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


                                  FORM 10-Q


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

      For the quarterly period ended June 30, 1999

      Commission file number (0-18173)


                            BANKNORTH GROUP, INC.
           (Exact name of registrant as specified in its charter)


              DELAWARE                             03-0321189
   (State or other jurisdiction of              (I.R.S. Employer
    incorporation or organization)           Identification Number)


                             300 FINANCIAL PLAZA
                                P.O. BOX 5420
                             BURLINGTON, VERMONT
                  (Address of principal executive offices)

                                    05401
                                 (Zip code)

                               (802) 658-9959
            (Registrant's telephone number, including area code)

      Indicate by check mark whether the Registrant (l) has filed all
reports required to be filed by Section l3 or l5(d) of the Securities
Exchange Act of l934 during the preceding l2 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
                            Yes  [x]      No  [ ]

23,255,296  shares of common stock,  $l.00 par, outstanding on June 30,
1999.


                             INDEX TO FORM 10-Q


PART I                                                                 PAGE

          Financial Highlights (Unaudited)                               1

  Item l  Interim Financial Statements

          Consolidated Statements of Income for the Three and
          Six Months Ended June 30, 1999 and 1998 (Both unaudited)       2

          Consolidated Balance Sheets at June 30, 1999 (Unaudited),
          December 31, 1998 and June 30, 1998 (Unaudited)                3

          Consolidated Statements of Changes in Shareholders'
          Equity for the Three Months Ended March 31, 1999,
          (Unaudited), June 30, 1999 (Unaudited) and the Year Ended
          December 31, 1998                                              4

          Consolidated Statements of Cash Flows for the Six Months
          Ended June 30, 1999 and 1998 (Both unaudited)                  5

          Notes to Unaudited Interim Consolidated Financial
          Statements                                                     6

          Independent Auditors' Review Report                            8

  Item 2  Management's Discussion and Analysis of Financial
          Condition and Results of Operations                            9

  Item 3  Quantitative and Qualitative Disclosures about Market
          Risk                                                          16


PART II

  Item 1  Legal Proceedings                                             N/A

  Item 2  Changes in Securities                                         N/A

  Item 3  Defaults Upon Senior Securities                               N/A

  Item 4  Submission of Matters to a Vote of Security Holders           38

  Item 5  Other Information                                             N/A

  Item 6  Exhibits and Reports on Form 8-K                              38

          Signatures                                                    39


2nd Quarter 1999 Financial Highlights (Unaudited)

<TABLE>
<CAPTION>

                                                                               Three Months                   Six Months
                                                                              Ended June 30,                Ended June 30,
                                                                        --------------------------    --------------------------
(In thousands, except share and per share data)                            1999           1998           1999           1998
                                                                           ----           ----           ----           ----

<S>                                                                     <C>            <C>            <C>            <C>
INCOME DATA
  Net income, as reported                                               $    14,135    $    11,264    $    27,589    $    21,164
  Less "non-operating" income items:
    Net securities transactions                                                 143            103            368           (326)
    Bank-Owned Life Insurance claim                                           1,389             --          1,389             --
    Net gain on curtailment of pension plan                                      --             --          2,577             --
                                                                        --------------------------------------------------------
      Total "non-operating" income items                                      1,532            103          4,334           (326)
    Income taxes on "non-operating" income items                                 54             38          1,194           (110)
                                                                        --------------------------------------------------------
      Total "non-operating" income items, net of taxes                        1,478             65          3,140           (216)
                                                                        --------------------------------------------------------
  Add "non-operating" expense items:
    Merger and acquisition related expenses                                      60             --          1,233             --
    Income taxes on "non-operating" expense items                                22             --            445             --
                                                                        --------------------------------------------------------
      Total "non-operating" expense items, net of taxes                          38             --            788             --
                                                                        --------------------------------------------------------

  Income from operations (1)                                            $    12,695    $    11,199    $    25,237    $    21,380

  Cash income from operations (2)                                       $    14,035    $    11,992    $    27,876    $    22,966

SHARE AND PER SHARE DATA
  Basic wtd. avg. number of shares                                       23,379,073     23,258,549     23,366,459     23,344,513
  Basic earnings per share (Basic EPS)
    Net income                                                          $      0.60    $      0.48    $      1.18    $      0.91
    Income from operations (1)                                                 0.54           0.48           1.08           0.92
    Cash income from operations (2)                                            0.60           0.52           1.19           0.98

  Diluted wtd. avg. number of shares                                     23,665,780     23,685,137     23,666,002     23,760,188
  Diluted earnings per share (Diluted EPS)
    Net income                                                          $      0.60    $      0.48    $      1.17    $      0.89
    Income from operations (1)                                                 0.54           0.47           1.07           0.90
    Cash income from operations (2)                                            0.59           0.51           1.18           0.97

  Shares outstanding, net of treasury shares, p.e.                       23,255,296     23,142,925     23,255,296     23,142,925
  Book value, p.e.                                                      $     14.19    $     13.84    $     14.19    $     13.84
  Tangible book value, p.e.                                                   10.94          12.61          10.94          12.61

  Market price: (3)
    High                                                                      33.00          39.13          37.25          39.13
    Low                                                                       25.00          33.38          24.75          27.63
    Average close                                                             27.79          35.85          28.44          34.12
    Last                                                                      33.00          37.00          33.00          37.00
  Share volume (3)                                                        5,945,509      3,004,099      9,610,647      5,165,823
  Average monthly share volume (3)                                        1,981,836      1,001,366      1,601,775        860,971

  Price/Tangible book value, p.e.                                             301.6%         293.4%         301.6%         293.4%
  Price/Diluted EPS (last 4 qtrs.)                                             16.0           21.1           16.0           21.1
  Price/Diluted income from operations per share (last 4 qtrs.)                14.7           19.6           14.7           19.6

AVERAGE BALANCES
  Assets                                                                $ 4,367,914    $ 4,016,254    $ 4,363,840    $ 3,976,911
  Earning assets                                                          4,052,231      3,784,749      4,045,752      3,749,169
  Loans                                                                   2,852,496      2,661,474      2,844,234      2,651,956
  Goodwill                                                                   76,883         29,250         77,100         29,898
  Deposits                                                                3,586,620      3,147,210      3,583,322      3,108,270
  Short-term borrowed funds                                                 305,526        424,048        305,046        430,809
  Long-term debt                                                             73,337         59,459         73,737         52,789
  Guaranteed preferred beneficial interests in Corporation's
   subordinated debentures                                                   30,000         30,000         30,000         30,000
  Shareholders' equity                                                      326,101        315,163        323,777        315,496

KEY RATIOS AND OTHER INFORMATION
  Return on average assets:
    Net income                                                                 1.30%          1.12%          1.27%          1.07%
    Income from operations (1)                                                 1.17           1.12           1.17           1.08
    Cash income from operations (2)                                            1.29           1.21           1.29           1.16
  Return on average shareholders' equity:
    Net income                                                                17.39          14.34          17.18          13.53
    Income from operations (1)                                                15.61          14.25          15.72          13.67
    Cash income from operations (2)                                           17.26          15.26          17.36          14.68

  Net interest margin                                                          4.44           4.36           4.41           4.39
  Efficiency ratio                                                            58.43          59.81          58.50          60.58
  Total non-interest income from operations/total gross revenue (fte)         22.35          19.58          21.98          19.11

  Stratevest total assets under management                              $ 4,103,919    $ 2,917,078    $ 4,103,919    $ 2,917,078
  Managed assets with discretionary powers                                2,735,487      1,663,244      2,735,487      1,663,244

  Net loan charge-offs to average loans                                        0.11%          0.25%          0.12%          0.20%
  Provision for loan losses to average loans                                   0.32           0.35           0.30           0.35
  Allowance for loan losses to loans, p.e.                                     1.62           1.53           1.62           1.53
  Allowance for loan losses coverage of non-performing loans, p.e.           240.53         241.97         240.53         241.97
  Non-performing assets to total assets, p.e.                                  0.46           0.50           0.46           0.50

  Total capital to risk-adjusted assets, p.e.                                 10.61          12.39          10.61          12.39
  Tier 1 capital to risk-adjusted assets, p.e.                                 9.36          11.14           9.36          11.14
  Tier 1 capital to quarterly average total assets (Leverage)                  6.82           7.97           6.82           7.97
  Tangible shareholders' equity to tangible assets, p.e.                       5.86           7.24           5.86           7.24

