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

                                    FORM 10-Q

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

For the quarterly period ended:                  Commission file number: 0-20167
September 30, 1998
                       NORTH COUNTRY FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

              MICHIGAN                                   38-2062816
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
    incorporation or organization)

    130 S. CEDAR STREET, MANISTIQUE, MI                   49854
   (Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (906) 341-8401


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months,  (or for such shorter  periods that the  registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                              Yes __X__  No ______


As of  September  30,  1998,  there  were  outstanding  7,152,724  shares of the
registrant's common stock, no par value.

                                                                              1.
<PAGE>
<TABLE>
                       NORTH COUNTRY FINANCIAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands of dollars)
                                   (Unaudited)
                                                                          September 30,    December 31,
                                                                              1998             1997
ASSETS
<S>                                                                        <C>             <C>
     Cash and due from banks                                                $ 13,191        $   9,338
     Federal funds sold                                                        8,406            1,805
                                                                           ---------        ---------
         Total cash and cash equivalents                                      21,597           11,143

     Securities available for sale                                             9,410           10,103
     Loans                                                                   398,993          372,519
     Allowance for loan losses                                                (6,270)          (5,600)
                                                                           ---------        ---------
                                                                             392,723          366,919
     Premises and equipment                                                   18,365           17,477
     Other assets                                                             12,955           15,792
                                                                           ---------        ---------
         Total assets                                                      $ 455,050         $421,434
                                                                           =========        =========
LIABILITIES AND SHAREHOLDERS' EQUITY
     Deposits
         Noninterest-bearing                                                $ 38,718         $ 33,354
         Interest-bearing                                                    347,437          327,195
                                                                           ---------        ---------
              Total deposits                                                 386,155          360,549
     Federal funds purchased and securities sold 
        under agreement to repurchase                                          2,215            1,895
     Other borrowings                                                         24,076           19,628
     Accrued expenses and other liabilities                                    3,408            2,770
                                                                           ---------        ---------
         Total liabilities                                                   415,854          384,842

Shareholders' equity
     Preferred stock, no par value, 500,000 shares authorized,
       no shares outstanding Common stock, no par value,
       18,000,000 shares authorized and 7,152,724 outstanding
       at September 30, 1998 and 6,000,000 authorized and
       2,379,490 outstanding at December 31, 1997                             20,097           19,916
     Retained earnings                                                        19,102           16,679
     Unrealized loss on securities available for sale, net                        (3)              (3)
                                                                           ---------        ---------
         Total shareholders' equity                                           39,196           36,592
                                                                           ---------        ---------
              Total liabilities and shareholders' equity                   $ 455,050        $ 421,434
                                                                           =========        =========

See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                                                              2.
<PAGE>
<TABLE>
                       NORTH COUNTRY FINANCIAL CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                            (In thousands of dollars)
                                   (Unaudited)


                                                              Three months ended             Nine months ended
                                                           ------September 30,------     ------September 30,------
                                                             1998           1997            1998           1997
                                                             ----           ----            ----           ----
Interest income
<S>                                                           <C>           <C>            <C>              <C>
     Loans, including fees                                    $ 9,370       $  8,988       $ 27,720         $ 25,571
     Securities
         Taxable                                                  185            223            582              797
         Exempt from federal taxation                              14              9             18               26
     Other                                                         98            109            345              237
                                                             --------       --------       --------         --------
                                                                9,667          9,329         28,665           26,631

Interest expense
     Deposits                                                   4,165          3,782         12,238           10,712
     Borrowed funds                                               382            298            975              931
                                                             --------       --------       --------         --------
                                                                4,547          4,080         13,213           11,643
                                                             --------       --------       --------         --------
Net interest income                                             5,120          5,249         15,452           14,988

Provision for loan losses                                         450            530          1,125              878
                                                             --------       --------       --------         --------
Net interest income after provision for loan losses             4,670          4,719         14,327           14,110

