<PAGE>

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

                                    FORM 10-Q


                 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2003

                                       OR

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                         Commission file number: 0-20167

                       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 SOUTH CEDAR STREET, MANISTIQUE, MI                    49854
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:  (906) 341-7125


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
                                      -----     -----

Indicated by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                                  Yes        No   X
                                      -----     -----

As of October 31, 2003, there were outstanding 7,019,152 shares of the
registrant's common stock, no par value.


<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                                      INDEX



<TABLE>
<CAPTION>
PART 1.       FINANCIAL INFORMATION                                                                    Page No.
                                                                                                       --------
<S>                                                                                                 <C>
     Item 1.      Financial Statements

                  Condensed Consolidated Balance Sheets -
                  September 30, 2003 (Unaudited) and December 31, 2002...............................        1

                  Condensed Consolidated Statements of Operations - Three
                    And Nine Months Ended September 30, 2003 (Unaudited) and
                    September 30, 2002 (Unaudited)...................................................        2

                  Condensed Consolidated Statements of Changes in Shareholders'
                    Equity - Three and Nine Months Ended September 30, 2003
                    (Unaudited) and September 30, 2002 (Unaudited)...................................        3

                  Condensed Consolidated Statements of Cash Flows -
                    Nine Months Ended September 30, 2003 (Unaudited) and
                    September 30, 2002 (Unaudited)...................................................        4

                  Notes to Condensed Consolidated Financial
                    Statements (Unaudited)...........................................................        5


     Item 2.      Management's Discussion and Analysis of Financial
                    Condition and Results of Operations..............................................       14


     Item 3.      Quantitative and Qualitative Disclosures About Market Risk.........................       26


     Item 4.      Controls and Procedures............................................................       29


PART II.      OTHER INFORMATION

     Item 1.      Legal Proceedings..................................................................       30


     Item 6.      Exhibits and Reports on Form 8-K...................................................       32


     SIGNATURES   ...................................................................................       33
</TABLE>

<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                    September 30,     December 31,
                                                                                        2003              2002
                                                                                        ----              ----
                                                                                     (Unaudited)
<S>                                                                                <C>              <C>
ASSETS
     Cash and due from banks                                                        $       8,476    $       17,542
     Federal funds sold                                                                    14,050            26,250
                                                                                    -------------    --------------
         Cash and cash equivalents                                                         22,526            43,792

     Interest-bearing deposits in other financial institutions                              3,350             2,010
     Securities available for sale                                                         91,439            67,955
     Federal Home Loan Bank stock                                                           4,488             4,375

     Total loans                                                                          325,647           435,043
         Allowance for loan losses                                                        (21,649)          (24,908)
                                                                                    -------------    --------------
     Net loans                                                                            303,998           410,135

     Premises and equipment                                                                14,038            15,592
     Other real estate held for sale                                                        4,370             5,409
     Other assets                                                                           9,516            16,038
                                                                                    -------------    --------------

         Total assets                                                               $     453,725    $      565,306
                                                                                    =============    ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
     Liabilities:
         Non-interest-bearing deposits                                              $      29,348    $       40,797
         Interest-bearing deposits                                                        305,462           396,697
                                                                                    -------------    --------------
              Total deposits                                                              334,810           437,494

     Borrowings                                                                            87,417            87,815
     Other liabilities                                                                      6,188             7,044

     Guaranteed preferred beneficial interests in the Corporation's
       subordinated debentures                                                             12,450            12,450

     Shareholders' equity:
         Preferred stock - No par value:
           Authorized 500,000 shares, no shares outstanding
         Common stock - No par value:
           Authorized - 18,000,000 shares
           Issued and outstanding - 7,019,152                                              16,175            16,175
         Retained earnings (deficit)                                                       (4,038)            3,086
         Accumulated other comprehensive income                                               723             1,242
                                                                                    -------------    --------------
              Total shareholders' equity                                                   12,860            20,503
                                                                                    -------------    --------------

         Total liabilities and shareholders' equity                                 $     453,725    $      565,306
                                                                                    =============    ==============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                                                              1.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Dollars in Thousands, Except per Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three Months Ended             Nine Months Ended
                                                                    September 30,                 September 30,
                                                                2003           2002            2003           2002
                                                                ----           ----            ----           ----
<S>                                                          <C>            <C>            <C>             <C>
Interest income:
     Interest and fees on loans:
         Taxable                                             $     4,387    $     7,130    $    15,099     $    23,199
         Tax-exempt                                                  328            561          1,179           1,735
     Interest on securities:
         Taxable                                                     387            852          1,599           2,801
         Tax-exempt                                                   55             68            187             200
     Other interest income                                           161             66            473             144
                                                             -----------    -----------    -----------     -----------
         Total interest income                                     5,318          8,677         18,537          28,079
                                                             -----------    -----------    -----------     -----------

Interest expense:
     Deposits                                                      2,101          3,105          6,779           9,526
     Borrowings                                                    1,198          1,283          3,610           3,831
     Subordinated debentures                                         123            138            368             414
                                                             -----------    -----------    -----------     -----------
         Total interest expense                                    3,422          4,526         10,757          13,771
                                                             -----------    -----------    -----------     -----------

Net interest income                                                1,896          4,151          7,780          14,308
Provision for loan losses                                              0         13,001              0          17,051
                                                             -----------    -----------    -----------     -----------
Net interest income (loss) after provision for loan losses         1,896         (8,850)         7,780          (2,743)
                                                             -----------    -----------    -----------     -----------
Other income:
     Service fees                                                    362            526          1,205           1,395
     Net security gains                                               44            247            235             669
     Other loan and lease income                                      17            238             55             878
     Net gains on sale of loans                                       20            128            126             447
     Other operating income                                          109              9            878             497
                                                             -----------    -----------    -----------     -----------
         Total other income                                          552          1,148          2,499           3,886
                                                             -----------    -----------    -----------     -----------

Other expenses:
     Salaries, commissions, and related benefits                   1,442          1,796          4,475           5,678
     Furniture and equipment expense                                 337            353          1,058           1,055
     Occupancy expense                                               325            417          1,075           1,256
     Data processing                                                 370            319          1,157           1,535
     Accounting, legal, and consulting fees                          722            505          2,388           1,125
     Loan and deposit expense                                        560            537          1,468             974
     Telephone                                                       352            316          1,049             925
     Impairment loss on intangible assets                              0              0             60               0
     Impairment loss on other real estate held for sale                4              0            220              35
     Loss on sale of premises, equipment, and
     other real estate                                               305            416            192             520
     Advertising expense                                              29             80            173             396
     Amortization of acquisition intangible                          117            132            373             287
     Other                                                           197            742          1,386           1,591
                                                             -----------    -----------    -----------     -----------
         Total other expenses                                      4,760          5,613         15,074          15,377
                                                             -----------    -----------    -----------     -----------

Loss before provision (credit) for income taxes                   (2,312)       (13,315)        (4,795)        (14,234)
Provision (credit) for income taxes                                  650         (4,833)         2,329          (5,648)
                                                             -----------    -----------    -----------     -----------
Net loss                                                     $    (2,962)   $    (8,482)   $    (7,124)    $    (8,586)
                                                             ===========    ===========    ===========     ===========
Loss per common share:
     Basic                                                   $     (0.42)   $     (1.20)   $     (1.01)    $     (1.22)
                                                             ===========    ===========    ===========     ===========
     Diluted                                                 $     (0.42)   $     (1.20)   $     (1.01)    $     (1.22)
                                                             ===========    ===========    ===========     ===========
Dividends declared per common share                          $      0.00    $      0.00    $      0.00     $      0.25
                                                             ===========    ===========    ===========     ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                                                              2.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Three Months Ended             Nine Months Ended
                                                                 September 30,                 September 30,
                                                             2003           2002            2003            2002
                                                             ----           ----            ----            ----
<S>                                                       <C>            <C>            <C>             <C>
Balance, beginning of period                              $    16,339    $    46,433    $    20,503     $    47,889

Net loss for period                                            (2,962)        (8,482)        (7,124)         (8,586)
Net unrealized gain (loss) on securities
  available for sale                                             (517)           407           (519)            810
                                                          -----------    -----------    -----------     -----------
     Total comprehensive loss                                  (3,479)        (8,075)        (7,643)         (7,776)

Dividends declared                                                  0              0              0          (1,755)
                                                          -----------    -----------    -----------     -----------

Balance, end of period                                    $    12,860    $    38,358    $    12,860     $    38,358
                                                          ===========    ===========    ===========     ===========
</TABLE>








     See accompanying notes to condensed consolidated financial statements.

                                                                              3.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended
                                                                                   September 30,
                                                                                2003          2002
                                                                            -----------    -----------
<S>                                                                         <C>            <C>
Increase (decrease) in cash and cash equivalents:

     Cash flows from operating activities:
         Net loss                                                           $    (7,124)   $    (8,586)
         Adjustments to reconcile net loss to
           net cash provided by (used in) operating activities:
              Provision for loan losses                                               0         17,051
              Depreciation and amortization                                       2,256          1,510
              Provision for impairment of intangible assets                          60             35
              Provision for impairment of other real estate held for sale           220              0
              Gain on sales of securities                                          (235)          (669)
              Loss on sale of premises, equipment, and other real estate            192            520
              FHLB stock dividend                                                  (113)             0
              Change in other assets                                              6,682         (5,352)
              Change in other liabilities                                          (856)          (275)
                                                                            -----------    -----------
     Net cash provided by operating activities                                    1,082          4,234
                                                                            -----------    -----------

     Cash flows from investing activities:
         Net (increase) decrease in interest-bearing deposits in other
          financial institutions                                                 (1,340)           634
         Purchase of securities available for sale                              (70,680)      (110,582)
         Proceeds from sales of securities available for sale                    35,308         81,280
         Proceeds from maturities, calls, or paydowns of securities
          available for sale                                                     10,246          7,635
         Net decrease in loans                                                  103,396         25,818
         Purchase of premises and equipment                                         (41)          (933)
         Proceeds from sale of premises, equipment, and other real estate         3,845          2,303
                                                                            -----------    -----------
     Net cash provided by investing activities                                   80,734          6,155
                                                                            -----------    -----------

     Cash flows from financing activities:
         Net decrease in deposits                                              (102,684)       (19,207)
         Principal payments on borrowings                                          (398)          (313)
         Payment of cash dividends                                                    0         (1,755)
                                                                            -----------    -----------
     Net cash used in financing activities                                     (103,082)       (21,275)
                                                                            -----------    -----------

Net change in cash and cash equivalents                                         (21,266)       (10,886)
Cash and cash equivalents at beginning of period                                 43,792         36,747
                                                                            -----------    -----------

Cash and cash equivalents at end of period                                  $    22,526    $    25,861
                                                                            ===========    ===========


Supplemental cash flow information:

Cash paid (refunded) for:
     Interest                                                               $    11,367    $    13,872
     Income taxes                                                                (3,203)           550

Noncash investing activities - Transfers of foreclosures from loans to
  other real estate                                                               2,741          5,181
</TABLE>



     See accompanying notes to condensed consolidated financial statements.

                                                                              4.
<PAGE>

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


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation

     The unaudited condensed consolidated financial statements of North Country
     Financial Corporation (the "Corporation") 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 nine-month period ended
     September 30, 2003, are not necessarily indicative of the results that may
     be expected for the year ending December 31, 2003. The unaudited
     consolidated financial statements and footnotes thereto should be read in
     conjunction with the audited consolidated financial statements and
     footnotes thereto included in the Corporation's Annual Report on Form 10-K
     for the year ended December 31, 2002.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements, and the reported amounts of revenue and expenses
     during the period. Actual results could differ from those estimates.
     Estimates that are particularly susceptible to significant change include
     the determination of the allowance for loan losses, impairment of
     intangible assets, impairment of other real estate held for sale, and
     income taxes.

