670  |         |         |   | 10,670  |         |  |   | 9,500   |         |  |         | 9,500   |         |         |   | 10,400  |         |  |   | 10,500  |         |  |   | 10,500  |         |  |   | 10,901  |        
|                                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |        
|Net interest income after provision for loan and lease losses    |         |     |  |         | 235,393 |         |         |   | 228,990 |         |  |   | 220,550 |         |  |         | 208,109 |         |         |   | 202,888 |         |  |   | 199,332 |         |  |   | 201,074 |         |  |   | 195,236 |        
|Noninterest income(1)                                            |         | (B) |  |         | 70,591  |         |         |   | 91,513  |         |  |   | 89,476  |         |  |         | 88,217  |         |         |   | 84,435  |         |  |   | 88,656  |         |  |   | 115,828 |         |  |   | 78,238  |        
|Noninterest expense, excluding merger and consolidation costs(2) |         | (C) |  |         | 229,073 |         |         |   | 168,595 |         |  |   | 159,691 |         |  |         | 158,105 |         |         |   | 154,360 |         |  |   | 150,839 |         |  |   | 182,509 |         |  |   | 145,458 |        
|Merger and consolidation costs                                   |         | (D) |  |         | 38,286  |         |         |   | 5,603   |         |  |   | 4,135   |         |  |         | 1,614   |         |         |   | 1,316   |         |  |   | 808     |         |  |   | 1,530   |         |  |   | 4,450   |        
|                                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |        
|Income before income taxes                                       |         |     |  |         | 38,625  |         |         |   | 146,305 |         |  |   | 146,200 |         |  |         | 136,607 |         |         |   | 131,647 |         |  |   | 136,341 |         |  |   | 132,863 |         |  |   | 123,566 |        
|Income tax expense                                               |         |     |  |         | 17,927  |         |         |   | 48,534  |         |  |   | 50,353  |         |  |         | 46,280  |         |         |   | 40,085  |         |  |   | 46,063  |         |  |   | 45,338  |         |  |   | 42,173  |        
|                                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |        
|Net income(1)(2)                                                 |         |     |  | $       | 20,698  |         |         | $ | 97,771  |         |  | $ | 95,847  |         |  | $       | 90,327  |         |         | $ | 91,562  |         |  | $ | 90,278  |         |  | $ | 87,525  |         |  | $ | 81,393  |        
|                                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |        
|Weighted average shares outstanding:                             |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |         |  |   |         |         |  |   |         |        
|                                                                 | Basic   |     |  |         |         | 177,071 |         |   |         | 173,271 |  |   |         | 169,637 |  |         |         | 162,965 |         |   |         | 162,149 |  |   |         | 161,517 |  |   |         | 162,312 |  |   |         | 157,667 | 
|                                                                 | Diluted |     |  |         |         | 179,953 |         |   |         | 176,756 |  |   |         | 173,109 |  |         |         | 166,657 |         |   |         | 165,685 |  |   |         | 164,446 |  |   |         | 164,559 |  |   |         | 159,328 | 
|Basic earnings per share:                                        |         |     |  | $       | 0.12    |         |         | $ | 0.56    |         |  | $ | 0.57    |         |  | $       | 0.55    |         |         | $ | 0.56    |         |  | $ | 0.56    |         |  | $ | 0.54    |         |  | $ | 0.52    |        
|Diluted earnings per share:                                      |         |     |  | $       | 0.12    |         |         | $ | 0.55    |         |  | $ | 0.55    |         |  | $       | 0.54    |         |         | $ | 0.55    |         |  | $ | 0.55    |         |  | $ | 0.53    |         |  | $ | 0.51    |        
|Financial Ratios                                                 |         |     |  |         |         |         |         |   |         |         |  |   |         |         |  |         |         |         |         |   |         |         |  |   |         |         |  |   |         |         |  |   |         |        
|Return on average assets(1)(2)(3)                                |         |     |  |         | 0.29    | %       |         |   | 1.33    | %       |  |   | 1.36    | %       |  |         | 1.37    | %       |         |   | 1.39    | %       |  |   | 1.39    | %       |  |   | 1.38    | %       |  |   | 1.32    | %      
|Return on average equity(1)(2)(3)                                |         |     |  |         | 2.66    | %       |         |   | 13.24   | %       |  |   | 13.54   | %       |  |         | 14.13   | %       |         |   | 14.72   | %       |  |   | 14.85   | %       |  |   | 14.24   | %       |  |   | 14.26   | %      
|Net interest margin (fully-taxable equivalent)(3)                |         |     |  |         | 3.87    | %       |         |   | 3.68    | %       |  |   | 3.66    | %       |  |         | 3.68    | %       |         |   | 3.65    | %       |  |   | 3.63    | %       |  |   | 3.71    | %       |  |   | 3.66    | %      
|Noninterest income as a percent of total income(4)               |         |     |  |         | 22.29   | %       |         |   | 27.63   | %       |  |   | 28.00   | %       |  |         | 28.85   | %       |         |   | 28.36   | %       |  |   | 29.70   | %       |  |   | 35.38   | %       |  |   | 27.51   | %      
|Efficiency ratio(1)(2)(5)                                        |         |     |  |         | 84.43   | %       |         |   | 52.60   | %       |  |   | 51.27   | %       |  |         | 52.23   | %       |         |   | 52.29   | %       |  |   | 50.81   | %       |  |   | 56.21   | %       |  |   | 52.71   | %      