<FN>
Note: All share and per share data has been restated to give retroactive
      effect to stock splits.
<F1>  Income from operations equals net income, excluding merger expenses,
      net securities transactions, gain on sale of merchant processing, and
      gain on curtailment of pension plan, net of income tax.
<F2>  Cash income from operations represents income from operations,
      excluding goodwill amortization expense, net of income tax effect.
<F3>  Market price per share and share volume represents the historical
      market price per share and share volume of Banknorth Group, Inc.
</FN>
</TABLE>


CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

<TABLE>
<CAPTION>

                                                            Three Months               Six Months
                                                           Ended June 30,            Ended June 30,
                                                         -------------------     ---------------------
(In thousands, except per share data)                     1999        1998         1999         1998
                                                          ----        ----         ----         ----

<S>                                                      <C>         <C>         <C>          <C>
Interest and dividend income:
  Interest and fees on loans                             $60,890     $59,891     $121,312     $118,756
  Interest on money market investments                       211         367          413          584
  Interest on securities available for sale               17,014      16,132       33,917       31,786
  Interest on investment securities held to maturity         333         685          664        1,703
                                                         ---------------------------------------------
      Total interest and dividend income                  78,448      77,075      156,306      152,829

Interest expense:
  Deposits                                                29,834      29,813       60,247       58,779
  Short-term borrowed funds                                3,286       5,608        6,497       11,385
  Long-term debt                                           1,126         947        2,258        1,693
                                                         ---------------------------------------------
      Total interest expense                              34,246      36,368       69,002       71,857
                                                         ---------------------------------------------

Net interest income                                       44,202      40,707       87,304       80,972
  Less: provision for loan losses                          2,275       2,335        4,275        4,675
                                                         ---------------------------------------------

Net interest income after provision for loan losses       41,927      38,372       83,029       76,297
                                                         ---------------------------------------------

Other operating income:
  Income from trust and investment management fees         4,975       3,139        9,808        6,101
  Service charges on deposit accounts                      3,402       2,948        6,600        5,827
  Mortgage banking income                                  1,290       1,195        2,614        2,289
  Card product income                                        748         542        1,361          972
  ATM income                                                 671         523        1,290        1,005
  Net securities transactions                                143         103          368         (326)
  Bank-Owned Life Insurance                                  552         553        1,091        1,093
  Bank-Owned Life Insurance claim                          1,389          --        1,389           --
  Net gain on curtailment of pension plan                     --          --        2,577           --
  Other income                                             1,290       1,105        2,191        2,025
                                                         ---------------------------------------------
      Total other operating income                        14,460      10,108       29,289       18,986

Other operating expenses:
  Compensation                                            14,119      12,979       27,509       25,897
  Employee benefits                                        3,225       3,094        6,610        6,389
  Net occupancy                                            2,949       2,356        5,988        4,976
  Equipment and software                                   2,540       2,376        4,984        4,693
  Data processing                                          1,767       1,926        3,869        3,661
  FDIC deposit insurance and other regulatory                306         283          600          563
  Other real estate owned and repossession                    53         142          207          497
  Legal and professional                                   1,280       1,299        2,207        2,401
  Printing and supplies                                      859         730        1,596        1,528
  Advertising and marketing                                1,177       1,058        2,326        2,032
  Communications                                             940         732        1,903        1,451
  Amortization of goodwill                                 2,234       1,321        4,398        2,643
  Capital securities                                         789         789        1,578        1,578
  Merger and acquisition related expenses                     60          --        1,233           --
  Other expenses                                           4,019       3,112        7,583        6,390
                                                         ---------------------------------------------
      Total other operating expenses                      36,317      32,197       72,591       64,699
                                                         ---------------------------------------------

Income before income tax expense                          20,070      16,283       39,727       30,584
Income tax expense                                         5,935       5,019       12,138        9,420
                                                         ---------------------------------------------

Net income                                               $14,135     $11,264     $ 27,589     $ 21,164
                                                         =============================================

Basic earnings per share                                 $  0.60     $  0.48     $   1.18     $   0.91
                                                         =============================================
Basic wtd. avg. number of shares                          23,379      23,259       23,366       23,345
                                                         =============================================

Diluted earnings per share                               $  0.60     $  0.48     $   1.17     $   0.89
                                                         =============================================
Diluted wtd. avg. number of shares                        23,666      23,685       23,666       23,760
                                                         =============================================

<FN>
All share and per share data has been restated to give retroactive effect
to stock splits.
See accompanying notes to unaudited interim consolidated financial statements.
</FN>
</TABLE>


Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                 June 30,     December 31,      June 30,
(In thousands, except share and per share data)                   1999            1998           1998
                                                                ---------     ------------     ---------
                                                               (Unaudited)                    (Unaudited)

<S>                                                            <C>             <C>            <C>
Assets
  Cash and due from banks                                      $  131,601      $  164,826     $  125,658
  Money market investments                                            100           4,900         44,405
                                                               -----------------------------------------
      Cash and cash equivalents                                   131,701         169,726        170,063
                                                               -----------------------------------------

  Securities available for sale, at fair value                  1,133,250       1,127,865      1,029,411
  Loans held for sale                                              26,246          42,996         36,284
  Investment securities, held to maturity                          18,087          20,545         29,628
   (Fair value of $18,389 at June 30, 1999, $21,606 at
   December 31, 1998 and $30,644 at June 30, 1998)
  Loans                                                         2,902,439       2,837,106      2,658,665
  Less: allowance for loan losses                                  47,135          44,537         40,570
                                                               -----------------------------------------
      Net loans                                                 2,855,304       2,792,569      2,618,095
                                                               -----------------------------------------

  Accrued interest receivable                                      23,137          21,244         23,451
  Premises, equipment and software, net                            50,365          50,936         44,457
  Other real estate owned and repossessed assets                      733           3,335          3,343
  Goodwill, net                                                    75,602          80,224         28,476
  Capitalized mortgage servicing rights                             6,038           5,351          5,323
  Bank-owned life insurance                                        42,804          42,306         41,170
  Other assets                                                     49,969          45,784         27,638
                                                               -----------------------------------------

      Total assets                                             $4,413,236      $4,402,881     $4,057,339
                                                               =========================================

Liabilities, Guaranteed Preferred Beneficial Interests in
 Corporation's Junior Subordinated Debentures and
 Shareholders' Equity
  Deposits:
    Non-interest bearing                                       $  497,174      $  546,192     $  428,233
    NOW accounts & money market savings                         1,448,520       1,490,944      1,251,682
    Regular savings                                               346,288         328,986        305,518
    Time deposits $100 thousand and greater                       230,799         239,071        219,834
    Time deposits under $100 thousand                           1,004,466       1,034,304        982,147
                                                               -----------------------------------------

      Total deposits                                            3,527,247       3,639,497      3,187,414
                                                               -----------------------------------------

  Short-term borrowed funds:
    Federal funds purchased                                        76,645          30,445             --
    Securities sold under agreements to repurchase                193,297         208,511        147,994
    Borrowings from U.S. Treasury                                  31,768          12,678         31,046
    Borrowings from Federal Home Loan Bank                        105,000          30,000        225,500
                                                               -----------------------------------------

      Total short-term borrowed funds                             406,710         281,634        404,540
                                                               -----------------------------------------

  Long-term debt:
    Federal Home Loan Bank term notes                              65,998          66,062         65,224
    Bank term loan                                                  6,710           8,263          9,563
                                                               -----------------------------------------

      Total long-term debt                                         72,708          74,325         74,787
                                                               -----------------------------------------

  Accrued interest payable                                          6,328           7,101          8,127
  Other liabilities                                                40,281          49,062         32,244
                                                               -----------------------------------------

      Total liabilities                                         4,053,274       4,051,619      3,707,112
                                                               -----------------------------------------


  Guaranteed preferred beneficial interests in
   Corporation's junior subordinated debentures                    30,000          30,000         30,000