     Principles of Consolidation

     The consolidated financial statements include the accounts of the
     Corporation and its wholly owned subsidiaries, North Country Bank and Trust
     (the "Bank"), North Country Financial Group, North Country Capital Trust,
     and other minor subsidiaries, after elimination of intercompany
     transactions and accounts.

     Allowance for Loan Losses

     The allowance for loan losses includes specific allowances related to
     commercial loans, which were judged to be impaired. A loan is impaired
     when, based on current information, it is probable that the Corporation
     will not collect all amounts due in accordance with the contractual terms
     of the loan agreement. These specific allowances are based on discounted
     cash flows of expected future payments using the loan's initial effective
     interest rate or the fair value of the collateral if the loan is collateral
     dependent.

     The Corporation continues to maintain a general allowance for loan losses
     for loans not considered impaired. The allowance for loan losses is
     maintained at a level which management believes is adequate to provide for
     possible loan losses. Management periodically evaluates the adequacy of the
     allowance using the Corporation's past loan loss experience, known and
     inherent risks in the portfolio, composition of the portfolio, current
     economic conditions, and other factors. The allowance does not include the
     effects of expected losses related to future events or future changes in
     economic conditions. This evaluation is inherently subjective since it
     requires material estimates that may be susceptible to significant change.
     Loans are charged against the allowance for loan losses when management
     believes the collectibility of the principal is unlikely. In addition,
     various regulatory agencies periodically review the allowance for loan
     losses. These agencies may require additions to the allowance for loan
     losses based on their judgments of collectibility.

     In management's opinion, the allowance for loan losses is adequate to cover
     probable losses relating to specifically identified loans, as well as
     probable losses inherent in the balance of the loan portfolio as of the
     balance sheet date.



                                                                              5.
<PAGE>

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


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Stock Option Plans

     The Corporation sponsors three stock option plans. One plan was approved
     during 2000 and applies to officers, employees, and nonemployee directors.
     A total of 500,000 shares were made available for grant under this plan.
     The other two plans, one for officers and employees and the other for
     nonemployee directors, were approved in 1997. A total of 600,000 shares
     were made available for grant under these plans. Options under all of the
     plans expire ten years after the grant date and are granted at the
     discretion of a committee of the Corporation's Board of Directors. Options
     to purchase shares of the Corporation's stock are granted at a price equal
     to the market price of the stock at the date of grant. The committee
     determines the vesting of the options when they are granted as established
     under the plan.

     The fair value of each option granted is estimated on the grant date using
     the Black-Scholes methodology. The following assumptions were made in
     estimating fair value for options granted for the nine months ended
     September 30, 2003:

<TABLE>
<CAPTION>
                                                                   September 30,
                                                                       2003
                                                                       ----
<S>                                                                <C>
     Dividend yield                                                     0.00%
     Risk-free interest rate                                            1.25%
     Weighted average expected life (years)                              7.0
     Expected volatility                                               29.85%
</TABLE>

     The weighted average fair value of options granted as of their grant date,
     using the assumptions shown above, was computed at $.75 per share for
     options granted in 2003. There were no options granted in 2002.

     The Corporation accounts for stock options using the intrinsic value
     method. For all options granted, the intrinsic value was zero; therefore,
     no compensation cost has been recognized for the plans. Had compensation
     cost been determined on the basis of fair value, net income and earnings
     per share would have been reduced for the nine months ended September 30,
     2003 and the year ended December 31, 2002 (dollars in thousands, except per
     share data) as follows:

<TABLE>
<CAPTION>
                                                September 30,     December 31,
                                                    2003              2002
                                                    ----              ----
<S>                                             <C>              <C>
Net loss:

  As reported                                   $      (7,124)   $     (26,713)
  Total stock-based compensation expense
    determined under fair value-based method,
    net of tax                                            (35)             (94)
                                                -------------    -------------
  Pro forma                                     $      (7,159)   $     (26,807)
                                                =============    =============

Loss per share - Basic:

  As reported                                   $       (1.01)   $       (3.81)
                                                -------------    -------------
  Pro forma                                     $       (1.02)   $       (3.82)
                                                =============    =============

Loss per share - Diluted:

  As reported                                   $       (1.01)   $       (3.81)
                                                -------------    -------------
  Pro forma                                     $       (1.02)   $       (3.82)
                                                =============    =============
</TABLE>



                                                                              6.
<PAGE>

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


2.   RECENT ACCOUNTING PRONOUNCEMENTS

     In December 2002, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards (SFAS) No. 148, "Accounting for
     Stock-Based Compensation - Transition and Disclosure," as an amendment to
     SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 148
     provides alternative methods of transition for a voluntary change to the
     fair value-based method of accounting for stock-based employee
     compensation. The Corporation has not voluntarily changed to the fair
     value-based method of accounting for stock-based employee compensation.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
     Variable Interest Entities" (FIN 46). The objective of this interpretation
     is to provide guidance on how to identify a variable interest entity and
     determine when the assets, liabilities, noncontrolling interests, and
     results of operations of a variable interest entity need to be included in
     a company's consolidated financial statements. A company that holds
     variable interests in an entity will need to consolidate the entity if the
     company's interest in the variable interest entity is such that the company
     will absorb a majority of the variable interest entity's losses and/or
     receive a majority of the entity's expected residual returns, if they
     occur. FIN 46 also requires additional disclosures by primary beneficiaries
     and other significant variable interest holders. The provisions of this
     interpretation are effective upon issuance. The requirements of FIN 46 did
     not have a material impact on the results of operations, financial
     position, or liquidity.

     In May 2003, FASB issued SFAS No. 150, "Accounting for Certain Financial
     Instruments with Characteristics of Both Liabilities and Equity." SFAS No.
     150 establishes standards for how an issuer classifies and measures certain
     financial instruments with characteristics of both liabilities and equity.
     It requires that an issuer classify a financial instrument that is within
     its scope as a liability (or an asset in some circumstances). Many of those
     instruments were previously classified as equity. SFAS No. 150 is effective
     for financial instruments entered into or modified after May 31, 2003, and
     otherwise is effective at the beginning of the first interim period
     beginning after June 15, 2003. The requirements of SFAS No. 150 did not
     have a material impact on the results of operations, financial position, or
     liquidity.



                                                                              7.
<PAGE>

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


3.   LOSS PER SHARE

     Loss per share is based upon the weighted average number of shares
     outstanding. The following shows the computation of basic and diluted loss
     per share for the three months and nine months ended September 30, 2003 and
     2002 (in thousands, except per share data):


<TABLE>
<CAPTION>
                                                             Three Months Ended             Nine Months Ended
                                                                September 30,                  September 30,
                                                             2003         2002             2003            2002
                                                             ----         ----             ----            ----
<S>                                                       <C>            <C>            <C>             <C>
       Basic loss per common share:
         Net loss                                         $    (2,962)   $    (8,482)   $    (7,124)    $    (8,586)
                                                          ===========    ===========    ===========     ===========
         Weighted average common shares outstanding             7,019          7,019          7,019           7,019
                                                          ===========    ===========    ===========     ===========

           Basic loss per common share                    $     (0.42)   $     (1.20)   $     (1.01)    $     (1.22)
                                                          ===========    ===========    ===========     ===========
       Diluted loss per common share:
         Net loss                                         $    (2,962)   $    (8,482)   $    (7,124)    $    (8,586)
                                                          ===========    ===========    ===========     ===========

         Weighted average common shares outstanding
           for basic loss per common share                      7,019          7,019          7,019           7,019
         Add: Dilutive effect of assumed exercise
           of stock options                                         0              2              0               3
                                                          -----------    -----------    -----------     -----------
           Average shares and dilutive potential
             common shares                                      7,019          7,021          7,019           7,022
                                                          ===========    ===========    ===========     ===========

              Diluted loss per common share               $     (0.42)   $     (1.20)   $     (1.01)    $     (1.22)
                                                          ===========    ===========    ===========     ===========
</TABLE>

4.   INVESTMENT SECURITIES

     The amortized cost and estimated fair value of investment securities
     available for sale as of September 30, 2003 and December 31, 2002, are as
     follows (in thousands):

<TABLE>
<CAPTION>
                                                              September 30, 2003             December 31, 2002
                                                           Amortized       Estimated      Amortized      Estimated
                                                             Cost         Fair Value        Cost        Fair Value
                                                             ----         ----------        ----        ----------
<S>                                                       <C>            <C>            <C>             <C>
       U.S. Government and agency securities              $    36,020    $    36,082    $         0     $         0
       Obligations of states and political
         subdivisions                                           3,772          4,032          5,172           5,632
       Corporate securities                                     1,765          1,943         10,593          11,264
       Mortgage-related securities                             49,159         49,382         50,355          51,059
                                                          -----------    -----------    -----------     -----------

         Total securities available for sale              $    90,716    $    91,439    $    66,120     $    67,955
                                                          ===========    ===========    ===========     ===========
</TABLE>

     The amortized cost and estimated fair value of investment securities
     pledged to secure treasury deposits and borrowings were $60,092,000 and
     $60,381,000 respectively, at September 30, 2003.


                                                                              8.
<PAGE>

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


5.   LOANS

     The composition of loans at September 30, 2003 and December 31, 2002
     (dollars in thousands) is as follows:


<TABLE>
<CAPTION>
                                                                                    September 30,     December 31,
                                                                                        2003             2002
                                                                                        ----             ----
<S>                                                                                 <C>              <C>
       Commercial real estate                                                       $      41,242    $       61,556
       Commercial, financial, and agricultural                                            223,651           290,371
       One- to four-family residential real estate                                         56,545            74,366
       Consumer                                                                             3,638             5,706
       Construction                                                                           571             3,044
                                                                                    -------------    --------------

         Total loans                                                                $     325,647    $      435,043
                                                                                    =============    ==============
</TABLE>

     An analysis of the allowance for loan losses for the nine months ended
     September, 2003, and 2002 (dollars in thousands) is as follows:

<TABLE>
<CAPTION>
                                                                                    September 30,     September 30,
                                                                                        2003              2002
                                                                                        ----              ----
<S>                                                                                 <C>              <C>
       Balance at beginning of period                                               $      24,908    $       10,444
       Provision for loan losses                                                                0            17,051
       Recoveries on loans                                                                  2,053               233
       Loans charged off                                                                   (5,312)           (9,746)
                                                                                    -------------    --------------

         Balance at end of period                                                   $      21,649    $       17,982
                                                                                    =============    ==============
</TABLE>

     The aggregate amount of nonperforming residential and consumer loans was
     approximately $1,957,000 and $2,212,000 at September 30, 2003 and December
     31, 2002, respectively. Nonperforming loans are those which are
     contractually past due 90 days or more as to interest or principal
     payments, on nonaccrual status, or loans, the terms of which have been
     renegotiated to provide a reduction or deferral of interest or principal.
     The interest income recorded and that which would have been recorded had
     residential and consumer nonaccrual and renegotiated loans been current, or
     not troubled, are not material to the consolidated financial statements for
     the nine months ended September 30, 2003 and 2002. The nonperforming
     commercial loans are reflected in the information regarding impaired loans.

     The following information relates to the commercial loan portfolio as of
     September 30, 2003 and December 31, 2002 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                     September 30,     December 31,
                                                                                         2003              2002
                                                                                         ----              ----
<S>                                                                                  <C>               <C>
       Total impaired loans                                                          $     45,667      $     51,602
       Impaired loans with a valuation allowance                                           45,667            51,331
       Impaired loans on nonaccrual                                                        38,419            23,992
       Valuation allowance related to impaired loans                                        9,520             6,739
</TABLE>

     The average investment in impaired loans was approximately $47,409,000 and
     $25,073,000 for the nine-months ended September 30, 2003 and the year ended
     December 31, 2002, respectively.