|    |                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Noninterest income included net securities gains (losses) of
    ($17.8) million and $29.2 million in the fourth
    quarter of 2004 and second quarter of 2003, respectively, which
    were incurred as part of balance sheet deleveraging programs
    implemented during these periods.        
|   
|(2) | Noninterest expense included prepayment penalties on borrowings
    of $61.5 million and $28.5 million in the fourth
    quarter of 2004 and the second quarter of 2003, respectively,
    which were incurred as part of balance sheet deleveraging
    programs implemented during these periods.
|   
|(3) | Annualized.                                                                                                                                                                                                                                                                                        
|   
|(4) | Represents noninterest income as a percentage of net interest
    income and noninterest income. Noninterest income as a percent
    of total income is calculated as (B) divided by (A+B).                                                                                                        
|   
|(5) | Represents noninterest expenses as a percentage of net interest
    income and noninterest income. Efficiency ratio is calculated as
    (C+D) divided by (A+B).                                                                                                                                   

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Report of Independent Registered Public Accounting Firm












Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO)




|            | 
|----------- | 
|(KPMG LOGO) | 





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Report of Independent Registered Public Accounting Firm






Internal Control  Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).








Internal
Control  Integrated Framework issued by Committee of
Sponsoring Organizations of the Treadway Commission




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|            | 
|----------- | 
|(KPMG LOGO) | 





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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures.


Management Report on Internal Control over Financial
Reporting. Internal
Control  Integrated Framework Internal Control  Integrated Framework,


Changes in Internal Control Over Financial Reporting.







|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III.







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant












|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and
Management.


Equity Compensation Plan Information.







|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services






PART IV.







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules





| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | Consolidated balance sheets at December 31, 2004 and 2003                                                                                
|
| | Consolidated statements of income for each of the years in the
    three-year period ended December 31, 2004                             
|
| | Consolidated statements of changes in shareholders equity
    for each of the years in the three-year period ended
    December 31, 2004
|
| | Consolidated statements of cash flows for each of the years in
    the three-year period ended December 31, 2004                         









|            |   |        |         |                                                                                                                                                                                                                                |          |  |     | 
|----------- | - | ------ | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------- |  | --- | 
|Exhibit No. |   |        | Exhibit |                                                                                                                                                                                                                                | Location | 
|            |   |        |         |                                                                                                                                                                                                                                |          | 
|            | 3 | (a)(1) |         | Amended and Restated Articles of Incorporation of Banknorth                                                                                                                                                                    |          |  | (1) | 
|            | 3 | (a)(2) |         | Amendments to the Articles of Incorporation of Banknorth                                                                                                                                                                       |          |  | (2) | 
|            | 3 | (b)    |         | Bylaws of Banknorth                                                                                                                                                                                                            |          |  | (3) | 
|            | 4 | (a)    |         | Specimen Common Stock certificate                                                                                                                                                                                              |          |  | (4) | 
|            | 4 | (b)    |         | Stockholder Rights Agreement, dated as of September 12,
    1989 and amended and restated as of July 27, 1999 and as of
    July  25, 2000, between Banknorth and American Stock
    Transfer & Trust Company, as Rights Agent |          |  | (5) | 
|            | 4 | (c)    |         | Instruments defining the rights of security holders, including
    indentures                                                                                                                                                  |          |  | (6) | 