  Shareholders' equity:
    Preferred stock, $.01 par value; authorized 500,000
     shares and none issued as of June 30, 1999 and
     December 31, 1998                                                 --              --             --
    Common stock, $1.00 par value; authorized 70,000,000
     shares and issued 23,548,392 shares as of June 30,
     1999, and December 31, 1998, and authorized 38,000,000
     shares and issued 23,556,925 as of June 30, 1998              23,548          23,548         23,557
    Capital surplus                                                85,891          86,033         85,525
    Retained earnings                                             240,386         221,919        221,952
    Unamortized employee restricted stock                            (864)         (1,266)        (1,310)
    Accumulated other comprehensive income (loss)                  (9,125)          3,509          4,339
    Unearned ESOP shares                                             (209)           (463)          (463)
    Less: Common stock in treasury, at cost; 293,096 shares
     as of June 30, 1999, 369,300 shares as of December 31,
     1998, and 414,000 shares as of June 30, 1998                  (9,665)        (12,018)       (13,373)
                                                               -----------------------------------------


      Total shareholders' equity                                  329,962         321,262        320,227
                                                               -----------------------------------------

      Total liabilities, guaranteed preferred beneficial
       interests in Corporation's junior subordinated
       debentures and shareholders' equity                     $4,413,236      $4,402,881     $4,057,339
                                                               =========================================

<FN>
See accompanying notes to unaudited interim consolidated financial statements.
</FN>
</TABLE>


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                                               Unamortized
                                                                                                                Employee
                                                        Number of Shares      Common    Capital    Retained    Restricted
                                                       Issued    Treasury     Stock     Surplus    Earnings       Stock
                                                       ------    --------     -----     -------    --------    ----------
(Dollars and shares in thousands, except per share data)

<S>                                                    <C>         <C>       <C>        <C>        <C>          <C>
Balance, January 1, 1998                               23,669       154      $23,669    $88,363    $209,766     $(1,550)

Comprehensive income:
  Net income                                                                      --         --      28,920          --
  Other comprehensive income, net of tax:
    Unrealized net holding gains arising
     during the year (pre-tax $1,147)                                             --         --          --          --
    Reclassification adjustment for net
     gains realized in net income during
     the year (pre-tax $519)                                                      --         --          --          --
    Minimum pension liability adjustments                                         --         --          --          --
Other comprehensive income                                                        --         --          --          --
Comprehensive income

Cash dividends declared ($ .64 per share)                                         --         --     (15,072)         --
Issuance of employee restricted stock                                (7)          --         41          --        (254)
Amortization of employee restricted stock                                         --        259          --         538
Issuance of restricted stock units under
 directors' deferred compensation plan, net                                       --        385         (37)         --
Exercise of employee stock options                                 (144)          --         --      (1,920)         --
Purchase of treasury stock                                          366           --         --          --          --
Fractional shares repurchased                              (1)                    (1)       (16)         --          --
Stock vested in ESOP                                                              --         --          --          --
Pooled company transactions
  Purchase and retirement of treasury stock              (120)      122         (120)    (2,999)         --          --
  Treasury stock reissued for stock awards
   and options exercised                                           (122)          --         --         262          --
                                                       ----------------------------------------------------------------

Balance, December 31, 1998                             23,548       369      $23,548    $86,033    $221,919     $(1,266)
                                                       ----------------------------------------------------------------

Comprehensive income:
  Net income                                                                      --         --      13,454          --
  Other comprehensive income, net of tax:
    Unrealized net holding losses arising
     during the quarter (pre-tax $3,947)                                          --         --          --          --
    Reclassification adjustment for net gains
     realized in net income during the
     quarter (pre-tax $218)                                                       --         --          --          --
Other comprehensive income (loss)                                                 --         --          --          --
Comprehensive income

Cash dividends declared ($ .36 per share)                                         --         --      (8,348)         --
Amortization of employee restricted stock                                         --       (560)         --         412
Issuance of restricted stock units under
 directors' deferred compensation plan                                            --        144          --          --
Exercise of employee stock options                                  (25)          --         --        (207)         --
Stock vested in ESOP                                                              --         --          --          --
                                                       ----------------------------------------------------------------

Balance, March 31, 1999                                23,548       344      $23,548    $85,617    $226,818     $  (854)
                                                       ----------------------------------------------------------------

Comprehensive income:
  Net income                                                                      --         --      14,135          --
  Other comprehensive income, net of tax:
    Unrealized net holding losses arising
     during the quarter (pre-tax $15,596)                                         --         --          --          --
    Reclassification adjustment for net gains
     realized in net income during the
     quarter (pre-tax $140)                                                       --         --          --          --
Other comprehensive income (loss)                                                 --         --          --          --
Comprehensive income

Amortization of employee restricted stock                                         --        284          --         (10)
Issuance of restricted stock units under
 directors' deferred compensation plan, net                          (7)          --        (10)        (61)         --
Exercise of employee stock options                                  (44)          --         --        (506)         --
Stock vested in ESOP                                                              --         --          --          --
                                                       ----------------------------------------------------------------

Balance, June 30, 1999                                 23,548       293      $23,548    $85,891    $240,386     $  (864)
                                                       ----------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

                                                       Unearned        Other
                                                         ESOP      Comprehensive    Treasury     Comprehensive
                                                        Shares     Income (Loss)     Stock       Income (Loss)     Total
                                                       --------    -------------    --------     -------------     -----
(Dollars and shares in thousands, except per share data)

<S>                                                     <C>           <C>           <C>             <C>           <C>
Balance, January 1, 1998                                $(640)        $ 3,318       $ (4,798)                     $318,128

Comprehensive income:
  Net income                                               --              --             --        $28,920       $ 28,920
                                                                                                    -------
  Other comprehensive income, net of tax:
    Unrealized net holding gains arising
     during the year (pre-tax $1,147)                      --              --             --            805
    Reclassification adjustment for net
     gains realized in net income during
     the year (pre-tax $519)                               --              --             --           (364)
    Minimum pension liability adjustments                  --              --             --           (250)
                                                                                                    -------
Other comprehensive income                                 --             191             --            191            191
                                                                                                    -------
Comprehensive income                                                                                $29,111
                                                                                                    =======

Cash dividends declared ($ .64 per share)                  --              --             --                       (15,072)
Issuance of employee restricted stock                      --              --            213                            --
Amortization of employee restricted stock                  --              --             --                           797
Issuance of restricted stock units under
 directors' deferred compensation plan, net                --              --             --                           348
Exercise of employee stock options                         --              --          4,864                         2,944
Purchase of treasury stock                                 --              --        (12,297)                      (12,297)
Fractional shares repurchased                              --              --             --                           (17)
Stock vested in ESOP                                      177              --             --                           177
Pooled company transactions
  Purchase and retirement of treasury stock                --              --         (1,921)                       (5,040)
  Treasury stock reissued for stock awards
   and options exercised                                   --              --          1,921                         2,183
                                                        ------------------------------------                      --------

Balance, December 31, 1998                              $(463)        $ 3,509       $(12,018)                     $321,262
                                                        ------------------------------------                      --------

Comprehensive income:
  Net income                                               --              --             --        $13,454       $ 13,454
                                                                                                    -------
  Other comprehensive income, net of tax:
    Unrealized net holding losses arising
     during the quarter (pre-tax $3,947)                   --              --             --         (2,506)
    Reclassification adjustment for net gains
     realized in net income during the
     quarter (pre-tax $218)                                --              --             --           (143)
                                                                                                    -------
Other comprehensive income                                 --          (2,649)            --         (2,649)        (2,649)
                                                                                                    -------
Comprehensive income                                                                                $10,805
                                                                                                    =======

Cash dividends declared ($ .36 per share)                  --              --             --                        (8,348)
Amortization of employee restricted stock                  --              --             --                          (148)
Issuance of restricted stock units under
 directors' deferred compensation plan                     --              --             --                           144
Exercise of employee stock options                         --              --            773                           566
Stock vested in ESOP                                      184              --             --                           184
                                                        ------------------------------------                      --------

Balance, March 31, 1999                                 $(279)        $   860       $(11,245)                     $324,465
                                                        ------------------------------------                      --------


Comprehensive income:
  Net income                                               --              --             --        $14,135       $ 14,135
                                                                                                    -------
  Other comprehensive income, net of tax:
    Unrealized net holding losses arising
     during the quarter (pre-tax $15,596)                  --              --             --         (9,896)
    Reclassification adjustment for net gains
     realized in net income during the
     quarter (pre-tax $140)                                --              --             --            (89)
                                                                                                    -------
Other comprehensive income                                 --          (9,985)            --         (9,985)        (9,985)
                                                                                                    -------
Comprehensive income                                                                                $ 4,150
                                                                                                    -------