                                                                              9.
<PAGE>

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


5.   LOANS (CONTINUED)

     The Bank, in the ordinary course of business, grants loans to the
     Corporation's executive officers and directors, including their families
     and firms in which they are principal owners. Activity in such loans for
     the nine months ended September 30, 2003, and the year ended December 31,
     2002, is summarized below (dollars in thousands).

<TABLE>
<CAPTION>
                                                                                     September 30,    December 31,
                                                                                         2003             2002
                                                                                         ----             ----
<S>                                                                                  <C>             <C>
       Loans outstanding beginning of period                                          $    10,987     $    16,625
       New loans                                                                              137           1,622
       Net activity on revolving lines of credit                                               12              23
       Repayment                                                                           (4,361)           (991)
       Decrease related to retired executive officers and directors                          (186)         (6,292)
                                                                                      -----------     -----------

         Loans outstanding end of period                                              $     6,589     $    10,987
                                                                                      ===========     ===========
</TABLE>

     One related-party had loan balances of approximately $6,216,000 at
     September 30, 2003 and $6,608,000 at December 31, 2002. Loans to
     related-parties of approximately $5,380,000 and $9,182,000 were classified
     substandard at September 30, 2003 and December 31, 2002, respectively.

6.   BORROWINGS

     Borrowings consist of the following at September 30, 2003 and December 31,
     2002 (in thousands):

<TABLE>
<CAPTION>
                                                                                    September 30,     December 31,
                                                                                        2003              2002
                                                                                        ----              ----
<S>                                                                                 <C>               <C>
       Federal Home Loan Bank advances at rates ranging from 4.35% to 7.59% with
         maturities from less than one year to ten years                            $   85,866        $    86,198

       Farmers Home Administration, fixed rate note payable,
         maturing August 24, 2024, interest payable at 1%                                1,551              1,617
                                                                                    ----------        -----------

                                                                                    $   87,417        $    87,815
                                                                                    ==========        ===========
</TABLE>

     As of September 30, 2003, the Federal Home Loan Bank borrowings are
     collateralized by a specific collateral agreement on the Corporation's
     residential mortgage loans of $53,197,000; U.S. government and agency
     securities with an estimated fair value of $59,345,000; an interest-bearing
     deposit in the amount of $3,350,000; and Federal Home Loan Bank stock of
     $4,488,000. 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 September 30, 2003. The Farmers Home
     Administration borrowing is collateralized by loans totaling $896,000
     originated and held by the Corporation's wholly owned subsidiary, First
     Rural Relending, and guaranteed by the Corporation.





                                                                             10.
<PAGE>

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


7.   STOCK OPTION PLANS

     A summary of stock option transactions for the nine months ended September
     30, 2003 and the year ended December 31, 2002, is as follows:

<TABLE>
<CAPTION>
                                                                    Number of Shares
                                                                    ----------------

                                                             September 30,     December 31,
                                                                 2003              2002
                                                                 ----              ----
<S>                                                          <C>               <C>
       Outstanding shares at beginning of year                     722,397           894,797
       Granted during the period                                    50,000                 0
       Expired during the period                                  (264,065)         (122,400)
                                                             -------------      ------------

       Outstanding shares at end of period                         558,332           772,397
                                                             =============      ============

       Weighted average exercise price per share
         at end of period                                    $       13.94      $      14.11
                                                             =============      ============

       Shares available for grant at end of period                 205,238           135,573
                                                             =============      ============
</TABLE>

     Options granted in 2003 were granted at a price of $2.95 per share. These
     same options expired in 2003 as a result of the grantee's resignation.

     Following is a summary of the options outstanding and exercisable at
     September 30, 2003:

<TABLE>
<CAPTION>
                                                              Weighted
                                                               Average        Weighted
                                                              Remaining        Average
          Exercise                                           Contractual      Exercise
         Price Range                         Number          Life-Years         Price
         -----------                         ------          ----------         -----
<S>                                        <C>               <C>             <C>
            $4.26                             5,400                 .38      $     4.26
        $7.80 - $12.00                      259,800                5.20            9.29
       $15.00 - $20.33                      293,132                4.22           18.25
                                           --------          ----------      ----------
                                            558,332                4.64      $    13.94
                                           ========          ==========      ==========
</TABLE>



                                                                             11.
<PAGE>

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


8.   COMMITMENTS, CONTINGENCIES, AND CREDIT RISK

     Financial Instruments With Off-Balance-Sheet Risk

     The Corporation is a party to financial instruments with off-balance-sheet
     risk in the normal course of business to meet the financing needs of its
     customers. These financial instruments include commitments to extend credit
     and standby letters of credit. Those instruments involve, to varying
     degrees, elements of credit risk in excess of the amount recognized in the
     consolidated balance sheets.

     The Corporation's exposure to credit loss, in the event of nonperformance
     by the other party to the financial instrument for commitments to extend
     credit and standby letters of credit, is represented by the contractual
     amount of those instruments. The Corporation uses the same credit policies
     in making commitments and conditional obligations as it does for
     on-balance-sheet instruments. These commitments are as follows (dollars in
     thousands):

<TABLE>
<CAPTION>
                                                                                    September 30,     December 31,
                                                                                        2003              2002
                                                                                        ----              ----
<S>                                                                                 <C>              <C>
       Commitments to extend credit:
         Fixed rate                                                                 $       7,426    $        7,980
         Variable rate                                                                     66,835            62,632
       Standby letters of credit - Variable rate                                           13,724            13,161
       Credit card commitments - Fixed rate                                                 3,529             4,111
                                                                                    -------------    --------------

                                                                                    $      91,514    $       87,884
                                                                                    =============    ==============
</TABLE>

     Commitments to extend credit are agreements to lend to a customer as long
     as there is no violation of any condition established in the contract.
     Commitments generally have fixed expiration dates or other termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected to expire without being drawn upon, the total commitment amounts
     do not necessarily represent future cash requirements. The Corporation
     evaluates each customer's creditworthiness on a case-by-case basis. The
     amount of collateral obtained, if deemed necessary by the Corporation upon
     extension of credit, is based on management's credit evaluation of the
     party. Collateral held varies but may include accounts receivable;
     inventory; property, plant, and equipment; and income-producing commercial
     properties.

     Standby letters of credit are conditional commitments issued by the
     Corporation to guarantee the performance of a customer to a third party.
     Those guarantees are primarily issued to support public and private
     borrowing arrangements. The credit risk involved in issuing letters of
     credit is essentially the same as that involved in extending loan
     facilities to customers. The commitments are structured to allow for 100%
     collateralization on all standby letters of credit.

     Credit card commitments are commitments on credit cards issued by the
     Corporation's subsidiary and serviced by other companies. These commitments
     are unsecured.



                                                                             12.
<PAGE>


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


8.   COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (CONTINUED)

     Contingencies

     The Corporation is a defendant in a consolidated putative class action
     initiated by shareholders of the Corporation, alleging violations of the
     Federal securities laws and seeking, among other things, compensatory
     damages. The original complaints also named as defendants a current and
     former director, each of whom was a senior executive officer of the
     Corporation. In addition, a shareholder's derivative action has been filed
     against the Corporation and certain current and former directors of the
     Corporation. All of these proceedings are described in Part II, Item 1
     ---Legal Proceedings. Litigation of the types involved in these actions can
     be complex, time-consuming, and often protracted. The Corporation
     anticipates that it will incur substantial additional expense for legal and
     other professional fees as a result of the filing of these actions. At this
     early stage of the proceedings, the Corporation cannot accurately assess
     the impact which these proceedings will have on the Corporation. An
     ultimate determination of any of these actions adverse to the Corporation
     could have a material adverse effect on the Corporation's financial
     condition and operations.

     In addition, in the normal course of business, the Corporation is involved
     in various other legal proceedings. In the opinion of management, any
     liability resulting from such other legal proceedings would not be expected
     to have a material adverse effect on the consolidated financial statements.

     Concentration of Credit Risk

     The Bank grants commercial, residential, agricultural, and consumer loans
     throughout Michigan. The Bank's most prominent concentration in the loan
     portfolio relates to commercial loans to entities within the hospitality
     and tourism industry. This concentration represents $79.7 million, or 35.6%
     of the commercial loan portfolio at September 30, 2003. The remainder of
     the commercial loan portfolio is diversified in such categories as gaming,
     petroleum, forestry, and agriculture. Due to the diversity of the Bank's
     locations, the ability of debtors of residential and consumer loans to
     honor their obligations is not tied to any particular economic sector.




                                                                             13.
<PAGE>

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


The following discussion and analysis of financial condition and results of
operations provides additional information to assess the condensed consolidated
financial statements of the Corporation and its subsidiaries through the third
quarter of 2003. The discussion should be read in conjunction with those
statements and their accompanying notes.

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 Corporation intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation 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, or expectations of the Corporation, are
generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Corporation's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors that could cause actual results to differ from the
results in forward-looking statements include, but are not limited to:

         -    Impact of restrictions related to the trust preferred securities
              issued by the Corporation's subsidiary;
         -    Difficulties in raising capital on acceptable terms;
         -    Impact of continued operating losses:
         -    Restrictions and requirements imposed on the Corporation and the
              Bank by formal action against them by bank regulatory agencies;
         -    Failure or inability of the Bank to comply with the terms of the
              Cease and Desist Order (the "Order") applicable to it;
         -    General economic conditions, either nationally or in the state(s)
              in which the Corporation does business;
         -    Legislation or regulatory changes which affect the business in
              which the Corporation is engaged;
         -    Changes in the interest rate environment which increase or
              decrease interest rate margins;
         -    Changes in securities markets with respect to the market value of
              financial assets and the level of volatility in certain markets
              such as foreign exchange;
         -    Significant increases in competition in the banking and financial
              services industry resulting from industry consolidation,
              regulatory changes and other factors, as well as action taken by
              particular competitors;
         -    The ability of borrowers to repay loans;
         -    The effects on liquidity of unusual decreases in deposits;
         -    Changes in consumer spending, borrowing, and saving habits;
         -    Technological changes;
         -    Acquisitions and unanticipated occurrences which delay or reduce
              the expected benefits of acquisitions;
         -    Difficulties in hiring and retaining qualified management and
              banking personnel;
         -    The Corporation's ability to increase market share and control
              expenses;
         -    The effect of compliance with legislation or regulatory changes;
         -    The effect of changes in accounting policies and practices;
         -    The costs and effects of existing and future litigation and of
              adverse outcomes in such litigation; and
         -    The factors discussed in Item 1 in this Report and in the
              Management's Discussion and Analysis in Item 2, as well as those
              discussed elsewhere in this Report.

These risks and uncertainties should be considered in evaluating forward-looking
statements. Further information concerning the Corporation and its business,
including additional factors that could materially affect the Corporation's
financial results, is included in the Corporation's filings with the Securities
and Exchange Commission. All forward-looking statements contained in this report
are based upon information presently available and the Corporation assumes no
obligation to update any forward-looking statements.


                                                                             14.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


As discussed in the Capital and Regulatory section, the Corporation and the Bank
are subject to minimum regulatory capital requirements. The Bank is also subject
to minimum capital requirements of the Order. As of September 30, 2003, the
capital of the Corporation and the Bank were below those requirements. If the
Bank does not meet the minimum regulatory capital requirements, it could be
subject to material adverse actions taken by bank regulators.

Management's near term strategies are expected to be centered around downsizing
the Bank and working to return the Corporation to profitability. This strategy
includes a combination of alternatives that may include: addressing the amount
of nonperforming assets, the associated costs of servicing them, and a potential
sale of these assets; controlling the Bank's growth; and a potential sale of
certain branches. The sale of assets and certain branches may increase the
Corporation's capital ratios. The Corporation's strategies for increasing its
capital and that of the Bank are discussed further in the Capital and Regulatory
section.