Noninterest income
     Service charges on deposit accounts                          333            334          1,043              856
     Gains on sale of loans                                        28             20             83               41
     Securities gain (losses)                                                    (17)            44              (17)
     Other                                                        301             91            750              263
                                                             --------       --------       --------         --------
                                                                  662            428          1,920            1,143
Noninterest expense
     Salaries and employee benefits                             1,590          1,405          4,798            4,437
     Occupancy                                                    632            540          1,798            1,667
     Other                                                      1,509          1,793          4,789            4,923
                                                             --------       --------       --------         --------
                                                                3,731          3,738         11,385           11,027
                                                             --------       --------       --------         --------

Income before income tax                                        1,601          1,409          4,862            4,226

Income tax expense                                                453            194          1,247              921
                                                             --------       --------       --------         --------

Net income                                                   $  1,148       $  1,215       $  3,615         $  3,305
                                                            =========      =========      =========        =========
Weighted average common shares outstanding                  7,131,698      7,144,626      7,132,551        7,128,675
                                                            =========      =========      =========        =========
Basic earnings per common share                              $    .16       $    .17       $    .51        $     .46
                                                             ========       ========       ========        =========
Diluted earnings per common share                            $    .16       $    .17       $    .50        $     .46
                                                             ========       ========       ========        =========

See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                                                              3.
<PAGE>
<TABLE>
                       NORTH COUNTRY FINANCIAL CORPORATION
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                            (In thousands of dollars)
                                   (Unaudited)


                                                            Three months ended              Three months ended
                                                            September 30, 1998              September 30, 1997
                                                         Shares       Equity Total        Shares          Equity Total
<S>                                                      <C>           <C>                <C>           <C>
Balance - beginning of period                            2,369,811     $37,760            2,376,578     $35,163

Net income for period                                                    1,148                            1,215
Net change in unrealized gain on
  securities available for sale                                              9                               71
                                                                      --------                         --------
     Total comprehensive income                                          1,157                            1,286

Cash dividends                                                            (315)                            (305)

Issuance of common stock related to
  3 for 1 stock split                                    4,756,773

Issuance of common stock                                    26,140         594                7,529         160

Common stock retired                                                                         (1,500)        (65)
                                                        ----------    --------            ---------    --------
                                                         7,152,724    $ 39,196            2,382,607    $ 36,239
                                                        ==========    ========            =========    ========
</TABLE>
<TABLE>
                                                             Nine months ended               Nine months ended
                                                            September 30, 1998              September 30, 1997
                                                         Shares       Equity Total        Shares          Equity Total
<S>                                                      <C>           <C>                <C>             <C>
Balance - beginning of period                            2,379,490      $ 36,592          2,363,734       $  32,386

Net income year-to-date                                                    3,615                              3,305
Net change in unrealized gain on
  securities available for sale                                                1                                141
                                                                       ---------                           --------
     Total comprehensive income                                            3,616                              3,446

Cash dividends                                                              (934)                              (878)

Issuance of common stock                                    30,638           875             26,488           1,557

Issuance of common stock related to
  3 for 1 stock split                                    4,756,773

Common stock retired                                       (14,177)         (953)            (7,615)           (272)
                                                        ----------     ---------         ----------       ---------
                                                         7,152,724     $  39,196          2,382,607       $  36,239
                                                        ==========     =========         ==========       =========

See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                                                              4.

<PAGE>
<TABLE>
                       NORTH COUNTRY FINANCIAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands of dollars)
                                   (Unaudited)


                                                                                         Nine months   Nine months
                                                                                            ended         ended
                                                                                       September 30,  September 30,
                                                                                            1998          1997
<S>                                                                                     <C>             <C>
Cash flows from operating activities                                                    $     8,771     $    6,303

Cash flows from investing activities
     Net change in interest-bearing deposits with banks                                                        438
     Purchase of securities available for sale                                               (4,000)          (830)
     Proceeds from sales of securities available for sale                                       752          9,847
     Proceeds from maturities, calls or paydowns of securities available for sale             3,943            488
     Net increase in loans                                                                  (26,474)       (24,664)
     Purchase of premises and equity                                                         (1,900)        (3,668)
     Net cash provided in acquisitions                                                                          32
                                                                                        -----------      ---------
         Net cash from investing activities                                                 (27,679)       (18,357)