Amortization of employee restricted stock                  --              --             --                           274
Issuance of restricted stock units under
 directors' deferred compensation plan, net                --              --            220                           149
Exercise of employee stock options                         --              --          1,360                           854
Stock vested in ESOP                                       70              --             --                            70
                                                        ------------------------------------------------------------------

Balance, June 30, 1999                                  $(209)        $(9,125)      $ (9,665)                     $329,962
                                                        ------------------------------------------------------------------

<FN>
Note:  Cash dividends per share represent historical dividends of Banknorth
       Group, Inc.  All share and per share data has been restated to give
       retroactive effect of stock splits
See accompanying notes to unaudited interim consolidated financial statements.
</FN>
</TABLE>


CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                              Six Months Ended June 30,
                                                                              -------------------------
(In thousands)                                                                   1999           1998
                                                                                 ----           ----

<S>                                                                            <C>            <C>
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
  Net income                                                                   $  27,589      $  21,164

Adjustments to reconcile net income to net cash provided by
 operating activities:
  Depreciation and amortization of premises, equipment and software                3,625          3,408
  Amortization of goodwill                                                         4,398          2,643
  Net amortization of premiums on securities available for sale                    4,104          2,396
  Net accretion of discounts on investment securities                                (49)          (119)
  Provision for loan losses                                                        4,275          4,675
  Adjustment of other real estate owned to estimated fair value                      (26)           135
  Provision for deferred tax (benefit) expense                                       342           (606)
  Amortization of employee restricted stock                                          126            495
  Issuance of restricted stock units under directors' deferred
   compensation plan, net                                                            293            202
  Net securities transactions                                                       (368)           326
  Net gain on sale of other real estate owned and repossessed assets                 (47)          (227)
  Proceeds from sale of loans held for sale                                      143,331        152,836
  Originations and purchases of loans held for resale                           (125,022)      (162,690)
  Net gain on sale of loans held for sale                                         (1,559)        (1,472)
  Net increase in cash surrender value of  bank owned life insurance                (498)        (1,093)
  Decrease (increase) in interest receivable                                      (1,893)          (174)
  (Decrease) increase in interest payable                                           (773)           597
  Decrease (increase) in other assets and other intangibles                        2,292         (2,980)
  Increase (decrease) in other liabilities                                        (8,781)         2,759
  ESOP compensation expense                                                          254            177
                                                                               ------------------------

     Total adjustments                                                            24,024          1,288
                                                                               ------------------------
     Net cash provided by  operating activities                                   51,613         22,452
                                                                               ------------------------

Cash flows from investing activities:
  Proceeds from maturity and call of securities available for sale               204,440        157,227
  Proceeds from maturity and call of investment securities held to maturity        2,518         29,130
  Proceeds from sale of securities available for sale                             16,869        102,063
  Purchase of securities available for sale                                     (250,342)      (330,902)
  Proceeds from sale of OREO and repossessed assets                                3,002          2,120
  Net decrease (increase) in originated loans                                    (67,337)       (21,803)
  Capital expenditures                                                            (3,069)        (2,555)
                                                                               ------------------------

      Net cash used in  investing activities                                     (93,919)       (64,720)
                                                                               ------------------------

Cash flows from financing activities:
  Net (decrease) increase in deposits                                           (112,250)       133,780
  Net increase (decrease) in short-term borrowed funds                           125,076        (45,395)
  Purchase of treasury stock                                                          --        (17,337)
  Issuance of long-term debt                                                         140         37,468
  Payments on long-term debt                                                      (1,757)        (4,930)
  Exercise of employee stock options                                               1,420          3,936
  Dividends paid                                                                  (8,348)        (7,559)
                                                                               ------------------------

      Net cash provided by  financing activities                                   4,281         99,963
                                                                               ------------------------

Net (decrease) increase in cash and cash equivalents                             (38,025)        57,695
                                                                               ------------------------

Cash and cash equivalents at beginning of period                                 169,726        112,368
                                                                               ------------------------

Cash and cash equivalents at end of period                                     $ 131,701      $ 170,063
                                                                               ========================

Additional disclosure relative to statement of cash flows:
  Interest paid                                                                $  69,775      $  71,295
                                                                               ========================

  Taxes paid                                                                   $   9,464      $  10,118
                                                                               ========================

Supplemental schedule of non-cash investing and financing activities:
  Net transfer of loans to OREO and repossessed assets                         $     327      $   2,576
  Adjustment to securities available for sale to fair value, net of tax          (12,634)         1,021

<FN>
See accompanying notes to  unaudited interim consolidated financial statements.
</FN>
</TABLE>


        NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.    The accompanying unaudited interim consolidated financial statements
      include the accounts of the Company and its subsidiaries, Evergreen
      Bank, N.A., First Massachusetts Bank, N.A., North American Bank
      Corporation and its wholly owned subsidiary, Farmington National Bank,
      The Howard Bank, N.A., First Vermont Bank and Trust Company and its
      wholly owned subsidiary, Banknorth Mortgage Company, Franklin Lamoille
      Bank, Granite Savings Bank and Trust Company, Woodstock National Bank,
      The Stratevest Group, N.A., North Group Realty, Inc., and Banknorth
      Capital Trust I.  It is the opinion of management that the
      accompanying unaudited interim consolidated financial statements have
      been prepared in accordance with the instructions to Form 10-Q and
      reflect all adjustments which are considered necessary to report
      fairly the financial position as of June 30, 1999 and 1998, the
      results of their operations for the three and six months ended June
      30, 1999 and 1998, and cash flows for the six months ended June 30,
      1999 and 1998.  The accompanying unaudited interim consolidated
      financial statements should be read in conjunction with Banknorth
      Group, Inc.'s consolidated year end financial statements, including
      notes thereto, which are included in Banknorth Group, Inc.'s 1998
      annual report to shareholders on Form 10-K.  On December 31, 1998,
      Evergreen Bancorp, Inc. and its wholly owned subsidiary Evergreen
      Bank, N.A. ("Evergreen") was merged with and into Banknorth.  The
      merger was accounted for as a pooling of interests and, accordingly,
      the financial information for all prior periods has been restated to
      present the combined financial condition and results of operations of
      both companies as if the merger had been in effect for all periods
      presented.

2.    Basic EPS excludes dilution and is computed by dividing income
      available to common stockholders by the weighted average number of
      common shares outstanding for the period.  Issuable shares (such as
      those related to the directors' restricted stock units), and
      returnable shares (such as restricted stock awards) are considered
      outstanding common shares and are included in the computation of basic
      earnings per share as of the date that all necessary conditions have
      been satisfied.  Diluted EPS reflects the potential dilution that
      could occur if securities or other contracts to issue common stock
      were exercised or converted into common stock or resulted in the
      issuance of common stock that then shared in the earnings of the
      entity (such as the Company's stock options). All share and per share
      data has been restated to give retroactive effect to stock splits.