Upon completion of these near-term strategies, the Corporation's long-term
strategy is expected to focus on profitable growth of loans and deposits in its
core markets in Michigan.

FINANCIAL OVERVIEW

Year-to-date consolidated net loss was $7.1 million through September 30, 2003,
compared to a net loss of $8.6 million for the same period in 2002. Basic loss
per share was $1.01 for the nine months ended September 30, 2003, compared to a
loss of $1.22 for the same period in 2002. The provision for loan losses was $0
for the nine months ended September 30, 2003 as compared to $17.0 million in the
same period in 2002. Total assets declined $111.6 million from December 31, 2002
to September 30, 2003. The loan portfolio continued to experience declines
through the third quarter of 2003, decreasing $109.4 million from December 31,
2002 to September 30, 2003. Deposits have decreased $102.7 million since
December 31, 2002.

FINANCIAL CONDITION

CASH AND CASH EQUIVALENTS

Cash and cash equivalents decreased $21.3 million through the third quarter of
2003. This was due to the employment of better cash management practices and
investments in securities to improve yields. See further discussion of the
change in cash in the Liquidity section.

INVESTMENT SECURITIES

Available-for-sale securities increased $23.5 million, or 34.6%, from December
31, 2002 to September 30, 2003, with the balance on September 30, 2003, totaling
$91.4 million. As noted above, the funds for purchasing investments were
provided through reduction of cash and cash equivalents. Investment securities
are utilized in an effort to manage interest rate risk and liquidity. As of
September 30, 2003, investment securities with an estimated fair value of $60.4
million were pledged for purposes of securing Treasury Tax and Loan deposits and
FHLB advances.


                                                                             15.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


LOANS

Through the third quarter of 2003, loan portfolio balances decreased by $109.4
million, or 25.1%. During the third quarter, loan portfolio balances decreased
$32.8 million. This continued decrease was in all loan types. Management expects
further reductions in loan balances in the near term as credit underwriting
continues to be tightened and the Corporation continues to pursue reducing the
level of problem loans and loans to the hotel and tourism industry. Future sales
of loans and branch locations may also occur as the Corporation enacts
strategies to address liquidity and capital needs. These sales could result in
further decreases in the loan portfolio. In order to better serve the needs of
loan customers in the local markets, an experienced mortgage lender and
commercial lender were hired in October 2003.

Management is in the process of obtaining bids and expects to sell the majority
of the Bank's nonperforming loans and previously charged-off loans, without
further loss to the Bank. The sale, if completed, would generate approximately
$36 million in cash and would reduce otherwise anticipated legal and collection
expenses. The sale is expected to be consummated prior to the year end 2003 and
would be contingent upon a number of factors, including the required regulatory
approval.

During the third quarter of 2003, a senior loan officer, with turnaround
experience, and a loan administrator were added to the management team.
Enhancements have been and are, from time to time, made to the loan approval and
exception reporting processes in order to provide for more effective management
of risk in the loan portfolio.

Management continues to actively manage the loan portfolio seeking to identify
and resolve problem assets at an early stage. Management believes a properly
positioned loan portfolio provides the most attractive earning asset yield
available to the Corporation. With changes to the credit policies, loan approval
process, and exception reporting, management can more effectively manage the
risk in the loan portfolio.

Following is a summary of the loan portfolio at September 30, 2003 and December
31, 2002 (dollars in thousands):

<TABLE>
<CAPTION>
                                                          September 30,       % of       December 31,        % of
                                                              2003            Total         2002             Total
                                                              ----            -----         ----             -----
<S>                                                       <C>               <C>         <C>                <C>
     Commercial real estate                               $    41,242           12.7    $    61,556            14.1
     Commercial, financial, and agricultural                  223,651           68.6        290,371            66.8
     1-4 family residential real estate                        56,651           17.4         74,366            17.1
     Consumer                                                   3,638            1.1          5,706             1.3
     Construction                                                 571            0.2          3,044             0.7
                                                          -----------       --------    -----------        --------

         Total loans                                      $   325,647          100.0    $   435,043           100.0
                                                          ===========       ========    ===========        ========
</TABLE>

Following is a table showing the significant industry types in the commercial
loan portfolio as of September 30, 2003 and December 31, 2002 (dollars in
thousands):

<TABLE>
<CAPTION>
                                                              September 30, 2003            December 31, 2002
                                                           Outstanding        % of       Outstanding        % of
                                                             Balance         Capital       Balance         Capital
                                                             -------         -------       -------         -------
<S>                                                       <C>                <C>        <C>                <C>
     Hospitality and tourism                               $   79,680          619.6     $   86,802           423.4
     Gaming                                                    23,179          180.2         25,938           126.5
     Petroleum                                                  7,591           59.0         14,180            69.2
     Forestry                                                   2,463           19.2          5,677            27.7
</TABLE>

CREDIT QUALITY

The allowance for loan losses is maintained by management at a level considered
to be adequate to cover probable losses related to specifically identified
loans, as well as losses inherent in the balance of the loan portfolio. At
September 30, 2003, the allowance for loan losses increased to 6.6% of total
loans outstanding from 5.7% at December 31, 2002. The increase of the allowance
as a percentage of total loans is due to the decrease in total loans from
December 31, 2002 to September 30, 2003.


                                                                             16.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


Management analyzes the allowance for loan losses in detail on a quarterly basis
to determine whether the losses inherent in the portfolio are properly reserved
for. Net charge-offs to average loans outstanding decreased to 1.3% from 2.0%
for the nine months ended September 30, 2003 and 2002, respectively. Net
charge-offs for the nine-month period ended September 30, 2003, were $3.3
million compared to $9.5 million for the same period in 2002. Of the $3.3
million of net charge-offs in 2003, $337,000 occurred in the third quarter. The
amount of gross loans charged off in the third quarter was $809,000 compared to
$2.8 million in the second quarter. As a result of the continued collection
efforts, the Corporation realized recoveries on previously charged-off loans of
$472,000 in the third quarter. The Corporation intends to continue its
aggressive efforts to collect on previously charged-off loans.

Based on management's analysis of the loan portfolio at September 30, 2003, the
Corporation did not recognize a provision for loan losses for the nine months
ended September 30, 2003, a decrease of $17.0 million when compared to the same
period in 2002.

During the third quarter of 2003, a comprehensive loan review was performed by
an outside third party. The third party loan review concurred with management's
assessment of the adequacy of the allowance for loan losses.

Following is the allocation of the allowance for loan losses as of September 30,
2003 and December 31, 2002 (in thousands):

<TABLE>
<CAPTION>
                                                             September 30,     December 31,
                                                                 2003              2002
                                                                 ----              ----
<S>                                                          <C>              <C>
       Commercial loans and leases                           $      19,223    $       22,703
       Real estate and mortgages                                     2,103             2,110
       Consumer                                                        145                95
       Unallocated                                                     178               -0-
                                                             -------------    --------------

       Totals                                                $      21,649    $       24,908
                                                             =============    ==============
</TABLE>

The following ratios assist management in the evaluation of the Corporation's
credit quality:

<TABLE>
<CAPTION>
                                                                September 30,     December 31,
                                                                    2003              2002
                                                                    ----              ----
<S>                                                             <C>               <C>
     Allowance to total loans                                           6.6%             5.7%
     Net charge-offs to average outstanding loans                       1.3%             2.6%
     Nonperforming loans to gross loans                                12.6%             6.3%
</TABLE>


The table presented below shows the balance of nonperforming loans, which
include nonaccrual loans and loans 90 or more days past due and still accruing,
at September 30, 2003 and December 31, 2002 (in thousands):

<TABLE>
<CAPTION>
                                                                September 30,     December 31,
                                                                    2003              2002
                                                                    ----              ----
<S>                                                             <C>              <C>
     Nonaccrual loans                                           $      40,575    $       26,814
     Loans 90 days or more past due and still accruing                    428               401
</TABLE>

Nonperforming loans have increased $13.8 million since December 31, 2002,
including an increase of $1.1 million in the third quarter of 2003. Management
had identified a majority of the $13.8 million as substandard as of December 31,
2002, and had reserved for them accordingly.

Management continues to consider market issues impacting its loan customer base.
Risk ratings for the commercial loan portfolio are periodically reviewed and
management closely monitors the commercial loan portfolio to timely identify
nonperforming loans.



                                                                             17.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


As part of the process of resolving problem credits, the Corporation may acquire
ownership of collateral which secured such credits. The Corporation carries this
collateral in other real estate which is grouped with other assets on the
condensed consolidated balance sheet. The following table represents the
activity in other real estate (in thousands):

<TABLE>
<S>                                                                    <C>
         Balance at January 1, 2002                                    $       4,211
         Other real estate transferred from loans                              4,705
         Other real estate transferred from premises                           1,226
         Write-downs of other real estate                                     (2,418)
         Other real estate sold                                               (2,315)
                                                                       -------------

         Balance at December 31, 2002                                          5,409
         Other real estate transferred from loans                              2,741
         Write-downs of other real estate                                       (220)
         Other real estate sold                                               (3,560)
                                                                       -------------

         Balance at September 30, 2003                                 $       4,370
                                                                       =============
</TABLE>

During the first nine months of 2003, the Corporation received real estate in
lieu of loan payments of $2.7 million of which $876,000 occurred in the third
quarter. Other real estate is initially valued at the lower of cost or the fair
value less selling costs. After the initial receipt, management periodically
reevaluates the recorded balance. Any additional reductions in the fair value
result in a write-down of other real estate. Write-downs on other real estate
may be recorded based on future reevaluations of current realizable fair values.

DEPOSITS

The Corporation continued to experience a substantial reduction in deposits in
the third quarter of 2003. Total deposits decreased by $102.7 million, or 23.5%,
since December 31, 2002, including a decline of $18.7 million in the third
quarter of 2003. Due to the reduction in the loan portfolio, management was able
to reduce its reliance on brokered deposits. Brokered deposits decreased by
$25.0 million through the third quarter of 2003 to $30.0 million at September
30, 2003, while certificates of deposit over $100,000 decreased by $12.3 million
through the third quarter of 2003 to $23.3 million at September 30, 2003. The
Corporation's other deposit categories decreased by $65.4 million through the
third quarter of 2003. Due to the cost of brokered and Internet deposits,
management periodically reviews deposit products to remain competitive and
increase core deposits.

In September 2003, the Bank closed four branches with deposits totaling $7
million. The expenses of closing these branches was recognized in the second and
third quarter of 2003. The closing of the branches did not significantly affect
deposit flows and will lead to reduced operating expense.

BORROWINGS

The Corporation has used alternative funding sources to provide long-term,
stable sources of funds. Total borrowings have remained relatively stable from
December 31, 2002 to September, 2003. At September 30, 2003, total borrowings
were $87.4 million, of which $85.9 million were from the Federal Home Loan Bank
of Indianapolis (FHLB). The FHLB borrowings carry fixed interest rates and
stated maturities ranging through 2011. Fixed rate borrowings totaling $80
million are callable quarterly at the option of the FHLB and can also be
converted to variable rates, at the option of the FHLB, should rates rise above
certain index levels. These borrowings are secured by a blanket collateral
agreement on the Bank's residential mortgage loans and specific assignment of
certain investment securities.