Cash flows from financial activities
     Net increase in deposits                                                                25,606         31,471
     Net increase (decrease) in federal funds purchased and securities
       sold under agreements to repurchase                                                      320         (5,000)
     Proceeds from other borrowings                                                          10,500         14,950
     Payment on other borrowings                                                             (6,052)       (18,658)
     Proceeds from issuance of common stock                                                     875          1,286
     Retirement of common stock                                                                (953)
     Payment of dividends                                                                      (934)          (879)
                                                                                        -----------      ---------
         Net cash from financing activities                                                  29,362         23,170
                                                                                        -----------      ---------
Net change in cash and cash equivalents                                                      10,454         11,116

Cash and cash equivalents at beginning of period                                             11,143         12,164
                                                                                        -----------      ---------
Cash and cash equivalents at end of period                                              $    21,597     $   23,280
                                                                                        ===========      =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
                                                                              5.

<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



1. BASIS OF PRESENTATION

     The unaudited condensed  consolidated financial statements of North Country
     Financial  Corporation  (the  Registrant)  have been prepared in accordance
     with  generally  accepted  accounting   principles  for  interim  financial
     information and the  instructions to Form 10-Q and Rule 10-01 of Regulation
     S-X. Accordingly,  they do not include all of the information and footnotes
     required by generally accepted accounting principles for complete financial
     statements.  In the opinion of management,  all adjustments  (consisting of
     normal recurring  accruals)  considered  necessary for a fair  presentation
     have been included.  Operating  results for the  three-month  period ending
     September 30, 1998, and the nine-month period ending September 30, 1998 are
     not necessarily indicative of the results that may be expected for the year
     ending   December  31,  1998.  For  further   information,   refer  to  the
     consolidated  financial  statements and footnotes  thereto  included in the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1997.


2. ACCOUNTING CHANGES

     In June 1997, the FASB issued SFAS No. 131,  ""oDisclosures  about Segments
     of an  Enterprise  and Related  Information".  This  statement  establishes
     standards for the way that public business  enterprises  report information
     about operating  segments in annual financial  statements and requires that
     those enterprises  report selected  information about operating segments in
     interim financial reports issued to shareholders. This statement supersedes
     SFAS No. 14, "Financial  Reporting for Segments of a Business  Enterprise",
     but retains the requirement to report information about major customers. It
     also  amends   SFAS  No.  94,   ""oConsolidation   of  All   Majority-Owned
     Subsidiaries", to remove the special disclosure requirements for previously
     unconsolidated  subsidiaries.  The  statement  is effective  for  financial
     statements  for periods  beginning  after December 15, 1997. In the initial
     year of  application,  comparative  information  for earlier years is to be
     presented.  This  statement  need  not  be  applied  to  interim  financial
     statements  in  the  initial  year  of  its  application,  but  comparative
     information for interim periods in the initial year of application is to be
     reported in financial  statements for interim periods in the second year of
     application.  The  statement  is not  expected  to  have an  effect  on the
     financial position or operating results of the Registrant,  but may require
     additional  disclosures in the financial  statements.  The Registrant  will
     implement this statement with the December 31, 1998 annual report.

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statement of Financial  Accounting  Standards ("FAS") No. 133,  "Accounting
     for Derivative Instruments and Hedging Activities". This statement requires
     that all derivative financial instruments be recognized as either assets or
     liabilities in the statement of financial  position.  Derivative  financial
     instruments  not  designated  as hedges will be measured at fair value with
     changes in fair value being recognized in earnings in the period of change.
     If a derivative  is designated as a hedge,  the  accounting  for changes in
     fair value will depend on the specific exposure being hedged. The statement
     is effective for fiscal years beginning after June 15, 1999. Management, at
     this time,  cannot determine the effect adoption of this statement may have
     on the  financial  statements  of the Company as the effect is dependent of
     the  amount  and  nature  of  derivatives  and  hedges  held at the time of
     adoption of the statement.


3. PER SHARE CALCULATIONS

     A  resolution  for a 3 for 1 stock  split,  effected  by means of a 2 for 1
     stock  distribution,  for  shareholders  of record on August  25,  1998 was
     approved by the Board of Directors  on August 11,  1998.  All share and per
     share  amounts in this filing have been  retroactively  adjusted to reflect
     the 3 for 1 split.