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|            |    |        |         |                                                                                                                                                                                              |          |  |      | 
|----------- | -- | ------ | ------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- |  | ---- | 
|Exhibit No. |    |        | Exhibit |                                                                                                                                                                                              | Location | 
|            |    |        |         |                                                                                                                                                                                              |          | 
|            | 10 | (a)    |         | Employment Agreement, dated as of August 25, 2004, by and
    among Banknorth, Banknorth Delaware, TD and William J.
    Ryan                                                                |          |  | (7)  | 
|            | 10 | (b)    |         | Employment Agreement, dated as of August 25, 2004, by and
    among Banknorth, Banknorth Delaware, TD and Peter J. Verrill                                                                   |          |  | (7)  | 
|            | 10 | (c)    |         | Form of Retention Agreement, dated as of August 25, 2004,
    between Banknorth and David J. Ott                                                                                             |          |  | (7)  | 
|            | 10 | (d)    |         | Form of Retention Agreement, dated as of August 25, 2004,
    between Banknorth and Andrew W. Greene                                                                                         |          |  | (7)  | 
|            | 10 | (e)    |         | Form of Retention Agreement, dated as of August 25, 2004,
    between Banknorth and Wendy Suechrstedt                                                                                        |          |  | (7)  | 
|            | 10 | (f)    |         | Form of Retention Agreement, dated as of August 25, 2004,
    between Banknorth and Stephen J. Boyle                                                                                         |          |  | (7)  | 
|            | 10 | (g)    |         | Form of Retention Agreement, dated as of August 25, 2004,
    between Banknorth and John W. Fridlington                                                                                      |          |  | (7)  | 
|            | 10 | (h)    |         | Form of Retention Agreement, dated as of August 25, 2004,
    between Banknorth and Carol L. Mitchell                                                                                        |          |  | (7)  | 
|            | 10 | (i)    |         | Retention Agreement, dated as of September 30, 2004,
    between Banknorth and Edward P. Schreiber                                                                                           |          |  |      | 
|            | 10 | (j)(1) |         | Amended and Restated Supplemental Retirement Agreement between
    Banknorth and William J. Ryan                                                                                             |          |  | (8)  | 
|            | 10 | (j)(2) |         | First Amendment to Amended and Restated Supplemental Retirement
    Agreement between Banknorth and William J. Ryan                                                                          |          |  |      | 
|            | 10 | (k)(1) |         | Amended and Restated Supplemental Retirement Agreement between
    Banknorth and Peter J. Verrill                                                                                            |          |  | (8)  | 
|            | 10 | (k)(2) |         | First Amendment to Amended and Restated Supplemental Retirement
    Agreement between Banknorth and Peter J. Verrill                                                                         |          |  |      | 
|            | 10 | (l)(1) |         | Supplemental Retirement Agreement between Banknorth and John W.
    Fridlington                                                                                                              |          |  | (9)  | 
|            | 10 | (l)(2) |         | First Amendment to Supplemental Retirement Agreement between
    Banknorth and John W. Fridlington                                                                                           |          |  | (10) | 
|            | 10 | (l)(3) |         | Second Amendment to Supplemental Retirement Agreement between
    Banknorth and John W. Fridlington                                                                                          |          |  | (8)  | 
|            | 10 | (1)(4) |         | Third Amendment to Supplemental Retirement Agreement between
    Banknorth and John W. Fridlington                                                                                           |          |  |      | 
|            | 10 | (m)(1) |         | Banknorth Group, Inc. Supplemental Retirement Plan (which covers
    each executive officer of Banknorth named in the Proxy
    Statement, other than Messrs. Ryan, Verrill and Fridlington) |          |  | (10) | 
|            | 10 | (m)(2) |         | First Amendment to the Banknorth Group Inc. Supplemental
    Retirement Plan                                                                                                                 |          |  |      | 
|            | 10 | (n)(1) |         | Amended and Restated Deferred Compensation Plan for Non-Employee
    Directors and Key Employees, effective January 1, 2003                                                                  |          |  | (10) | 
|            | 10 | (n)(2) |         | First Amendment to the Amended and Restated Deferred
    Compensation Plan for Non-Employee Directors and Key Employees                                                                      |          |  |      | 
|            | 10 | (o)    |         | 1986 Stock Option and Stock Appreciation Rights Plan, as amended                                                                                                                             |          |  | (11) | 
|            | 10 | (p)    |         | Amended and Restated Employee Stock Purchase Plan                                                                                                                                            |          |  | (12) | 
|            | 10 | (q)    |         | Amended and Restated Restricted Stock Plan for Non-Employee
    Directors                                                                                                                    |          |  | (13) | 
|            | 10 | (r)    |         | Amended and Restated 1995 Stock Option Plan for Non-Employee
    Directors                                                                                                                   |          |  | (8)  | 