                                                                             18.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


GUARANTEED PREFERRED BENEFICIAL INTERESTS IN THE CORPORATION'S SUBORDINATED
DEBENTURES

In 1999, the Corporation completed a private offering of capital, or trust
preferred, securities in the amount of $12,450,000. Under regulatory guidelines,
guaranteed preferred beneficial interests in the Corporation's subordinated
debentures are eligible as regulatory capital, as defined, subject to certain
limitations. As of September 30, 2003, the Corporation has suspended four
quarterly payments of interest on its subordinated debentures that fund
quarterly distributions on the trust preferred securities issued by its trust
subsidiary, North Country Capital Trust. The debenture agreement allows for
suspension of payments for up to 20 quarterly payments. It is expected that
distributions will continue to be deferred until the Board of Directors
determines it is prudent to resume payments based upon returning to
profitability, the capital requirements of the Corporation and the Bank.

SHAREHOLDERS' EQUITY

Total shareholders' equity decreased $7.6 million from December 31, 2002 to
September 30, 2003. The decrease represents the net loss of $7.1 million and a
decrease in the net unrealized gain on securities of $519,000 for the nine
months ended September 30, 2003. The declaration of dividends is contingent on a
variety of factors, including satisfaction of requirements in the Order and
receipt of approval by the Federal Reserve Bank of Chicago. The Board of
Directors does not anticipate declaring any dividends in the near future.

RESULTS OF OPERATIONS

NET INTEREST INCOME

Net interest income before provision for loan losses for the quarter ended
September 30, 2003, decreased by $2.3 million, or 54.3% compared to the same
period one year ago. Loans and total assets declined $109.4 million and $111.6
million, respectively, when compared to September 30, 2002, balances. The
decrease in loan volume offset by the decrease in deposit volume during the past
twelve months, combined with increases in nonaccrual loans, and a continued
decline in prevailing market rates, have resulted in the decline in net interest
income. Loan and deposit balances and margins have declined for the past seven
quarters. If the decline in deposits continues and if that decline continues to
be funded with a decline in loans as anticipated by management, then management
anticipates margins will continue to decline in both dollars and as a percent of
assets.

PROVISION FOR LOAN LOSSES

The Corporation records a provision for loan losses at a level it believes is
necessary to maintain the allowance at an adequate 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 decreased by $13.0 million for the quarter ended September 30, 2003,
compared to the same period in 2002. Management continues to monitor the loan
portfolio for changes which may impact the required allowance for loan losses.
Additional provisions for loan losses are possible.

OTHER INCOME

Other income decreased by $596,000 for the quarter ended September 30, 2003,
compared to the quarter ended September 30, 2002. Service charge revenue
decreased $164,000 due to the decline in deposits. Loan and lease income
decreased $221,000 as a result of a decline in mortgage subsidiary fee income
and leasing subsidiary fee income, as well as a significant drop in new loan
activity compared to the same period in 2002. Gain on sale of loans decreased
$108,000 due to a lower volume of mortgage loans sold compared to the third
quarter of 2002. A decrease of $203,000 in security gains also contributed to
the decline in other income in comparison to the third quarter of 2002.





                                                                             19.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


OTHER EXPENSES

Other expenses decreased $853,000 for the quarter ended September 30, 2003,
compared to the same period of 2002. Salaries, commissions, and related benefits
decreased by $354,000 during the third quarter of 2003 compared to the third
quarter of 2002 due to fewer personnel. This decrease was offset by an increase
in professional services expenses of $217,000 during the third quarter of 2003
and an increase in loan collection expense of $41,000 The increases in the costs
of these outside services is due to changes in the Corporation's internal staff
and the need to address the Order, problem loans, and other regulatory issues.

During the third quarter of 2003, the executive management team and loan
administration were strengthened. A chief executive officer with 25 years of
bank turnaround experience was hired by the Board of Directors, and an executive
vice president with bank regulatory experience was added to the executive
management team. In addition, a senior lender with turnaround experience and a
loan administration officer were hired to manage the loan portfolio, reduce
nonperforming assets, and retain high quality loan customers. The addition of
management may increase expense in the short term. However, the additional
management expertise is expected to help the Corporation resolve many of its
issues more quickly and improve customer service and financial performance.

The Corporation is taking action to reduce its reliance on external collection
resources by recruiting qualified personnel who will be able to assume certain
tasks currently being outsourced. Further, management is examining all areas of
expenses for potential reduction. In the third quarter of 2003, the Bank closed
four branches with deposits totaling approximately $7 million. The closure of
these branches will not significantly affect deposits and will reduce operating
expenses. Management is considering the closure of additional locations.

FEDERAL INCOME TAXES

The income tax provision of $2.3 million is the result of an addition to the
valuation allowance provided against the deferred tax asset. This provision
increases the valuation allowance to $9.3 million at September 30, 2003, from
$7.0 million at December 31, 2002. The increase in the valuation allowance
represents an alternative minimum tax credit carryforward that can only be
realized if the Corporation generates taxable income. The Corporation's current
year net loss carryover may expire prior to its utilization; therefore, no tax
credit is being recorded in anticipation of a future tax benefit from the use of
loss carryovers.

LIQUIDITY

As a result of the Corporation's 2002 annual and year-to-date 2003 results,
sources of liquidity, such as lines of credit from correspondent banks,
borrowings from the Federal Home Loan Bank, and the issuance of stock, which
were historically available, are currently not short-term sources of liquidity.

The liquidity issues faced, the Corporation's actions taken to address them, and
the liquidity plan for 2003, are discussed below.

Through the first nine months of 2003, the Corporation decreased cash and cash
equivalents by $21.3 million. As shown on the Corporation's condensed
consolidated statement of cash flows, despite the net loss of $7.1 million
through the third quarter of 2003, the Corporation provided $1.1 million of cash
from operations, due to the noncash expenses such as the depreciation and
amortization of $2.3 million and the change in other assets and liabilities.
Other significant factors impacting cash flow were the $103.4 million of cash
received from the decrease in loans and $45.6 million in proceeds from sales and
maturities of securities. These cash inflows were offset by the $102.7 million
of cash used due to the decrease in deposits and the net increase in investment
securities of $23.5 million.

It is anticipated that during the remainder of 2003, cash generated from
decreases in certain segments of the loan portfolio will be reinvested in
securities and local market loans to meet the collateral requirements of
borrowings, and may also be used to fund further declines in deposits.



                                                                             20.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


The Corporation's liquidity plan for 2003 includes strategies to increase core
deposits in the Corporation's local markets. New products and advertising
commenced in 2003, with a goal of increasing core deposits to reduce the
dependency on noncore deposits, although efforts to generate local deposits have
not been as effective as management anticipated. The Corporation's liquidity
plan for 2003 calls for augmenting local deposit growth efforts with Internet
CDs. However, a substantial portion of these Internet CDs will mature in the
fourth quarter of 2003, and there is no assurance that Internet CDs will be
available in adequate amounts or at economically feasible pricing.

At the end of the third quarter, the Corporation had substantial liquidity to
fund deposit withdrawals including federal funds sold, marketable securities,
and borrowing capacity. Further, management has definitive plans to address the
Internet CDs maturing in the fourth quarter of 2003.

The 2003 plan includes the possible sale of certain segments of the loan
portfolio to maintain certain loan to asset and loan to deposit ratios as well
as to reduce the concentration of loans in particular industries, such as
hospitality and gaming.

During the fourth quarter of 2002, the unsecured lines of credit the Corporation
had with two correspondent banks were closed by those banks. In the first
quarter of 2003, the Corporation established with the Federal Reserve Bank a
secondary borrowing arrangement collateralized by loans.

CAPITAL AND REGULATORY

Through the third quarter of 2003, capital decreased by $7.6 million as a result
of the net loss of the Corporation. This compares to a decrease in capital
during the same period in the previous year of $7.8 million resulting primarily
from the net loss, changes in the unrealized gain on securities available for
sale, and dividends declared.

As a bank holding company, the Corporation is required to maintain certain
levels of capital under government regulation. There are several measurements of
regulatory capital and the Corporation is required to meet minimum requirements
under each measurement. The federal banking regulators have also established
capital classifications beyond the minimum requirements in order to risk-rate
deposit insurance premiums and to provide trigger points for prompt corrective
action in the event an institution becomes financially troubled. As of September
30, 2003, the Corporation, and as of December 31, 2002, the Corporation and the
Bank, were undercapitalized. See discussions on the following pages of the
regulatory requirements and the Corporation's plans for increasing its capital
ratios.

Regulatory capital is not the same as shareholders' equity reported in the
accompanying condensed consolidated financial statements. Certain assets cannot
be considered assets for regulatory purposes. The Corporation's acquisition
intangibles and a portion of the deferred tax asset are examples of such assets.

Presented below is a summary of the capital position in comparison to generally
applicable regulatory requirements:

<TABLE>
<CAPTION>
                                                                    Tier I          Tier I              Total
                                                                  Capital to      Capital to         Capital to
                                                                    Average      Risk-Weighted      Risk-Weighted
                                                                    Assets          Assets             Assets
                                                                    ------          ------             ------
<S>                                                               <C>            <C>                <C>
     Regulatory minimum for capital adequacy purposes                4.0%            4.0%                8.0%

     The Corporation:
         September 30, 2003                                          3.0%            4.2%                8.3%
         December 31, 2002                                           3.8%            5.3%                8.2%

     The Bank:
         September 30, 2003                                          5.0%            7.0%                8.3%
         December 31, 2002                                           4.8%            6.6%                7.9%
</TABLE>





                                                                             21.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


As shown above, the Corporation did not meet the minimum regulatory capital
requirements at September 30, 2003, and December 31, 2002. The Bank did not meet
the minimum regulatory capital requirements on December 31, 2002. The Bank is
also below minimum capital requirements imposed by the Order as of September 30,
2003,

The capital levels include trust preferred securities, issued in May 1999,
subject to certain limitations. Federal Reserve guidelines limit the amount of
trust preferred securities which can be included in Tier I capital to 25% of
total Tier I capital. As of September 30, 2003 and December 31, 2002, $3,506,000
and $5,706,000, respectively, of the $12,450,000 of trust preferred securities
were available as Tier I capital of the Corporation.

In September 2002, a safety and soundness examination of the Bank was conducted
by its principal regulators, the Michigan Office of Financial and Insurance
Services (OFIS) and the FDIC. During the course of that examination, the FDIC,
the OFIS, and the Federal Reserve Bank of Chicago (FRB) requested that the
Corporation and the Bank take certain actions, including suspending the payment
of dividends and conserving the liquidity of the Corporation.

In response to the concerns expressed by the regulators, the Board of Directors
of the Corporation and the Bank adopted resolutions providing for prior
regulatory approval of the declaration or payment of any dividend by the
Corporation or the Bank, and suspension of interest payments by the Corporation
in connection with its trust preferred securities.

The agreements relating to the trust preferred securities allow for the
suspension of payments for up to 20 quarters. Therefore, the suspension of the
interest payments does not violate the agreement. However, while interest on the
Corporation's subordinated debentures that fund the distributions on the trust
preferred securities are suspended, no dividends can be paid on the
Corporation's common stock, and certain other restrictions apply. These other
restrictions include a prohibition on the sale of assets except in the ordinary
course of business or in immaterial amounts.

Following the completion of the safety and soundness examination of the Bank by
the FDIC and the OFIS, and the Bank's receipt of the related Joint Report of
Examination ("Report"), the FDIC and the OFIS, with the consent of the Bank, on
March 26, 2003, entered a formal Cease and Desist Order (the "Order") under
federal and state banking laws. The Order became effective on April 5, 2003, and
will remain in effect until modified or terminated by action of the FDIC and the
OFIS. The Order identifies deficiencies in the Bank's policies and procedures
for safe and sound operation, including its directorate and management personnel
and practices, credit underwriting, credit administration, and policies
regarding asset/liability management, liquidity, funds management and
investments, and its compliance with all applicable laws and regulations,
including Regulations O and U of the Board of Governors of the Federal Reserve
System (the "Board"), the FDIC Rules and Regulations, and the Michigan Banking
Code of 1999. The Order also requires the Bank to maintain specified capital
ratios during the life of the Order.