                                 (Consolidated)
                                                                              6.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


4. ALLOWANCE FOR LOAN LOSSES

Activity in the  allowance  for loan losses for the nine months ended  September
30, 1998 and 1997, are summarized as follows:
<TABLE>
                            (In thousands of dollars)
                                                                            September 30,      September 30,
                                                                               1998                 1997
     <S>                                                                   <C>                 <C>
     Balance at beginning of period                                        $   5,600           $  4,591
     Charge-offs                                                                (533)              (370)
     Recoveries                                                                   78                 97
     Transferred from purchase of U.P. Financial                                                    298
     Provision for loan loss                                                   1,125                878
                                                                           ---------           --------
                                                                           $   6,270           $  5,494
                                                                           =========           ========
</TABLE>                                                                   
Information regarding impaired loans follows:
<TABLE>
                            (In thousands of dollars)
                                                                           September 30,       December 31,
                                                                               1998               1997
     <S>                                                                   <C>                 <C>
     Average investment in impaired loans                                  $   5,220           $  6,710
     Balance of impaired loans                                                 5,192              6,933
</TABLE>


5. OTHER BORROWINGS

Other  borrowings  consists of the  following at September 30, 1998 and December
31, 1997:
<TABLE>
                            (In thousands of dollars)
                                                                           September 30,    December 31,
                                                                               1998           1997
                                                                               ----           ----
<S>                                                                        <C>              <C>
Other borrowings
Federal Home Loan bank advances (6) at various rates with
various maturities (see annual financial statements)                       $ 20,850         $ 16,115

Farmers Home Administration, $2,000,000 fixed rate line
agreement maturing August 24, 2024, interest payable at 1%                    1,938            1,938

Note payable to NDB Bank, $500,000 fixed rate line
agreement maturing November 20, 1998, interest payable at
7.39%                                                                           500                0

Notes payable to South Range State Bank's former
stockholders, maturing in three equal annual installments
beginning February 1, 1997, interest payable at 5.2%                            788            1,575
                                                                           --------         --------
                                                                           $ 24,076         $ 19,628
                                                                           ========         ========

</TABLE>
The Federal Home Loan Bank borrowings are collateralized by a blanket collateral
agreement on the  Registrant's  residential  mortgage  loans.  Prepayment of the
advances is subject to the provisions and conditions of the credit policy of the
Federal  Home Loan Bank of  Indianapolis  in effect as of December  31, 1997 and
September 30, 1998. Borrowings other than Federal Home Loan Bank are not subject
to prepayment penalties.

                                                                              7.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)




The  following  discussion  and analysis of financial  condition  and results of
operations provides additional  information to assess the consolidated condensed
financial statements of the Registrant and its wholly-owned subsidiaries through
the third quarter of 1998.  The discussion  should be read in  conjunction  with
those statements and their accompanying notes.

The Registrant is not aware of any market or institutional  trends,  events,  or
circumstances  that will have or are reasonably likely to have a material effect
on liquidity,  capital  resources,  or results of operations except as discussed
herein.  Also,  the  Registrant is not aware of any current  recommendations  by
regulatory authorities which will have such effect if implemented.


Highlights:

Year to date  consolidated net income was $3,615,000  through September 30, 1998
compared to $3,305,000 for the same period in 1997. Earnings per share increased
from $.46 through  September 30, 1997, to $.51 for the same period in 1998.  The
loan portfolio  continues a significant growth trend with gross loans increasing
$26,500,000 or 7.11% since December 31, 1997. Loan growth remains focused in the
commercial  lending and leasing  areas.  The loan growth in 1998 has been funded
through  an  increase  in  the  deposit   portfolio.   Deposits  have  increased
$25,600,000 or 7.10% since December 31, 1997. The primary area of deposit growth
for the Registrant has been in money market accounts.