      The following table provides calculations of basic and diluted
      earnings per share:

<TABLE>
<CAPTION>

                                                        Three Months Ended June 30,
                                  ----------------------------------------------------------------------
Dollars in thousands,                            1999                                 1998
except for per share data         ---------------------------------    ---------------------------------
                                              Weighted                             Weighted
                                    Net       Average     Per Share      Net       Average     Per Share
                                  Income       Shares       Amount     Income       Shares       Amount
                                  ----------------------------------------------------------------------

<S>                               <C>        <C>            <C>        <C>        <C>             <C>
Basic earnings per share          $14,135    23,379,073     $0.60      $11,264    23,258,549      $0.48
Effect of dilutive securities:
  Stock options                                 253,956                              399,387
  Restricted stock awards                        32,751                               27,201
                                             ----------                           ----------
Diluted earnings per share        $14,135    23,665,780     $0.60      $11,264    23,685,137      $0.48
                                  =====================================================================

<CAPTION>

                                                        Six Months Ended June 30,
                                  ----------------------------------------------------------------------
Dollars in thousands,                            1999                                 1998
except for per share data         ---------------------------------    ---------------------------------
                                             Weighted                             Weighted
                                    Net      Average      Per Share      Net      Average      Per Share
                                  Income      Shares        Amount     Income      Shares        Amount
                                  ----------------------------------------------------------------------

<S>                               <C>        <C>            <C>        <C>        <C>             <C>
Basic earnings per share          $27,589    23,366,459     $1.18      $21,164    23,344,513      $0.91
Effect of dilutive securities:
  Stock options                                 268,494                              386,692
  Restricted stock awards                        31,049                               28,983
                                             ----------                           ----------
Diluted earnings per share        $27,589    23,666,002     $1.17      $21,164    23,760,188      $0.89
                                  =====================================================================

</TABLE>

3.    In June 1998, the Financial Accounting Standards Board ("FASB"),
      issued SFAS No. 133, "Accounting for Derivative Instruments and
      Hedging Activities," which establishes accounting and reporting
      standards for derivative instruments, including certain derivative
      instruments embedded in other contracts, and for hedging activities.
      During the second quarter of 1999, the FASB issued SFAS No. 137,
      "Accounting for Derivative Instruments and Hedging Activities-Deferral
      of the Effective Date of FASB Statement No. 133." SFAS No. 137 defers
      the effective date of SFAS No. 133 by one year from Fiscal quarters of
      Fiscal years beginning after June 15, 1999 to Fiscal quarters of
      Fiscal years beginning after June 15, 2000.  Management is currently
      evaluating the impact of this Statement on the Company's consolidated
      financial statements.

4.    On June 2, 1999, Banknorth announced that it and Peoples Heritage
      Financial Group, Inc. ("PHFG") had entered into an Agreement and Plan
      of Merger (the "Agreement"), which sets forth the terms and conditions
      pursuant to which the Company would be merged with and into PHFG (the
      "Merger") and PHFG would change its name to "Banknorth Group, Inc."
      The Agreement provides, among other things, that as a result of the
      Merger, each outstanding share of common stock of the Company will be
      converted into the right to receive 1.825 shares of PHFG's common
      stock, plus cash in lieu of any fractional share interest.
      Consummation of the Merger is subject to a number of conditions
      including (i) the approval of the Agreement and Merger by the
      shareholders of the Company and PHFG, (ii) the receipt of requisite
      regulatory approvals, (iii) receipt by the parties of an opinion of
      counsel as to certain tax consequences of the Merger, (iv) receipt by
      the parties of letters from their independent public accountants
      stating their opinion that the Merger shall qualify for pooling of
      interests accounting treatment and (v) satisfaction of certain other
      conditions.  The transaction is valued at $780.7 million and will
      create a $17 billion multi-state banking and financial services
      company.  It is expected that the transaction will be closed by year
      end 1999.


                     INDEPENDENT AUDITORS' REVIEW REPORT


The Board of Directors
Banknorth Group, Inc.

      We have reviewed the accompanying consolidated balance sheets of
Banknorth Group, Inc. and subsidiaries ("the Company") as of June 30, 1999
and 1998, and the related consolidated statements of income for the three
and six month periods ended June 30, 1999 and 1998, and the consolidated
statements of changes in shareholders' equity for the three month periods
ended March 31, 1999 and June 30, 1999, and the consolidated statements of
cash flows for the six-month periods ended June 30, 1999 and 1998. These
consolidated financial statements are the responsibility of the Company's
management.

      We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters.  It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole.  Accordingly, we do not express such an
opinion.

      Based on our review, we are not aware of any material modifications
that should be made to the consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.

      We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Banknorth Group, Inc.
and subsidiaries as of December 31, 1998, and the related consolidated
statements of income and cash flows for the year then ended (not presented
herein) and the consolidated statement of changes in shareholders' equity
for the year then ended; and in our report dated January 22, 1999, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet as of December 31, 1998 and the consolidated statements of
changes in shareholders' equity for the year ended December 31, 1998, are
fairly stated, in all material respects, in relation to the consolidated
balance sheet and statement of changes in shareholders' equity from which
they have been derived.


                                       /S/ KPMG LLP


Albany, New York
July 16, 1999


                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      The financial review which follows focuses on the factors affecting the
consolidated financial condition and results of operations of Banknorth
Group, Inc. ("the parent") and its subsidiaries during the three and six
months ended June 30, 1999, with comparisons to 1998, as applicable.
Collectively, the parent company and its subsidiaries are referred to herein
as "Banknorth" or "Company". Net interest income and net interest margin are
presented in this discussion on a fully taxable equivalent basis (f.t.e.).
Balances discussed are daily averages unless otherwise described. The
unaudited consolidated interim financial statements, as well as the 1998
annual report to shareholders' should be read in conjunction with this
review.  Amounts in prior period consolidated financial statements are
reclassified whenever necessary to conform to the 1999 presentation.  On
December 31, 1998, the shareholders of Banknorth Group, Inc. and Evergreen
Bancorp, Inc. ("Evergreen") of Glens Falls, New York approved a merger
between the two organizations.  Evergreen was merged with and into Banknorth
on that date with each issued and outstanding share of Evergreen common stock
converted into 0.9 shares of Banknorth common stock.  This resulted in the
issuance of approximately 7.9 million in additional shares of Banknorth
common stock.  All of the historical financial information in this quarterly
report has been restated for the effect of this transaction, which was
accounted for as a pooling-of-interests.

      Except for historical information contained herein, the matters
contained in this review are "forward-looking statements" that involve risk
and uncertainties, including statements concerning future events or
performance and assumptions and other statements which are other than
statements of historical facts.  The Company wishes to caution readers that
the following important factors, among others, could in the future affect the
Company's actual results and could cause the Company's actual results for
subsequent periods to differ materially from those expressed in any forward-
looking statement made by or on behalf of the Company herein:

      *  the effect of changes in laws and regulations, including federal and
         state banking laws and regulations, with which the Company and its
         banking subsidiaries must comply, the cost of such compliance and
         the potentially material adverse effects if the Company or any of
         its banking subsidiaries were not in substantial compliance either
         currently or in the future as applicable;

      *  the effect of changes in accounting policies and practices, as may
         be adopted by the regulatory agencies as well as by the Financial
         Accounting Standards Board, or changes in the Company's
         organization, compensation and benefit plans;

      *  the effect on the Company's competitive position within its market
         area of increasing consolidation within the banking industry and
         increasing competition from larger "super regional" and other
         banking organizations as well as non-bank providers of various
         financial services;

      *  the effect of certain customers and vendors of critical systems or
         services failing to adequately address issues relating to becoming
         year 2000 compliant;

      *  the effect of unforeseen changes in interest rates;

      *  the effects of changes in the business cycle and downturns in the
         local, regional or national economies;

      *  the effect of lower than expected revenues or cost savings from the
         recently completed merger with Evergreen and acquisition of the
         Berkshire branches;

      *  the effect of higher than expected costs and unanticipated
         difficulties related to the cost of integration of acquired
         businesses and operations; and

      *  the effect of other risks and uncertainties discussed throughout
         this report as well as those discussed in the Company's Annual
         Report on Form 10-K for the year ended December 31, 1998.

      The Company wishes to caution readers not to place undue reliance on
any forward-looking statements, which speak only as of the date made, and to
advise readers that various factors, including those described above, could
cause the Company's actual results or circumstances for future periods to
differ materially from those anticipated or projected.

      The Company does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions, which may be
made to any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date of such
statements.

MERGER WITH PEOPLES HERITAGE FINANCIAL GROUP, INC.

      On June 2, 1999, Banknorth announced that it and Peoples Heritage
Financial Group, Inc. ("PHFG") had entered into an Agreement and Plan of
Merger (the "Agreement"), which sets forth the terms and conditions pursuant
to which the Company would be merged with and into PHFG (the "Merger") and
PHFG would change its name to "Banknorth Group, Inc."  The Agreement
provides, among other things, that as a result of the Merger, each
outstanding share of common stock of the Company  will be converted into the
right to receive 1.825 shares of PHFG's common stock, plus cash in lieu of
any fractional share interest.  Consummation of the Merger is subject to a
number of conditions including (i) the approval of the Agreement and the
Merger by the shareholders of the Company and PHFG, (ii) the receipt of
requisite regulatory approvals, (iii) receipt by the parties of an opinion of
counsel as to certain tax consequences of the Merger, (iv) receipt by the
parties of letters from their independent public accountants stating their
opinion that the Merger shall qualify for pooling-of-interests accounting
treatment and (v) satisfaction of certain other conditions.