The Order further requires the Bank and its directors to take the following
specific steps, again within time periods specified in the Order. For the
calendar quarters ending March 31, 2003, and June 30, 2003, the Bank was
required to have a ratio of Tier 1 capital to total assets ("Tier 1 Capital
Ratio") equal to at least 6.4%. Commencing with the calendar quarter ending
September 30, 2003, and for each calendar quarter thereafter, the Bank must have
a Tier 1 Capital Ratio equal to at least 8.0%. If the Bank's Tier 1 Capital
Ratio is below the required percentage for any such quarter, the Bank must take
steps to bring its Tier 1 Capital Ratio to the required level within 60 days.
The Order also requires the Bank to maintain its total risk-based capital ratio
at 10.0% or greater for each calendar quarter ending after the effective date of
the Order. If the Bank's total risk-based capital ratio for any such quarter is
less than 10.0%, the Bank must take steps to bring its total risk-based capital
ratio to the required level within 60 days.

As of September 30, 2003, the Bank's capital ratios do not meet the minimum
requirements of the Order. Following is a summary of the strategies which
management is considering in order to restore the Bank's capital to the levels
required by the Order.






                                                                             22.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


The Corporation may sell or close certain branches to reduce the size of the
Bank. In conjunction with the possible sale of the branches, the Bank would sell
a select portion of its loan portfolio. It is anticipated that the cash received
from the sale of the loans would provide the necessary liquidity to fund the
branch sales. Any sales of the branches and loans will require prior regulatory
approval, and may require approval by holders of the trust preferred securities.
During the third quarter of 2003, the Bank closed four branches with deposits
totaling approximately $7 million. The Bank has received regulatory approval to
close two additional branches with deposits totaling approximately $4 million. A
decision to close these branches will be part of an overall branch strategy.

The potential branch and loan sales is not expected to reduce the overall size
of the Bank sufficiently, based on current capital levels, to achieve the
required regulatory capital ratios. Therefore, the Corporation is anticipating
additional capital will need to be raised to attain the 8% Tier 1 Capital Ratio.

The Corporation has and continues to explore a possible capital infusion from
outside investors which may also include an opportunity for existing
shareholders to participate. In addition, the Board of Directors has pursued and
expects to continue to pursue the sale of the Corporation to other financial
institutions. If no outside investor is found or a sale does not materialize,
the Corporation will consider other alternatives for raising additional capital.
Among the options that the Corporation would consider is a rights offering for
existing shareholders. It is possible that any new stock issuance could be at a
price below the Corporation's current book value, resulting in a dilution of the
existing shareholders' ownership interests.

Noncompliance with the minimum capital requirements of the Order may impact the
ability of the Corporation and the Bank to remain as ongoing operating entities.

Management has hired additional skilled and experienced banking professionals
who are assisting the senior management team in addressing the regulatory issues
facing the Corporation. By strengthening the infrastructure of the Corporation,
management can place more emphasis on addressing problem loans, financial
matters, and moving forward with and implementing the daily strategies of the
Corporation. In the future, this may decrease the dependence on outsourced
services, which in turn should decrease expenses associated with these services.
The expense reduction and improvement in the loan portfolio would be significant
steps toward returning the Corporation to profitability, which in turn could
further improve the capital ratios.

The Order imposes specific prohibitions and limitations on the Bank and its
directors regarding certain matters. Without the prior approval of the FDIC and
the OFIS, the Bank may not (i) enter into any material transaction that is not
in the ordinary course of business (including any material acquisition or
disposition of assets), (ii) declare or pay any cash dividend, (iii) extend any
credit, directly or indirectly, to any borrower obligated to the Bank on any
credit which has been charged off or classified loss by bank examiners so long
as such credit remains uncollected, or (iv) authorize any "golden parachute"
payment to any person, within the meaning of the applicable FDIC regulation. In
addition, the Bank is required to notify the FDIC and the OFIS in writing of any
change in the Bank's directors or senior executive officers, and to obtain the
prior approval of the OFIS of the addition of any person as a director or senior
executive officer of the Bank. The Bank is also prohibited from permitting its
director and former Chairman, Ronald G. Ford, from negotiating or making any
loan, overdraft, or extension of credit, serving as a member of the Bank's loan
committee, or participating in credit underwriting, other than voting as a
director on matters presented to the Board of Directors.



                                                                             23.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)

The Order requires the Bank and its directors to take specific steps, within
time periods specified in the Order, to address the operational deficiencies,
including certain violations of law and regulations, identified by the FDIC and
the OFIS in the Order and the Report. Among other things, the Bank must
establish, and submit to the FDIC and the OFIS for comment, written plans (i) to
reduce the Bank's risk position with respect to certain classified loans
identified in the Report or any subsequent Report of Examination during the life
of the Order, (ii) to reduce identified concentrations of loans to one industry
in excess of 100% of the Bank's Tier 1 capital, (iii) to reduce and collect
delinquent loans, (iv) to eliminate the classified amounts of loans to
directors, executive officers, principal shareholders of the Bank and their
respective related interests, (v) to address the Bank's relationship of volatile
liabilities to temporary investments, rate sensitivity objectives, and
asset/liability management, (vi) setting forth the Bank's strategic plan,
including financial goals and strategies to maintain adequate capital and
liquidity, to reduce problem loans, and to attract and keep qualified
management, (vii) covering the policies and procedures for review and approval
of reimbursement of customer entertainment and business development expenses of
the Bank's directors, officers and employees, (viii) for a realistic budget for
calendar year 2003 and each subsequent year during the life of the Order,
including strategies to improve the Bank's net interest margin, (ix) to reduce
the Bank's portfolio of other real estate owned as a result of foreclosure or
surrender of collateral for loans, and (x) to address procedures for the
directors to monitor, and management to implement, the requirements of the
Order.

Further actions the Bank must take within periods specified in the Order include
correcting all deficiencies noted in the Report with respect to certain
categories of loans, and all technical exceptions and all violations of law
noted in the Report. The Bank's loan committee, which must include at least
three outside directors who are independent of management and any principal
shareholder, is required to meet at least monthly, and to act with respect to
specified categories of loans and loan applications, including all such
applications involving directors and executive officers of the Bank and their
respective related interests. The Bank's Board of Directors is required to
review and revise the Bank's written loan policy, to submit the revised policy
to the FDIC and OFIS for review and comment, and to conduct an annual review of
the policy. The Bank's Board of Directors is also required to review and revise
the Bank's investment policy, and to submit the revised policy for comment to
the FDIC and the OFIS. The Order mandates the Bank's Board of Directors (i) to
adopt resolutions acknowledging the Bank's designation as a troubled institution
by the FDIC, (ii) to review all agreements for the provision of goods and
services between the Bank and any of its current or former directors, officers,
or employees, and their respective related interests, and to determine whether
such agreements remain in the best interest of the Bank, and (iii) to seek
restitution from Ronald G. Ford of all amounts paid by the Bank pursuant to the
Chairman Agreement entered into as of April 12, 2002, between Mr. Ford and the
Corporation. The Order also requires the Bank to submit to the FDIC and the OFIS
written reports regarding its progress under the Order, signed by each director
of the Bank, every three months following the effective date of the Order.

The Bank believes it has complied with the requirements of the Order to develop
policies and plans to address the operating deficiencies noted in the report.

If the Bank fails or is unable to timely comply with the Order, there could be
material adverse effects on the Bank and the Corporation and it could impact
their ability to remain as ongoing entities. Since the entry of the Order, the
Corporation has determined that the Bank was not in compliance with the minimum
capital ratios specified in the Order for the calendar quarter ended June 30,
2003. There can be no assurance that the Corporation can take steps in the time
limits prescribed by the Order to restore the Bank's capital ratios to the
required levels.

The Corporation and the Bank have been addressing the requirements of the Order
as the Board of Directors and management believe it is in the best interests for
the long-term financial health of the Corporation to address the issues
promptly.





                                                                             24.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (Continued)


The Order requires development of a comprehensive strategic plan, financial
plan, and profit plan. The development of these plans will provide the Board of
Directors and management with a road map to strengthen the Corporation in many
areas, reduce risk, and improve liquidity, all in an effort to return the
Corporation to profitability. By implementing these strategic plans, improved
policies and resolution of nonperforming assets, the Corporation believes it can
more effectively serve its customers, grow in its markets, and work toward
returning to profitability, and increasing shareholder value. Management and the
Board of Directors are developing a strategic plan, financial plan, and profit
plan that are intended to strengthen the operations of the Corporation and the
Bank.

Addressing the requirements of the Order, carrying out the objectives of the
strategic plan, and returning the Corporation to profitability requires the
strengthening of the executive management team. The Board of Directors hired C.
James Bess, President and Chief Executive Officer, effective July 28, 2003. Mr.
Bess has 40 years of banking experience and has successfully led the turnaround
of eight banks over the last 25 years. An executive vice president with bank
regulatory experience, a senior lender with turnaround experience, and a loan
administration officer have been hired.

The Corporation may add additional management with experience in turnaround
situations, loan portfolio, credit and problem loan administration, and
financial management expertise commensurate with the issues the Corporation must
address. The addition of management may increase expense in the short term.
However, the additional management expertise is expected to help the Corporation
resolve many of its issues more quickly, and improve customer service and
financial performance.

The Board of Directors is further required to address the overall
asset/liability management practices of the Bank, interest rate risk management,
and liquidity management. Strengthening the Bank's policies, risk limits, and
procedures in these areas should increase overall liquidity and consistency of
income through interest rate cycles and reduce risk to capital.

OTHER MATTERS

The Corporation is a defendant in a consolidated putative class action initiated
by shareholders of the Corporation, alleging violations of the Federal
securities laws and seeking, among other things, compensatory damages. The
original complaints also named as defendants a current and former director, each
of whom was a senior executive officer of the Corporation. In addition, a
shareholder's derivative action has been filed against the Corporation and
certain current and former directors of the Corporation. All of these
proceedings are described in Part II, Item 1 -- Legal Proceedings. Litigation of
the types involved in these actions can be complex, time-consuming, and often
protracted. The Corporation anticipates that it will incur substantial
additional expense for legal and other professional fees as a result of the
filing of these actions. At this early stage of the proceedings, the Corporation
cannot accurately assess the impact which these proceedings will have on the
Corporation. An ultimate determination of any of these actions adverse to the
Corporation could have a material adverse effect on the Corporation's financial
condition and operations.


                                                                             25.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


INTEREST RATE RISK

In general, the Corporation attempts to manage interest rate risk by investing
in a variety of assets which afford it an opportunity to reprice assets and
increase interest income at a rate equal to or greater than the interest expense
associated with repricing liabilities.

Interest rate risk is the exposure of the Corporation to adverse movements in
interest rates. The Corporation derives its income primarily from the excess of
interest collected on its interest-earning assets over the interest paid on its
interest-bearing obligations. The rates of interest the Corporation earns on its
assets and owes on its obligations generally are established contractually for a
period of time. Since market interest rates change over time, the Corporation is
exposed to lower profitability if it cannot adapt to interest rate changes.
Accepting interest rate risk can be an important source of profitability and
shareholder value; however, excess levels of interest rate risk could pose a
significant threat to the Corporation's earnings and capital base. Accordingly,
effective risk management that maintains interest rate risk at prudent levels is
essential to the Corporation's safety and soundness.

Loans are the most significant earning asset. Management offers commercial and
real estate loans priced at interest rates which fluctuate with various indices
such as the prime rate or rates paid on various government issued securities. In
addition the Corporation prices loans so it has an opportunity to reprice the
loan within 12 to 36 months.