Forward-Looking Statements:

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act of 1934,  as  amended.  The  Registrant  intends  such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe future plans,  strategies and  expectations of the Registrant,  are
generally  identifiable  by use  of the  words  "believe",  "expect",  "intend",
"anticipate",  "estimate",  "project" or similar  expressions.  The Registrant's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which could have a material adverse affect on the
operations and future prospects of the Registrant and the subsidiaries  include,
but are not limited to, changes in: interest rates, general economic conditions,
legislative/regulatory  changes,  monetary  and  fiscal  policies  of  the  U.S.
Government,  including  policies of the U.S.  Treasury  and the Federal  Reserve
Board, the quality or composition of the loan or investment  portfolios,  demand
for loan products, deposit flows, competition,  demand for financial services in
the Registrant's market area and accounting principles, policies and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such  statements.  Further
information  concerning the Registrant  and its business,  including  additional
factors that could materially  affect the  Registrant's  financial  results,  is
included  in  the   Registrant's   filings  with  the  Securities  and  Exchange
Commission.


Financial Condition:

Loans:  Through the third  quarter of 1998,  loan  balances  increased  by $26.5
million.  Management  believes loans provide the most  attractive  earning asset
yield available to the Registrant and that trained personnel and controls are in
place  to  successfully  manage a  growing  portfolio.  Accordingly,  management
intends to continue to maintain  loans at the highest  level which is consistent
with maintaining  adequate liquidity.  As shown in the table below, the loan mix
remains relatively constant for the quarter ended September 30, 1998 compared to
December 31, 1997.

Management is aware of the risk associated with an increase in average  balances
of loans but feels that the current  level in the  allowance  for loan losses is
adequate. At September 30, 1998 the allowance for loan losses was equal to 1.57%
of total loans outstanding compared to 1.50% at December 31, 1997.

                                                                              8.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



Commercial real estate loans have increased by $1.3 million and loans to general
commercial  businesses  increased by $14.0 million  through the third quarter of
1998.  Commercial  leases  increased  $8.8  million at  September  30,  1998 and
governmental  leases  increased $5.0 million.  Management  continues to focus on
loan growth through an increase in the  commercial  lending and leasing areas. A
significant  portion of the growth is due to a  continued  ability to  penetrate
growth markets such as Marquette and Sault Ste. Marie. The other loan categories
have remained fairly  consistent since December 31, 1997 with  residential,  1-4
family  mortgages  decreasing by $.09 million,  consumer loans  decreasing  $2.6
million and construction loans increasing $.4 million at September 30, 1998.
<TABLE>
                                                       September 30,    % of           December 31,      % of
                                                           1998         Total              1997          Total
                                                           ----         -----              ----          -----
     <S>                                               <C>              <C>           <C>                 <C>
     Loans
     Commercial real estate                            $     87,396        21.9%      $     86,052        23.1%
     Commercial, financial, and agricultural                109,671        27.5             95,631        25.7
     Leases:
         Commercial                                          19,877         5.0             11,094         3.0
         Governmental                                        51,440        12.9             46,464        12.5
     1-4 family residential real estate                      95,454        23.9             95,543        25.6
     Consumer                                                24,177         6.1             26,795         7.2
     Construction                                            10,978         2.7             10,940         2.9
                                                       ------------     -------       ------------     -------
                                                       $    398,993       100.0%      $    372,519       100.0%
                                                       ============     =======       ============     =======
</TABLE>
Credit Quality: Management analyzes the allowance for loan losses in detail on a
monthly  basis to ensure that the losses  inherent in the portfolio are properly
recognized.  The Registrant's success in maintaining excellent credit quality is
demonstrated in its historical charge-off  percentage.  Net charge-offs to gross
loans   outstanding  was  .11%  and  .08%  for  September  30,  1998  and  1997,
respectively.  Charge-offs  for the period ended  September  30, 1998  increased
$163,000 from the same period in 1997.  This is mainly the result of an increase
in commercial and installment loan charge-offs for the period. Accordingly,  the
provision for loan losses was  increased  from $878,000 in the nine month period
ended September 30, 1997 to $1,125,000 for the same period in 1998.