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|            |      |        |         |                                                                            |          |  |      | 
|----------- | ---- | ------ | ------- | -------------------------------------------------------------------------- | -------- |  | ---- | 
|Exhibit No. |      |        | Exhibit |                                                                            | Location | 
|            |      |        |         |                                                                            |          | 
|            | 10   | (s)(1) |         | Amended and Restated 401(k) Plan, effective January 1, 2004                |          |  | (8)  | 
|            | 10   | (s)(2) |         | First Amendment to the Amended and Restated 401(k) Plan                    |          |  |      | 
|            | 10   | (t)    |         | 1996 Equity Incentive Plan, as amended                                     |          |  | (10) | 
|            | 10   | (u)    |         | Executive Incentive Plan                                                   |          |  | (10) | 
|            | 10   | (v)    |         | 2003 Equity Incentive Plan                                                 |          |  | (14) | 
|            | 10   | (w)    |         | Amended and Restated 2003 Equity Incentive Plan                            |          |  | (15) | 
|            | 21   |        |         | Subsidiaries of Banknorth Group, Inc.                                      |          |  |      | 
|            | 23   |        |         | Consent of KPMG LLP                                                        |          |  |      | 
|            | 31.1 |        |         | Certification of Chief Executive Officer under Rules 13a-14
    and 15d-14 |          |  |      | 
|            | 31.2 |        |         | Certification of Chief Financial Officer under Rules 13a-14
    and 15d-14 |          |  |      | 
|            | 32.1 |        |         | Certification of Chief Executive Officer Under 18 U.S.C.
    §1350         |          |  |      | 
|            | 32.2 |        |         | Certification of Chief Financial Officer Under 18 U.S.C.
    §1350         |          |  |      | 






| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to Exhibit A to the Agreement and
    Plan of Merger, dated as of October 27, 1997, between
    Banknorth and CFX Corporation, which agreement is included as
    Exhibit A to the Prospectus/ Proxy Statement included in
    the Form S-4 Registration Statement (No. 333-23991)
    filed by Banknorth with the SEC on December 31, 1997.                                                                         
|
| | (2) | Exhibits are incorporated by reference to (i) the proxy
    statement filed by Banknorth with the SEC on March 23,
    1998, (ii) the proxy statement filed by Banknorth with the
    SEC on March 22, 2000 and (iii) the Form S-4
    Registration Statement (No. 333-95587) filed by Banknorth
    with the SEC on January 28, 2000, which describes an
    amendment which changed the name of the registrant to
    Banknorth Group, Inc.
|
| | (3) | Exhibit is incorporated by reference to the Form 10-Q
    report filed by Banknorth for the three months ended
    September 30, 2003.                                                                                                                                                                                                                                                                                                         
|
| | (4) | Exhibit is incorporated by reference to the Form S-4
    Registration Statement (No. 333-95587) filed by Banknorth
    with the SEC on January 28, 2000.                                                                                                                                                                                                                                                                                       
|
| | (5) | Exhibit is incorporated by reference to the Form 8-A/ A
    report filed by Banknorth with the SEC on July 26, 2000.                                                                                                                                                                                                                                                                                                                           
|
| | (6) | Banknorth has no instruments defining the rights of holders of
    its long-term debt where the amount of securities authorized
    under any such instrument exceeds 10% of the total assets of
    Banknorth and its subsidiaries on a consolidated basis.
    Banknorth hereby agrees to furnish a copy of any such instrument
    to the SEC upon request.                                                                                 
|
| | (7) | Exhibit is incorporated by reference to the Form 8-K report
    filed by Banknorth on August 31, 2004. Upon completion of
    the TD acquisition, the indicated agreement will supersede the
    previously-filed severance agreement between Banknorth and such
    officer.                                                                                                                                                                  
|
| | (8) | Exhibit is incorporated by reference to Banknorths
    Form 10-K report for the year ended December 31, 2003.                                                                                                                                                                                                                                                                                                                                 
|
| | (9) | Exhibit is incorporated by reference to Banknorths
    Form 10-K report for the year ended December 31, 1995.                                                                                                                                                                                                                                                                                                                                 