The Corporation has $91.4 million of securities, of which $49.4 million are
mortgage-backed securities providing for scheduled monthly principal and
interest payments as well as unanticipated prepayments of principal. These cash
flows are then reinvested into other earning assets at current market rates.

The Corporation also has federal funds sold to correspondent banks as well as
other interest-bearing deposits with correspondent banks. These funds are
generally repriced on a daily basis.

The Corporation offers deposit products with a variety of terms ranging from
deposits whose interest rates can change on a weekly basis to certificates of
deposit with repricing terms of up to five years.

Beyond general efforts to shorten the loan pricing periods and extend deposit
maturities, management can manage interest rate risk by the maturity periods of
securities purchased, selling securities available for sale, and borrowing funds
with targeted maturity periods, among other strategies. Also, the rate of
interest rate changes can impact the actions taken since the speed of change
affects borrowers and depositors differently.

Exposure to interest rate risk is reviewed on a regular basis. Interest rate
risk is the potential of economic losses due to future interest rate changes.
These economic losses can be reflected as a loss of future net interest income
and/or a loss of current fair market values. The objective is to measure the
effect of interest rate changes on net interest income and to structure the
composition of the balance sheet to minimize interest rate risk and at the same
time maximize income. Management realizes certain risks are inherent and that
the goal is to identify and minimize the risks. Tools used by management include
maturity and repricing analysis and interest rate sensitivity analysis.

The difference between repricing assets and liabilities for a specific period is
referred to as the gap. An excess of repriceable assets over liabilities is
referred to as a positive gap. An excess of repriceable liabilities over assets
is referred to as a negative gap. The cumulative gap is the summation of the gap
for all periods to the end of the period for which the cumulative gap is being
measured.

Assets and liabilities scheduled to reprice are reported in the following time
frames. Those instruments with a variable interest rate tied to an index and
considered immediately repriceable are reported in the 1- to 90-day time frame.
The estimates of principal amortization and prepayments are assigned to the
following time frames.


                                                                             26.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)


The following is the Corporation's repricing opportunities at September 30, 2003
(dollars in thousands):

<TABLE>
<CAPTION>
                                                      1 - 90      91 - 365      2 - 5        Over 5
                                                       Days         Days        Years        Years        Total
                                                       ----         ----        -----        -----        -----
<S>                                                <C>          <C>          <C>          <C>           <C>
Interest-earning assets:
   Loans                                           $   170,824  $    51,503  $    53,116  $    50,204   $  325,647
   Securities                                                0       48,067       37,356       13,854       99,277
   Other                                                14,050            0            0            0       14,050
                                                   -----------  -----------  -----------  -----------   ----------

   Total interest-earning assets                       184,874       99,570       90,472       64,058      438,974
                                                   -----------  -----------  -----------  -----------   ----------

Interest-bearing obligations:
   Savings deposits                                     98,141            0            0            0       98,141
   Time deposits                                        60,318       90,873       55,364          766      207,321
   Borrowings                                                0        1,176       14,690       71,551       87,417
   Subordinated debentures                              12,450            0            0            0       12,450
                                                   -----------  -----------  -----------  -----------   ----------

   Total interest-bearing obligations                  170,909       92,049       70,054       72,317      405,329
                                                   -----------  -----------  -----------  -----------   ----------

Gap                                                $    13,965  $     7,521  $    20,418  $    (8,259)  $   33,645
                                                   ===========  ===========  ===========  ===========   ==========

Cumulative gap                                     $    13,965  $    21,486  $    41,904  $    33,645
                                                   ===========  ===========  ===========  ===========
</TABLE>

The above analysis indicates that at September 30, 2003, the Corporation had a
cumulative asset sensitivity gap position of $21.5 million within the one-year
time frame. The Corporation's cumulative asset sensitive gap suggests that if
market interest rates increase in the next twelve months, the Corporation's net
interest income could increase. Conversely, if market interest rates decrease
over the next twelve months, the above gap position suggests the Corporation's
net interest income would decrease.

At December 31, 2002, the Corporation had a cumulative asset sensitivity gap
position of $20.1 million within the one-year time frame. The Corporation's
cumulative asset sensitive gap suggested that if market interest rates increased
in the next twelve months, the Corporation had the potential to earn more net
interest income. Conversely, if market interest rates continued to decrease over
a twelve-month period, the December 31, 2002, gap position suggested the
Corporation's net interest income would decrease.

The change in the gap position from December 31, 2002 to September 30, 2003, was
not significant. A limitation of the traditional gap analysis is that it does
not consider the timing or magnitude of noncontractual repricing or expected
prepayments. In addition, the gap analysis treats savings, NOW, and money market
accounts as repricing within 90 days.

The borrowings in the gap analysis include FHLB advances as fixed-rate advances.
A significant portion of these advances give the FHLB the option to convert from
a fixed-rate advance to an adjustable rate advance with quarterly repricing at
three-month LIBOR. The exercise of this conversion feature by the FHLB would
impact the repricing dates currently assumed in the analysis.

The Corporation's primary market risk exposure is interest rate risk and, to a
lesser extent, liquidity risk and foreign exchange risk. The Corporation has no
market risk sensitive instruments held for trading purposes. The Corporation has
limited agricultural-related loan assets and therefore has minimal significant
exposure to changes in commodity prices. Any impact that changes in foreign
exchange rates and commodity prices would have on interest rates are assumed to
be insignificant.



                                                                             27.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)


Evaluating the exposure to changes in interest rates includes assessing both the
adequacy of the process used to control interest rate risk and the quantitative
level of exposure. The Corporation's interest rate risk management process seeks
to ensure that appropriate policies, procedures, management information systems,
and internal controls are in place to maintain interest rate risk at prudent
levels with consistency and continuity. In evaluating the quantitative level of
interest rate risk, the Corporation assesses the existing and potential future
effects of changes in interest rates on its financial condition, including
capital adequacy, earnings, liquidity, and asset quality.

In addition to changes in interest rates, the level of future net interest
income is also dependent on a number of variables, including: the growth,
composition and levels of loans, deposits, and other earning assets and
interest-bearing obligations, and economic and competitive conditions; potential
changes in lending, investing, and deposit strategies; customer preferences; and
other factors.

FOREIGN EXCHANGE RISK

In addition to managing interest rate risk, management also actively manages
risk associated with foreign exchange. The Corporation provides foreign exchange
services, makes loans to, and accepts deposits from, Canadian customers
primarily at its banking offices in Sault Ste. Marie. To protect against foreign
exchange risk, the Corporation monitors the volume of Canadian deposits it takes
in and then invests these Canadian funds in Canadian commercial loans and
securities. As of September 30, 2003, the Corporation had excess Canadian assets
of $2.6 million (or $1.9 million in U.S. dollars). Management believes the
exposure to short-term foreign exchange risk is minimal and at an acceptable
level for the Corporation.

OFF-BALANCE-SHEET RISK

Derivative financial instruments include futures, forwards, interest rate swaps,
option contracts and other financial instruments with similar characteristics.
The Corporation currently does not enter into futures, forwards, swaps or
options. However, the Corporation is party to financial instruments with
off-balance-sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include commitments to
extend credit and standby letters of credit and involve to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the condensed consolidated balance sheets. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates and may require collateral from the borrower if deemed
necessary by the Corporation. Standby letters of credit are conditional
commitments issued by the Corporation to guarantee the performance of a customer
to a third party up to a stipulated amount and with specified terms and
conditions.

Commitments to extend credit and standby letters of credit are not recorded as
an asset or liability by the Corporation until the instrument is exercised.

IMPACT OF INFLATION AND CHANGING PRICES

The accompanying condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles, which require the
measurement of financial position and results of operations in historical
dollars without considering the change in the relative purchasing power of money
over time due to inflation. The impact of inflation is reflected in the
increased cost of the Corporation's operations. Nearly all the assets and
liabilities of the Corporation are financial, unlike industrial or commercial
companies. As a result, the Corporation's performance is directly impacted by
changes in interest rates, which are indirectly influenced by inflationary
expectations. The Corporation's ability to match the interest sensitivity of its
financial assets to the interest sensitivity of its financial liabilities tends
to minimize the effect of changes in interest rates on the Corporation's
performance. Changes in interest rates do not necessarily move to the same
extent as changes in the price of goods and services.


                                                                             28.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                   ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES


As of September 30, 2003, an evaluation was performed under the supervision of
and with the participation of the Corporation's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Corporation's disclosure controls and procedures.
Based on that evaluation, the Corporation's management, including the Chief
Executive Officer and Chief Financial Officer, concluded that the Corporation's
disclosure controls and procedures were effective as of September 30, 2003.






                                                                             29.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

As of the date hereof, except for the Order, the two lawsuits, and the
arbitration referred to below, there were no material pending legal proceedings,
other than routine litigation incidental to the business of banking to which the
Corporation or any of its subsidiaries is a party or of which any of its
properties is the subject. Information pertaining to the Order is contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" under the caption "Capital and Regulatory" on this Form 10-Q, and is
incorporated here by reference.

In an action styled Lanctot v. Littlejohn, et al., filed in the U.S. District
Court for the Western District of Michigan on June 13, 2003, a shareholder of
the Corporation has brought a class action against the Corporation, its former
chairman and chief executive officer and current director, Ronald G. Ford, and
its former chief executive officer and director, Sherry L. Littlejohn, for
alleged violations of Federal securities laws. The Complaint, which demands a
jury trial, is brought on behalf of all persons, subject to certain exceptions,
who purchased the Corporation's common stock during the period from November 13,
2000, through April 15, 2003. It alleges that the Corporation and the individual
defendants violated section 10(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") and Rule 10b-5 of the Securities and Exchange Commission (the
"SEC") issued under the Exchange Act, by disseminating materially false and
misleading statements and/or concealing material adverse facts concerning the
financial condition and operations of the Corporation, with knowledge, or in
reckless disregard, of the materially false and misleading character thereof.
The Complaint also alleges violations of Section 20 of the Exchange Act by the
individual defendants, by reason of their control, at relevant times, of the
Corporation. Among other things, the Complaint is based upon allegations of
deficiencies in the Corporation's policies and procedures for safe and sound
operation, including its directorate and management personnel and practices,
credit underwriting, credit administration, and policies regarding
asset/liability management, liquidity, funds management and investments, and its
compliance with all applicable laws and regulations, including Regulations O and
U of the Board of Governors of the Federal Reserve System (the "Board"), the
Federal Deposit Insurance Corporation ("FDIC") Rules and Regulations, and the
Michigan Banking Code of 1999. The Complaint seeks certification of a class
consisting of all persons who purchased the common stock of the Corporation on
the open market between the dates noted above, compensatory damages, and costs
and attorney's fees.

In an action styled Rosen v. North Country Financial Corporation, et al., filed
in the U.S. District Court for the Western District of Michigan on June 23,
2003, a former shareholder of the Corporation has brought a class action against
the Corporation, its former chairman and chief executive officer and current
director, Ronald G. Ford, and its former chief executive officer and director,
Sherry L. Littlejohn, for alleged violations of Federal securities laws. The
Complaint, which demands a jury trial, is brought on behalf of all persons,
subject to certain exceptions, who purchased the Corporation's common stock
during the period from November 13, 2000, through April 15, 2003. It alleges
that the Corporation and the individual defendants violated section 10(b) of the
Exchange Act and Rule 10b-5, by disseminating materially false and misleading
statements and/or concealing material adverse facts concerning the financial
condition and operations of the Corporation, with knowledge, or in reckless
disregard, of the materially false and misleading character thereof. The
Complaint also alleges violations of Section 20 of the Exchange Act by the
individual defendants, by reason of their control, at relevant times, of the
Corporation. Among other things, the Complaint is based upon allegations of
deficiencies in the Corporation's policies and procedures for safe and sound
operation, including its directorate and management personnel and practices,
credit underwriting, credit administration, and policies regarding
asset/liability management, liquidity, funds management and investments, and its
compliance with all applicable laws and regulations, including Regulations O and
U of the Board, FDIC Rules and Regulations, and the Michigan Banking Code of
1999. The Complaint seeks certification of a class consisting of all persons who
purchased the common stock of the Corporation on the open market between the
dates noted above, compensatory damages, and costs and attorney's fees.