      The transaction is valued at $780.7 million and will create a $17
billion multi-state banking and financial services company.  It is expected
that the transaction will be closed by year end 1999.  The operational
integration of the two companies is expected to be completed during the
second quarter of 2000.

OVERVIEW

      Banknorth's net income was $14.1 million, representing basic earnings
per share ("EPS") of $.60 and diluted EPS of $.60, for the three months ended
June 30, 1999, compared to $11.3 million, or $.48 basic EPS, and $.48 diluted
EPS for the three months ended June 30, 1998.  For the year to date period
ended June 30, 1999, net income was $27.6 million, representing basic EPS of
$1.18 and diluted EPS of $1.17 as compared to $21.2 million, or $.91 basic
EPS, and $.89 diluted EPS.

      During the first half of 1999, the Company completed the core banking
systems conversion related to the Evergreen merger.  As a result, the Company
recorded and paid $1.2 million in additional one-time expenses, primarily in
data conversion and staff expenses.  Additionally, the Company recorded a net
gain of $2.6 million related to the curtailment of the Evergreen pension
resulting from the combination of the former Evergreen and Banknorth pension
plans following the merger.  The net result of the merger-related activities
was a net pre-tax gain of $1.3 million, or $735 thousand in after tax impact.
This represents a $.03 impact on the diluted EPS. Final systems conversions
for the Berkshire and Evergreen private banking relationships are scheduled
to be completed in the third quarter of 1999.

ACQUISITION ACTIVITY

Evergreen Bancorp, Inc.

      On December 31, 1998, the shareholders of Banknorth and Evergreen
approved a merger between the two organizations.  Evergreen was merged with
and into Banknorth with each issued and outstanding share of Evergreen common
stock, together with associated preferred purchase rights, converted into 0.9
shares of Banknorth common stock, plus cash in lieu of any fractional share
interest.  This resulted in the issuance of approximately 7.9 million in
additional shares of Banknorth common stock, bringing Banknorth's outstanding
shares to approximately 23.2 million immediately following the merger.

      Evergreen Bank, N.A. ("Evergreen Bank"), a national bank and formerly
Evergreen's sole banking subsidiary, will continue to operate its banking
business, as a wholly owned subsidiary of Banknorth.  Evergreen Bank operates
28 offices in 8 counties in eastern upstate New York, throughout an area
extending from the Massachusetts border fifty miles south of Albany, north to
the Canadian border.  Evergreen Bank serves commercial, individual,
institutional and municipal customers with a wide range of deposit and loan
products.  As of June 30, 1999, Evergreen Bank had total assets of $1.1
billion and deposits of $968.0 million.

      In order to effect the merger, one-time merger related expenses of
$21.3 million ($15.9 million after-tax impact), were incurred in the fourth
quarter of 1998 and the first half of 1999.  The majority of these expenses
were employment-related costs and data processing conversion and termination
costs.  Additionally, as mentioned above, the Company recorded in the first
quarter of 1999, a net gain of $2.6 million on the curtailment of the
Evergreen pension plan.  As of June 30, 1999, the systems conversion was
completed in all areas, except the private banking relationships. The
conversion of the private banking relationships of Evergreen is scheduled to
occur in the third quarter of 1999 and the Company expects to incur an
additional $100 thousand in one-time expenses to complete this conversion.

      At December 31, 1998, after payments of certain one-time merger related
expenses, the Company had a remaining accrued liability of approximately
$15.4 million related to: compensation costs, including severance, employment
contracts and accelerated employee benefits ($5.6 million); data processing
contract termination costs ($3.9 million); investment banking fees ($3.5
million); and legal, accounting, and other costs incidental to the merger
($2.4 million).  $11.1 million of these liabilities were paid during the
first half of 1999.  As of  June 30, 1999, $4.3 million of these liabilities
remain.  The remaining liability primarily represents employment related
costs and other costs incidental to the merger.

      The merger qualified as a tax-free reorganization and was accounted for
as a pooling-of-interests.  At the time the merger was announced, both
companies announced the recision of their previously announced stock
repurchase programs.

      All historical financial information in this quarterly report has been
restated for the combination of the two companies.

First Massachusetts Bank - Berkshire Region

      On November 13, 1998, Banknorth completed the purchase from BankBoston,
N.A. of ten full-service branches, one limited service branch and nine remote
ATM locations, as well as private banking relationships associated with the
branches in the Berkshire region of Massachusetts.

      In connection with the Berkshire acquisition, Banknorth paid
BankBoston, N.A. a fixed premium of $52.5 million.  At the closing, the
deposits of the Berkshire branches were approximately $290.1 million,
including accrued interest. Banknorth also purchased in the transaction
commercial loans associated with the branches with a net book balance as of
November 13, 1998 of approximately $73.6 million and a portfolio of consumer
loans originated in the branches with a net book balance of $35.8 million.
In addition, the Company received approximately $122.5 million in cash as
consideration for the net liabilities assumed. The Berkshire acquisition
(other than the private banking relationships) was made through First
Massachusetts Bank, N.A. headquartered in Worcester, Massachusetts, and has
extended that bank's central Massachusetts territory westward to the border
of New York State and contiguous to the southern reach of Evergreen's New
York market area.

      The private banking relationships associated with these branches, which
as of closing represented approximately $1.0 billion of trust and investment
assets under management, including approximately $750 million in
discretionary trust assets under management, were acquired by Stratevest.

      The transaction was accounted for under purchase accounting rules. As
such, both the assets acquired and liabilities assumed have been recorded on
the consolidated balance sheet of the Company at estimated fair value as of
the date of acquisition. Goodwill, representing the excess of cost over net
assets acquired, was $54.2 million, substantially all of which is deductible
for income tax purposes, and is being amortized over fifteen years on a
straight-line basis.  The one-time acquisition-related expenses of $1.8
million pre-tax, or $1.2 million after-tax, were recorded in the fourth
quarter of 1998.  The conversion of the private banking relationships of the
Berkshires, as previously noted, is to be completed in the third quarter of
1999 and an additional $100 thousand in one-time expenses are expected to be
incurred in the completion of this conversion.

      The results of operations for the branches and private banking
relationships acquired are included in Banknorth's consolidated financial
statements from the date of acquisition forward.

ASSET/LIABILITY MANAGEMENT

      In managing its asset portfolios, Banknorth utilizes funding and
capital sources within sound credit, investment, interest rate and liquidity
risk guidelines.  Loans and securities are the Company's primary earning
assets with additional capacity invested in money market instruments. Earning
assets were 92.45% and 93.62% of total assets at June 30, 1999 and 1998,
respectively.

      Banknorth, through its management of liabilities, attempts to provide
stable and flexible sources of funding within established liquidity and
interest rate risk guidelines. This is accomplished through core deposit
products offered within the markets served by the Company as well as through
the prudent use of purchased liabilities.

      Banknorth's objectives in managing its balance sheet are to limit the
sensitivity of net interest income to actual or potential changes in interest
rates, and to enhance profitability through strategies that promise
sufficient reward for understood and controlled risk. The Company is
deliberate in its efforts to maintain adequate liquidity, under prevailing
and forecasted economic conditions, and to maintain an efficient and
appropriate mix of core deposits, purchased liabilities and long-term debt.

Earning Assets

      Earning assets were $4.1 billion during the second quarter of 1999, an
increase of $267.5 million, or 7.1% from the second quarter of 1998. For the
year to date period, earning assets were $4.0  billion as compared to $3.7
billion in 1998.  Table A, Mix of Average Earning Assets, shows how the mix
of earning assets has changed as compared to the same period in 1998.

      Loans. Average total loans of $2.9 billion during the three months
ended June 30, 1999, were $191.0 million, or 7.2%, above the same period of
1998.  The increase is primarily attributable to the Berkshire branch
acquisition completed in November 1998.  The Berkshire acquisition added
approximately $100 million on average to the loan portfolio.  The remainder
of the increase is attributable to strong loan demand in the Massachusetts
market and improved lending activity in Vermont and New Hampshire. The strong
commercial loan demand offset a decline in the real estate mortgage portfolio
as a result of refinancing activity.  Table B, Loan Portfolio, provides the
detailed components of the loan portfolio as of June 30, 1999 and 1998, as
well as December 31, 1998.