The table  presented below shows the balances of nonaccrual  loans,  loans 90 or
more days  past due,  and  renegotiated  loans as of  September  30,  1998,  and
December 31, 1997.
<TABLE>
                            (In thousands of dollars)
                                                                September 30,     December 31,
                                                                    1998            1997
                                                                    ----            ----
     <S>                                                         <C>              <C>
     Nonaccrual loans                                            $  1,695         $  1,956
     Loans 90 days or more past due                                 1,630              698
     Renegotiated loans                                                 0                0
</TABLE>
While nonaccrual  loans have decreased  $261,000 or 13% since December 31, 1997,
loans 90 days or more past due have increased $932,000 or 134%. The cause of the
increase is due to two commercial loans that have become over 90 days delinquent
in the third quarter of 1998.  Management is actively  managing the current loan
delinquencies   and  has  taken   various   actions   to  reduce  the  level  of
non-performing  loans.  Non-performing  loans to total gross loans were .83% and
 .71% at September 30, 1998 and December 31, 1997, respectively.

Investments:  Available for sale  securities  decreased $.69 million through the
third quarter of 1998 due to the call of $3.9 million,  and sale of $.75 million
of  securities.  The mix of the portfolio  remained  relatively  unchanged  from
December  31, 1997.  The primary use of the  portfolio is to provide a source of
liquidity  and  pledging  for  certain  repurchase   agreements  and  regulatory
requirements.  Most of the  portfolio  is invested in U.S.  Treasury  and agency
securities  which have little  credit risk and are highly  liquid.  There are no
securities classified as held to maturity.

                                                                              9.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


Deposits: Total deposits through the third quarter have increased $25.6 million.
Interest  bearing  deposit  balances   increased  through  September  30,  1998,
continuing  a trend from 1997.  Management  has  continued  to offer  attractive
deposit products to its customer, generally through premium-based certificate of
deposit programs and higher yielding savings accounts.

Borrowings:  The Registrants branching network is a relatively high cost network
in comparison to peers.  Accordingly,  the Registrant uses  alternative  funding
sources to provide funds for lending activities.  Other borrowings  increased by
$4.4 million  through the third quarter (refer to the table  presented in Note 4
to the third  quarter  financial  statements  above for the  composition  of the
increase).  At September 30, 1998,  $20.85 million of the total  borrowings were
from the Federal Home Loan Bank of Indianapolis.  Alternative sources of funding
can be obtained at interest  rates which are  competitive  with,  or lower than,
retail deposit rates and with minimal administrative costs.

Liquidity:  The Registrants  sources of liquidity include principal  payments on
loans and  investments,  sales of securities  available for sale,  deposits from
customers,  borrowings from the Federal Home Loan Bank,  other bank  borrowings,
and the issuance of common stock. The Registrant has ready access to significant
sources of liquidity on an almost  immediate  basis.  Management  anticipates no
difficulty  in  maintaining  liquidity  at the levels  necessary  to conduct the
Registrants day-to-day business activities.


Results of Operations

Net Interest Income: Net interest income through September 30, 1998 decreased by
2.5%,  compared to the same period one year ago. The net interest  margin,  on a
fully tax  equivalent  basis at September 30, 1998 was 5.13%,  compared to 5.64%
for all of  1997.  The  net  yield  on  interest  earning  assets  reflects  the
competitive  nature of the  Registrant's  market.  Interest  income  from  loans
represented  96.9% of total  interest  income  through the third quarter of 1998
compared to 96.3% for the same period of 1997. In all cases, the total amount of
interest income and the yield on total earning assets is strongly  influenced by
lending activities.


Provision  for Loan Losses:  The  Registrant  maintains  the  allowance for loan
losses at a level  adequate  to cover  losses  inherent  in the  portfolio.  The
Registrant  records a  provision  for loan  losses  necessary  to  maintain  the
allowance at that level after  considering  factors such as loan charge-offs and
recoveries, changes in the mix of loans in the portfolio, loan growth, and other
economic factors.  The provision for loan losses has increased  $247,000 through
September  30,  1998  compared  to the same  period  in 1997 as a result  of the
Registrant's   desire  to  maintain  an  adequate  allowance  for  loan  losses.
Management  continues  to fund the  allowance  at a rate  consistent  with  loan
growth.  The  allowance to gross loans was 1.57% and 1.53% at September 30, 1998
and 1997, respectively.