                                                                             30.
<PAGE>

                      NORTH COUNTRY FINANCIAL CORPORATION
                     PART II - OTHER INFORMATION (Continued)


On September 2, 2003, pursuant to 15 U.S.C. ss. 78-u-4(a)(3)(B), Plaintiff
Charles Lanctot filed a motion requesting the court to consolidate the two
securities class action cases (Lanctot and Rosen) under the caption In re North
Country Financial Corporation Securities Litigation, appoint him as "Lead
Plaintiff" in the consolidated cases and approve the selection of his counsel as
"Lead Plaintiff's Counsel." In an Order dated September 29, 2003, the court
among other things consolidated the Lanctot and Rosen actions, designated John
F. Stevens and Charles D. Lanctot as "Lead Plaintiffs," and designated "Co-Lead
Counsel" and "Liaison Counsel" for the class.

Prior to entry of the court's Order, Plaintiff Charles Lanctot and the
Corporation, by their respective counsel, reached an agreement, confirmed in
writing and entered by the court in the form of a stipulated order, that: (1)
within 45 days of the court's entry of the order described above concerning
appointment of Lead Plaintiff and Lead Plaintiff's Counsel, Lead Plaintiff shall
file an Amended and Consolidated Class Action Complaint; and (2) within 45 days
of the filing of the Amended and Consolidated Class Action Complaint, the
Corporation shall file its first responsive pleading. At this juncture, the
Corporation anticipates filing a motion to dismiss the consolidated securities
class action lawsuit on the ground that Plaintiffs have not adequately plead
that the Corporation, through its officers and directors, acted with the intent
to defraud the investing public under the standard articulated in Helwig v.
Vencor, Inc., 251 F.3d 540 (6th Cir. 2001), cert. dismissed, 536 U.S. 935, 122
S.Ct. 2616 (2002). During the pendency of a motion to dismiss, a stay of "all
discovery and other proceedings" automatically will be imposed under 15 U.S.C.
ss. 78u-4(b)(3)(B).

In an action styled Virginia M. Damon Trust v. North Country Financial
Corporation, Nominal Defendant, and Dennis Bittner, Bernard A. Bouschor, Ronald
G. Ford, Sherry L. Littlejohn, Stanley J. Gerou II, John D. Lindroth, Stephen
Madigan, Spencer Shunk, Michael Henrickson, Glen Tolksdorf, and Wesley Hoffman,
filed in the U.S. District Court for the Western District of Michigan on July 1,
2003, a shareholder of the Corporation has brought a shareholder's derivative
action under Section 27 of the Exchange Act against the Corporation and certain
of its current and former directors and senior executive officers. The
Complaint, which demands a jury trial, is brought on behalf of the Corporation
against the individual defendants. It alleges that the individual defendants
have caused loss and damage to the Corporation through breaches of their
fiduciary duties of oversight and supervision by failing (i) adequately to
safeguard the assets of the Corporation, (ii) to ensure that adequate
administrative, operating, and internal controls were in place and implemented,
(iii) to ensure that the Corporation was operated in accordance with
legally-prescribed procedures, and (iv) to oversee the audit process to ensure
that the Corporation's assets were properly accounted for and preserved. The
Complaint further alleges that the individual defendants violated Section 14(a)
of the Exchange Act by making materially false and misleading statements in the
proxy statement mailed to shareholders in connection with the annual meeting of
the Corporation held May 29, 2000, and the adoption by the shareholders at that
meeting of the Corporation's 2000 Stock Incentive Plan. The Complaint also
alleges that Mr. Ford and Ms. Littlejohn, through a series of compensation
arrangements, stock options, and employment agreements obtained by them through
improper means resulting from the offices they held with the Corporation,
received excessive compensation, to the injury of the Corporation. Among other
things, the Complaint is based upon allegations of material misstatements or
omissions in filings made by the Corporation with the SEC, and deficiencies in
the Corporation's policies and procedures for safe and sound operation,
including its directorate and management personnel and practices, credit
underwriting, credit administration, and policies regarding asset/liability
management, liquidity, funds management and investments, and its compliance with
all applicable laws and regulations, including Regulations O and U of the Board,
FDIC Rules and Regulations, and the Michigan Banking Code of 1999. The Complaint
seeks (i) rescission of the approval of the 2000 Stock Incentive Plan and return
of all stock and options granted under the Plan, (ii) a declaration that the
individual defendants breached their fiduciary duty to the Corporation, (iii) an
order to the individual defendants to account to the Corporation for all losses
and/or damages by reason of the acts and omissions alleged, (iv) an order to
each of the individual defendants to remit to the Corporation all salaries and
other compensation received for periods during which they breached their
fiduciary duties, (v) compensatory damages in favor of the Corporation, (vi)
injunctive relief, and (vii) interest, costs, and attorney's and expert's fees.
Plaintiffs and a number of the individual defendants, by their respective
counsel, have negotiated extensions of time in which the individual defendants
will file their respective first responsive pleadings.



                                                                             31.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                     PART II - OTHER INFORMATION (Continued)


In the meantime, on September 18, 2003, the Corporation filed a motion to
dismiss the Damon action because Plaintiff did not satisfy the mandatory
precondition, under Section 493a of the Michigan Business Corporation Act
("MBCA"), M.C.L.ss. 450.1493a, for filing a shareholder derivative action that
the shareholder must first have submitted a written demand that the Corporation
pursue in its own right the claims asserted by the shareholder (the Plaintiff
here). Plaintiff's counsel has proposed a schedule that would require Plaintiff
to respond to the Corporation's motion to dismiss not later than December 26,
2003, with the reply briefs of the Corporation and the individual defendants due
not more than 14 days after Plaintiff's response. It is anticipated that a final
agreement as to the briefing schedule will be confirmed in writing and submitted
for entry by the court in the form of a stipulated order.

By letter dated September 17, 2003, and expressly without prejudice to the
argument that any such written demand is not required, Plaintiff's counsel
purported to make a written demand that the Corporation pursue a number of
indicated putative claims against: (1) present and former officers and directors
of the Corporation who also are the individual defendants in the Damon action,
and (2) the certified public accounting firm of Wipfli, Ullrich, Bertelson, LLP.
The MBCA grants the Corporation ninety (90) days in which to respond to a proper
written demand. At this juncture, it is not clear what effect, if any, the
putative demand may have on the Damon action or the Corporation's motion to
dismiss the action.

On November 10, 2003, the Corporation filed a motion, as permitted by section
495 of the MBCA, M.C.L.ss. 450.1495, requesting the court to appoint a
disinterested person to conduct a reasonable investigation of the claims made by
the Plaintiff and to make a good faith determination whether the maintenance of
the derivative action is in the best interests of the Corporation.

Litigation of the types involved in these actions can be complex,
time-consuming, and often protracted. The Corporation anticipates that it will
incur substantial additional expense for legal and other professional fees as a
result of the filing of these actions. At this early stage of the proceedings,
the Corporation cannot accurately assess the impact which these proceedings will
have on the Corporation. An ultimate determination of any of these actions
adverse to the Corporation could have a material adverse effect on the
Corporation's financial condition and operations.

On September 16, 2003, Ronald G. Ford, the former chairman and chief executive
officer and a current director of the Corporation, initiated an arbitration
proceeding against the Corporation seeking monetary damages for alleged breach
by the Corporation of his Amended and Restated Employment Agreement, Chairman
Agreement, and Amended and Restated Consulting Agreement, each with the
Corporation. The Corporation has denied the alleged breach and asserted a
counterclaim to recover all amounts paid to Mr. Ford under the Chairman
Agreement, as required by the Cease and Desist Order entered by the FDIC and the
OFIS, in addition to other amounts. The proceeding is currently stayed by
agreement of the parties. The Corporation intends to defend the arbitration.



                                                                             32.
<PAGE>

                       NORTH COUNTRY FINANCIAL CORPORATION
                     PART II - OTHER INFORMATION (Continued)


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

     Exhibit 3.1  Articles of Incorporation, as amended, incorporated herein by
                  reference to exhibit 3.1 of the Corporation's Quarterly
                  Report on Form 10-Q for the quarter ended September 30, 1999.

     Exhibit 3.2  Amended and Restated Bylaws, incorporated herein by reference
                  to exhibit 3.1 of the Corporation's Quarterly Report on Form
                  10-Q for the quarter ended September 30, 2001.

     Exhibit 10.1 Agreement dated August 18, 2003 between North Country
                  Financial Corporation and Joseph E. Petterson.

     Exhibit 10.2 Agreement dated September 1, 2003 between North Country Bank
                  and Trust and Jani Blake.

     Exhibit 10.3 Agreement dated September 3, 2003 between North Country
                  Financial Corporation and Kelly W. George.

     Exhibit 31.1 Rule 13a-14(a) Certification of Chief Executive Officer.

     Exhibit 31.2 Rule 13a-14(a) Certification of Chief Financial Officer.

     Exhibit 32.1 Section 1350 Certification of Chief Executive Officer.

     Exhibit 32.2 Section 1350 Certification of Chief Financial Officer.

(b) The following Form 8-K filings were made during the quarter for which this
report is filed:

     -   Form 8-K dated July 28, 2003, disclosure of the employment of Mr. C.
         James Bess as President and Chief Executive Officer of the Corporation
         and the Bank.
     -   Form 8-K dated August 18, 2003, disclosure of the employment of Mr.
         Joseph E. Petterson as Executive Vice President of the Corporation and
         the Bank.
     -   Form 8-K dated September 3, 2003, disclosure of the employment of Mr.
         Kelly W. George as Senior Vice President/Chief Lending Officer of the
         Bank.



                                                                             33.
<PAGE>
                       NORTH COUNTRY FINANCIAL CORPORATION
                                   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)



11/12/03                               By: /s/ C. JAMES BESS
--------                                   -------------------------------------
Date                                       C. JAMES BESS
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                           (principal executive officer)



                                       By: /s/ WILLIAM T. FITZGERALD, JR.
                                           -------------------------------------
                                           WILLIAM T. FITZGERALD, JR.
                                           CHIEF FINANCIAL OFFICER
                                           (principal financial officer)







                                                                             34.

<PAGE>

                               10-Q EXHIBIT INDEX


EXHIBIT NO.             DESCRIPTION
-----------             -----------

Exhibit 3.1       Articles of Incorporation, as amended, incorporated herein by
                  reference to exhibit 3.1 of the Corporation's Quarterly
                  Report on Form 10-Q for the quarter ended September 30, 1999.

Exhibit 3.2       Amended and Restated Bylaws, incorporated herein by reference
                  to exhibit 3.1 of the Corporation's Quarterly Report on Form
                  10-Q for the quarter ended September 30, 2001.

Exhibit 10.1      Agreement dated August 18, 2003 between North Country
                  Financial Corporation and Joseph E. Petterson.

Exhibit 10.2      Agreement dated September 1, 2003 between North Country Bank
                  and Trust and Jani Blake.

Exhibit 10.3      Agreement dated September 3, 2003 between North Country
                  Financial Corporation and Kelly W. George.

Exhibit 31.1      Rule 13a-14(a) Certification of Chief Executive Officer.

Exhibit 31.2      Rule 13a-14(a) Certification of Chief Financial Officer.

Exhibit 32.1      Section 1350 Certification of Chief Executive Officer.

Exhibit 32.2      Section 1350 Certification of Chief Financial Officer.