|     |                                                                                                                                                                                                                                                                                                                                                     
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Exhibit is incorporated by reference to Banknorths
    Form 10-K report for the year ended December 31, 2002.                                                                                                                                                                                                                                      
|    
|(11) | Exhibit is incorporated by reference to the Form S-4
    Registration Statement (No. 33-20243) filed by Banknorth
    with the SEC on February 22, 1988. An amendment to the 1986
    Stock Option and Stock Appreciation Rights Plan is incorporated
    by reference to the proxy statement filed by Banknorth with the
    SEC on March 24, 1994.

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|     |                                                                                                                                                                                         
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(12) | Exhibit is incorporated by reference to the proxy statement
    dated March 22, 2002 filed by Banknorth with the SEC.                                                                   
|    
|(13) | Exhibit is incorporated by reference to the Form 10-K
    report filed by Banknorth for the year ended December 31,
    1996.                                                           
|    
|(14) | Exhibit is incorporated by reference to the proxy statement
    dated March 10, 2003 filed by Banknorth with the SEC.                                                                   
|    
|(15) | Exhibit is incorporated by reference to Annex B to
    Banknorths proxy statement for its 2005 annual meeting of
    stockholders, which will be filed on or before April 30,
    2005.







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SIGNATURES






|                      | 
|--------------------- | 
|Banknorth Group, Inc. | 

|    |  |                                                                                           |  |                        
|--- |  | ----------------------------------------------------------------------------------------- |  | -----------------------
|   
|By: |  | /s/ William J. RyanWilliam
    J. RyanChairman, President and
    Chief Executive Officer |  | Date: February 25, 2005



|                                                        |  |                         |  | 
|------------------------------------------------------- |  | ----------------------- |  | 
|                                                       
|/s/Gary
    G. Bahre
    Director                       |  | Date:                  
|                                                       
|/s/ Robert G. ClarkeRobert
    G. Clarke
    Director   |  | Date: February 24, 2005
|                                                       
|/s/ P. Kevin CondronP. Kevin
    Condron
    Director   |  | Date: February 23, 2005
|                                                       
|/s/ John Otis DrewJohn
    Otis Drew
    Director       |  | Date: February 24, 2005
|                                                       
|/s/ Colleen A. KhouryColleen
    A. Khoury
    Director |  | Date: February 23, 2005
|                                                       
|/s/ Dana S. LevensonDana
    S. Levenson
    Director   |  | Date: February 24, 2005
|                                                       
|/s/Steven
    T. Martin
    Director                    |  | Date:                  
|                                                       
|/s/ John M. NaughtonJohn
    M. Naughton
    Director   |  | Date: February 24, 2005

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|                                                                                                                                                           |  |                         |  | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- |  | 
|                                                                                                                                                          
|/s/ Malcolm W. Philbrook,
    Jr.Malcolm
    W. Philbrook, Jr. 
    Director                                                                               |  | Date: February 23, 2005
|                                                                                                                                                          
|/s/Angelo
    P. Pizzagali
    Director                                                                                                                    |  | Date:                  
|                                                                                                                                                          
|/s/Irving
    E. Rogers, III
    Director                                                                                                                  |  | Date:                  
|                                                                                                                                                          
|/s/ William J. RyanWilliam
    J. Ryan
    Chairman, President and
    Chief Executive Officer
    (principal executive officer)                           |  | Date: February 25, 2005
|                                                                                                                                                          
|/s/ Curtis M. ScribnerCurtis
    M. Scribner
    Director                                                                                                  |  | Date: February 24, 2005
|                                                                                                                                                          
|/s/ Gerry S. WeidemaGerry
    S. Weidema
    Director                                                                                                      |  | Date: February 23, 2005
|                                                                                                                                                          
|/s/ Stephen J. BoyleStephen
    J. Boyle
    Executive Vice President and
    Chief Financial Officer
    (principal financial and
    accounting officer) |  | Date: February 24, 2005

115