Noninterest  Income:  Service  charges on deposit  accounts  increased  $187,000
through the third quarter of 1998 vs. the third quarter of 1997 due mainly to an
increased focus on non-interest  sources of income.  Gains on sales of loans has
increased to $83,000  through the third quarter of 1998 vs. $41,000  through the
third quarter of 1997 due to an increase in loan sale activity. Securities gains
were $45,000 through the third quarter of 1998.  Security losses of $17,000 were
reported for the same period in 1997.  The proceeds from the security sales were
used to fund loans in the Registrant's growing loan portfolio. Other noninterest
income  increased  $514,000  through  the third  quarter  of 1998 vs.  the third
quarter of 1997 due mainly to an increase in insurance  commissions and the sale
of property.

Noninterest  Expenses:  Noninterest  expense  increased 4% through September 30,
1998 compared to the same period of 1997.  The increase is  consistent  with the
Registrant's  asset growth.  Salary expense increased by $467,000 from September
30, 1997 to the same period in 1998. Much of the increase in salaries was due to
the Registrant's staffing of branches that opened in the second quarter of 1998.
Occupancy expense increased by $125,000 from September 30, 1997 to September 30,
1998. Other  noninterest  expense  decreased by $164,000 for this same period. A
primary objective of management is to hold the rate of increase in this category
below future asset growth.  Management believes this decrease is attributable to
significant efficiencies obtained and an increasing level of management emphasis
in this area.

                                                                             10.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


Federal  Income Tax: The  provision  for income taxes was 25.8% of income before
income tax through  September 30, 1998  compared to 21.8% through  September 30,
1997.  The difference  between the effective tax rate and the federal  corporate
income tax rate of 34% is primarily due to tax-exempt  interest earned on loans,
leases,  and  investments.  The  effective  tax rate has increased as tax-exempt
income has become a smaller portion of total interest income.

Interest Rate Risk:  Management actively manages the Registrant's  interest rate
risk. In relatively low interest rate environments  which have been in place the
last few years,  borrowers  have  generally  tried to extend the  maturities and
repricing periods on their loans and place deposits in demand or very short term
accounts.  Management  has taken various  actions to offset the imbalance  which
those  tendencies would otherwise  create.  Commercial and real estate loans are
written at variable  rates or, if necessary,  fixed rates for  relatively  short
terms.  Products have also been offered to give customers an incentive to accept
longer term  deposits.  Management  can also manage  interest rate risk with the
maturity periods of securities purchased, selling securities available for sale,
and borrowing funds with targeted maturity periods. Since December 31, 1997, the
Registrant has decreased its sensitivity in the cumulative net asset (liability)
funding  gap  for 1 - 180  days  from  ($34,038,000)  at  December  31,  1997 to
($15,303,000) at September 30, 1998.

Capital  Resources:  It is the policy of the Registrant to maintain capital at a
level  consistent  with both safe and sound  operations  and proper  leverage to
generate an appropriate  return on  shareholders'oequity.  The capital ratios of
the   Registrant   exceed  the  regulatory   guidelines  for  well   capitalized
institutions.  The table below shows the Registrant's  capital,  in thousands of
dollars, and capital ratios at September 30, 1998 and 1997.
<TABLE>
                                                       --------------------September 30, 1998----------------------
                                                          Required       Required         Actual        Actual
     <S>                                                  <C>               <C>             <C>           <C>
     Tier 1 risk adjusted capital ratio                $     13,995         4.0%      $     31,420         9.0%
     Total risk adjusted capital ratio                       27,990         8.0             35,582        10.2
     Tier 1 leverage ratio                                   17,749         4.0             31,420         7.1

     Tier 1 capital                                                                         33,022
     Tier 2 capital                                                                          4,352
     Total risk based capital                                                               37,374
     Total risk weighted assets                                                            349,882
     Average total assets                                                                  443,720
</TABLE>
<TABLE>
                                                       --------------------September 30, 1997----------------------
                                                          Required       Required         Actual        Actual
     <S>                                               <C>                  <C>            <C>            <C>
     Tier 1 risk adjusted capital ratio                $     12,701         4.00%     $     29,402         9.26%
     Total risk adjusted capital ratio                       25,402         8.00            33,390        10.52
     Tier 1 leverage ratio                                   16,494         4.00            29,402         7.13