      Given the current economic indicators and interest rate environment,
management believes that the Company will see continued but slowing growth in
the loan portfolio during 1999.  If interest rates rise, a greater slow down
in lending activity could be expected.

      Loans held for sale. Loans designated as held for sale are primarily
single-family mortgages, originated by the Company's mortgage banking
subsidiary or purchased through its wholesale lending operation, awaiting
sale into the secondary market or to other Banknorth subsidiaries.

      Loans held for sale were $26.2 million as of June 30, 1999, $10.0
million lower than the $36.3 million balance outstanding as of June 30, 1998.
The production level experienced in 1998 was at record high levels for the
Company as refinancing activity was strong throughout the year given the low
interest rate environment.  Interest rates rose slightly throughout 1999 and
refinancing activity slowed.  The current production in 1999 is primarily new
mortgage originations as the home buying season is active and interest rates
remain relatively low.  Management expects the level of mortgage originations
to continue at the more normal level, as seen to date in 1999, for the second
half of 1999.

      Securities available for sale. This portfolio is managed on a total
return basis with the objective of exceeding, by 50 basis points, the return
that would be experienced if investing solely in U.S. Treasury instruments.
This category of investments is used primarily for liquidity purposes while
simultaneously producing earnings, and is managed under prudent policy limits
established for average duration, average convexity and average portfolio
life.

      Period end balances in securities available for sale totaled $1.1
billion at June 30, 1999 as compared to $1.0 billion at June 30, 1998, an
increase of $103.8 million or 10.1%.  The balances include a fair value
adjustment reflecting a net unrealized loss of $14.0 million at June 30,
1999, compared to a net unrealized gain of $7.2 milllion at June 30, 1998.
The increase in securities available for sale is primarily the result of  the
cash flow generated by the investment securities held to maturity portfolio
re-invested in the available for sale portfolio and the investing of excess
liquidity as a result of deposit growth.  Average balances for securities
available for sale for the three months ended June 30, 1999 and 1998 were
$1.1 billion and $1.0 billion, respectively.

      Investment securities held to maturity. The designation "investment
securities held to maturity" is made at the time of purchase or transfer
based upon the intent and ability to hold these securities until maturity.
The management of this portfolio focuses on yield and earnings generation,
liquidity through cash flow and interest rate risk characteristics within the
framework of the entire balance sheet. Cash flow guidelines and average
duration targets have been established for management of this portfolio. As
of June 30, 1999, the balance of securities in this category was $18.1
million, $11.5 million below the balance at June 30, 1998. The primary cause
of the reduced portfolio size was the reinvestment of cash flows from
maturities during 1998 and thus far in 1999 into the available for sale
portfolio.

      Table C, Securities Available for Sale and Investment Securities
contains details of investment securities at June 30, 1999 and 1998, as well
as December 31, 1998.

      Money market investments. Money market investments, primarily Federal
funds sold, averaged $18.2 million during the second quarter of 1999, down
$7.9 million, or 30.3%, from the second quarter of 1998. Subsidiary banks
with excess overnight cash positions invest such funds with other subsidiary
banks that may have short-term funding needs. This internal settlement,
performed prior to purchasing funds in the market, reduces funding costs and
improves overall liquidity.

      Income on earning assets. Income from earning assets was $79.2 million
for the three-month period ended June 30, 1999, as compared to $77.5 million
for the same period in 1998.  The increase of $1.7 million, or 2.2%, resulted
from the increases in earning assets through acquisition and normal growth
described previously.  Total earning assets during the second quarter of 1999
of $4.1 billion yielded 7.83%, while in 1998 earning assets of $3.8 billion
yielded 8.22%. The increase in earning assets contributed $5.3 million
towards the increase in interest income, while the decline in yield of 39
basis points resulted in $3.6 million less in interest income.  Table D,
Average Balances, Yields and Net Interest Margins and Table F, Volume and
Yield Analysis contain details of changes by category of interest income from
earning assets.

      For the six months ended June 30, 1999 and 1998, income from earning
assets was $157.6 million and $153.6 million, respectively.  Total earning
assets of $4.0 billion, increased $296.6 million or 7.9% over the six month
average of 1998.  The yield on earning assets was 7.85% during the first six
months of 1999 as compared to 8.26% during the same period of 1998.  During
the first six months of 1999, the increase in earning asset contributed $11.6
million towards the increase over the same period of 1998, while the 41 basis
point reduction in yield caused a $7.6 million decrease.

Funding Sources

      Banknorth utilizes various traditional sources of funding to support
its earning asset portfolios. Average total net funding increased by $334.8
million, or 9.2%, in the second quarter of 1999 in comparison to the average
for the quarter ended June 30, 1998.  Table E, Average Sources of Funding,
presents the various categories of funds used and the corresponding average
balances for the second quarter of 1999 and 1998.

      Deposits. Total core deposits averaged $3.3 billion during the three
month period ended June 30, 1999, $401.6 million, or 13.7%, over the second
quarter average of 1998.  The majority of the increase was the result of the
Berkshire branch acquisition, which contributed $291.5 million on average in
deposits during the second quarter of 1999.  Overall, NOW and money market
accounts increased by $259.1 million, retail time deposits in denominations
less than $100,000 increased by $20.0 million and regular savings increased
$38.2 million.  In the current low rate environment, the indexed money market
product offered is an attractive option for our customers.  Total core
deposits represented 83.8% of total net funding during the second quarter of
1999 as compared to 80.5% during the same quarter of 1998.

      Purchased liabilities. Total purchased liabilities decreased on average
by $64.0 million to $633.3 million during the second quarter of 1999 from
$697.3 million during the second quarter of 1998.  Short-term borrowed funds
decreased $118.5 million from $424.0 million for the three months ended June
30, 1998 to $305.5 million for the three months ended June 30, 1999. Short-
term borrowings from the FHLB decreased significantly from $256.0 million at
June 30, 1998 to $85.6 million at June 30, 1999. The decrease in short-term
borrowed funds was the result of paydowns made after receipt of cash in the
acquisition of the Berkshire branches and a refinancing of approximately
$30.0 million to longer-term debt at more favorable rates. Long-term advances
from the Federal Home Loan Bank increased on average from $49.3 million for
the three months ended June 30, 1998 to $66.0 million for the three months
ended June 30, 1999. Scheduled maturities of short-term advances were
replaced with long-term advances in response to movements in interest rates
while maintaining the Company's interest rate risk profile within established
guidelines.

      Securities sold under repurchase agreements continued to be an
important source of purchased liabilities. Securities sold under repurchase
agreements averaged $192.6 million or 30.4% of the purchased liabilities for
the second quarter of 1999. This is an increase of $49.4 million from the
average in the second quarter of 1998. The Company enters into sales of
securities under short-term, usually overnight, fixed coupon, repurchase
agreements with customers.  Such agreements are treated as financings and the
obligations to repurchase securities sold are reflected as liabilities.

      Bank Debt.  Average bank debt of $7.4 million during the second quarter
of 1999 represented primarily the 1994 funding of the acquisition of North
American Bank Corporation. The balance of $6.7 million at June 30, 1999 will
be repaid within five years. Additionally, there was $280 thousand in bank
debt at June 30, 1999 related to the funding of the Employee Stock Ownership
Plan of Evergreen Bank.  This loan is an adjustable rate loan that will
mature in 2000.

      Interest expense summary. Total interest expense for the three months
ended June 30, 1999 was $34.2 million, a decrease of $2.1 million or 5.8%, as
compared to the same period of 1998. The decrease in interest expense was the
result of the Company lowering its cost of funding given the significant
increase in core deposits and the decline of $104.6 million in higher cost
borrowings, primarily short-term. Increased levels of interest-bearing
liabilities contributed $2.5 million to the increase in interest expense
while the decline in rates paid decreased interest expense by $4.6 million.
The cost of interest bearing liabilities was 3.96% in the second quarter of
1999, a decrease of  57 basis points from the second quarter of 1998.