     Tier 1 capital                                                                         29,402
     Tier 2 capital                                                                          3,988
     Total risk based capital                                                               33,390
     Total risk weighted assets                                                            317,525
     Average total assets                                                                  412,356
</TABLE>

Year 2000 Issue:  The  Registrant has identified the resolution of the Year 2000
issue as a priority  item.  During 1997 and the first nine  months of 1998,  the
Registrant has committed resources,  mainly manpower, to the task of identifying
the scope of the Year 2000 issue and  formulating  a plan for ensuring  that all
impacted  systems are  compliant  by the end of 1998. A  contingency  plan is in
place for all major systems identified.

Because the Registrant has outsourced  virtually all of its data processing,  it
has begun the process of  contacting  all related  vendors,  requesting  written
confirmation  that their  respective  products are Year 2000  compliant.  Vendor
assertions  will be tested during 1998 so that the  Registrant has ample time to
react to any problems.

                                                                             11.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



The Registrant has already begun  contacting  significant  commercial  customers
regarding their status on the Year 2000 issue so as to avoid any negative impact
on the quality of the loan portfolio.

Because of the  outsourcing  utilized by the  Registrant,  the addressing of the
Year 2000 issue is not expected to materially impact the Registrant's results of
operations and capital resources.  The Registrant has budgeted Year 2000 related
expenses of $225,000 for 1998 and 1999. As of September 30, 1998, the Registrant
has expensed approximately $13,500 in Year 2000 related expenses.


                                                                             12.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The  Corporation  has not  experienced  any material  changes to its market risk
position from that disclosed in the Corporation's 1997 Form 10-K Annual Report.






                                                                             13.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
                           PART II - OTHER INFORMATION



Item 1. Legal Proceedings.

At the date hereof, there were no material pending legal proceedings, other than
routine  litigation  incidental  to  the  business  of  banking,  to  which  the
Registrant  or  any  of its  subsidiaries  is a  party  of or  which  any of its
properties is the subject.


Item 2. Changes in Securities and Use of Proceeds

None.


Item 3. Defaults Upon Senior Securities.

There have been no defaults upon senior securities  relevant to the requirements
of this section.


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

(a)  A special meeting of the  Registrant's  shareholders was held on August 11,
     1998.

(b)  Not applicable.

(c)  The sole  purpose of the meeting was to consider  and vote upon an increase
     in the  Registrant's  common stock "no par value" from 6,000,000  shares to
     18,000,000. The vote was as follows:

                    For: 1,556,677
                    Against: 13,354
                    Abstentions and broker non-votes: 22,404

(d)  Not applicable.


Item 5. Other Information.

None.


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

(a)  The following exhibits are filed as part of this report:

     Number         Exhibit

     27             Financial Data Schedule. Filed herewith.


The following documents are filed as part of Part I, Item 1 of this report:

     Consolidated  Balance Sheets - September 30, 1998  (Unaudited) and December
     31, 1997 (Audited)
     Consolidated  Statements of Income - Three months ended  September 30, 1998
     and 1997 and the nine months ended September 30, 1998 and 1997 (Unaudited)
     Consolidated  Statement of Changes in  Shareholders'  Equity - Three months
     ended  September 30, 1998 and 1997 and nine months ended September 30, 1998
     and 1997 (Unaudited)
     Consolidated Statement of Cash Flows - Nine months ended September 30, 1998
     and 1997 (Unaudited)
     Notes to consolidated financial statements - September 30, 1998
<PAGE>
                                   SIGNATURES

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

                                     NORTH COUNTRY FINANCIAL CORPORATION
                                                (Registrant)



11-16-98                    /s/ Ronald G. Ford
Date                        RONALD G. FORD, CEO


11-16-98                    /s/ Sherry Littlejohn
Date                        SHERRY LITTLEJOHN
                            PRESIDENT AND CFO