      Total interest-bearing liabilities averaged $3.5 billion during the six
months ended June 30, 1999, $278.1 million, or 8.7%, higher than in 1998.
The cost of funds was 4.01% in 1999 as compared to 4.54% in 1998.  Table D,
Average Balances, Yields and Net Interest Margins and Table F, Volume and
Yield Analysis contain details of changes by category of interest bearing
liabilities and interest expense.

Net Interest Income

      Net interest income totaled $44.9 million and $41.1 million for the
three month periods ended June 30, 1999 and 1998, respectively.  The net
interest margin was 4.44% during the second quarter of 1999 as compared to
4.36% during the same period of 1998. The yield on earning assets of 7.83%
for the second quarter of 1999, was 39 basis points below the corresponding
period of the prior year.  Interest rates generally decreased during 1998 and
rose slightly in early 1999.  This trend of the decreasing yield on earning
assets was experienced throughout 1998 and 1997. In the second quarter of
1999, the cost of funds declined 57 basis points from the second quarter of
1998.  This decline in the cost of funds was greater than the decline in the
yield on earning assets, resulting in a slight increase in the net interest
margin in the second quarter of 1999 compared to the second quarter of 1998.

      Net interest income totaled $88.6 million for the six months ended June
30, 1999, compared to $81.7 million for the same period of 1998.  The net
interest margin increased slightly from 4.39% for the six months ended June
30, 1998 to 4.41% for the six months ended June 30, 1999.  As noted earlier,
the decline in the cost of funds exceeded the decline in the yield in earning
assets during this time period.

RISK MANAGEMENT

Credit Risk

      Credit risk is managed through a network of loan officer authorities,
credit committees, loan policies and oversight from the corporate senior
credit officer and subsidiary boards of directors. Management follows a
policy of continually identifying, analyzing and grading credit risk inherent
in each loan portfolio. An ongoing independent review, subsequent to
management's review, of individual credits is performed on each subsidiary
bank's commercial loan portfolios by the independent Loan Review function.

      As a result of management's ongoing review of the loan portfolio, loans
are placed in non-accrual status, either due to the delinquent status of
principal and/or interest payments, or a judgment by management that,
although payments of principal and/or interest are current, such action is
prudent. Loans are generally placed in non-accrual status when principal
and/or interest is 90 days overdue, except in the case of consumer loans
which are generally charged off when loan principal and/or interest payments
are 120 days overdue.

      Non-performing assets ("NPAs"). Non-performing assets include non-
performing loans, which are those loans in a non-accrual status, loans which
have been classified as troubled debt restructurings and loans past due 90
days or more and still accruing interest. Also included in the total non-
performing assets are foreclosed and repossessed non-real estate assets.

      NPAs were $20.3 million at June 30, 1999, an increase of $219 thousand,
or 1.1%, from June 30, 1998 and a decrease of $4.0 million, or 16.4%, from
December 31, 1998. The ratio of NPAs to loans plus other real estate owned
and repossessed assets at June 30, 1999, was .70% compared to .76% at June
30, 1998. Table G, Non-Performing Assets, contains the details for June 30,
1999 and 1998, and December 31, 1998.

      Non-performing loans ("NPLs") at June 30, 1999 were $19.6 million, a
net increase of $2.8 million, or 16.9%, from June 30, 1998. Delinquency rates
in the residential portfolio are consistent with trends seen regionally and
nationally. Given the possibility of increases in interest rates, management
expects that certain credits may encounter difficulty in continuing to
perform under the contractual terms of their loans should rates actually
increase. While this occurrence might result in increases in NPLs and
subsequent charge-offs, management does not expect it to materially affect
the Company's performance during the year.

      Total other real estate owned and repossessed assets were $733 thousand
at June 30, 1999, down $2.6 million  from one year earlier and from December
31, 1998.

      Allowance for loan losses and provision. The allowance for loan losses
is maintained at a level estimated by management to provide adequately for
risk of loss inherent in the current loan portfolio.  The adequacy of the
allowance for loan losses is monitored quarterly.  It is assessed for
adequacy using a methodology designed to ensure the level of the allowance
reasonably reflects the loan portfolio's risk profile.  It is also evaluated
to ensure that it is sufficient to absorb all probable and reasonably
estimable credit losses inherent in the current loan portfolio.

      For purposes of evaluating the adequacy of the allowance, the Company
considers a number of significant factors that affect the collectibility of
the portfolio.  For individually analyzed loans, these include estimates of
loss exposure, which reflect the facts and circumstances that affect the
likelihood of repayment of such loans as of the evaluation date.  For
homogenous pools of loans, estimates of the Company's exposure to credit loss
reflect a thorough assessment of a number of factors, which could affect loan
collectibility.  These factors include: the size, trend, composition, and
nature; changes in lending policies and procedures, including underwriting
standards and collection, charge-off and recovery practices; trends
experienced in non-performing and delinquent loans; past loss experience;
economic trends in the Company's market; portfolio concentrations that may
affect loss experienced across one or more components of the portfolio; the
effect of external factors such as competition, legal and regulatory
requirements; and, the experience, ability, and depth of lending management
and staff.  In addition, various regulatory agencies, as an integral
component of their examination process, periodically review the Company's
allowance for loan losses.  Such agencies may require the Company to
recognize additions to the allowance based on their judgement about
information available to them at the time of their examination, which may not
be currently available to management.

      After a thorough consideration and validation of the factors discussed
above, required additions to the allowance for loan losses are made
periodically by charges to the provision for loan losses. These charges are
necessary to maintain the allowance at a level which management believes is
reasonably reflective of overall risk of loss inherent in the loan portfolio.
While management uses available information to recognize losses on loans,
additions to the allowance may fluctuate from one reporting period to
another.  These fluctuations are reflective of changes in risk associated
with portfolio content and/or changes in management's assessment of any or
all of the determining factors discussed above.

      Table H, Summary of Loan Loss Experience, includes an analysis of the
changes to the allowance for the three months ended June 30, 1999 and 1998,
as well as for the year ended December 31, 1998. Loans charged off in the
first six months of 1999 were $4.6 million, or an annualized .32% of average
loans.  This represents an improvement over the prior year's results when
charge-offs totaled $5.7 million, or an annualized .43% of average loans.
Recoveries on loans previously charged off were $2.9 million for the six
months ended June 30, 1999 compared to $3.0 million for the same period of
1998.

      The provision for loan losses ("provision") for the three months ended
June 30, 1999 was $2.3 million, or an annualized .32% of average loans. The
provision for the first six months of the year was $4.3 million or an
annualized .30% of average loans.  Provisions of $4.7 million, or an
annualized .35% of average loans, and $9.3 million, or .35% of average loans
were experienced during the first half of 1998 and the full year of 1998,
respectively.  The decrease in the provision is primarily the result of a
reduction of the higher credit risk loan portfolios as a percentage of the
total loan portfolio.  Previously, the Company had experienced significant
growth in commercial, commercial real estate, and installment loans as well
as its Massachusetts market.  Accordingly, the provision was increased in
fiscal 1997 as compared to fiscal 1996 and in fiscal 1998 as compared to
fiscal 1997.  In addition, as discussed above, charge-offs and net charge-
offs have decreased from the second quarter of 1998 to the second quarter of
1999.  These items are somewhat offset by the slight increase in non-
performing loans, as discussed above.  Accordingly, the provision for loan
losses for the quarter ended June 30, 1999 is down slightly from the second
quarter of 1998.

      At June 30, 1999, the allowance provided a coverage of non-performing
loans of 240.53% as compared to 212.14% and 241.97% at December 31, 1998 and
June 30, 1998, respectively.

Market Risk

      Interest rate risk is the most significant market risk affecting the
Company.  Other types of market risk, such as foreign currency exchange rate
risk and commodity price risk, do not arise in the normal course of the
Company's business activities.

      The responsibility for balance sheet risk management oversight is the
function of the Asset/Liability Committee ("ALCO"). The corporate ALCO,
chaired by the chief financial officer and composed of various subsidiary
presidents and other members of corporate senior management, meets on a
monthly basis to review balance sheet structure, formulate strategy in light
of expected economic conditions, and review performance against guidelines
established to control exposure to the various types of inherent risk. Bank
subsidiary  ALCOs meet on a more frequent basis to implement policy, review
adherence to guidelines, adjust product prices as necessary and monitor
liquidity.

      Interest rate risk can be defined as an exposure to a movement in
interest rates that could have an adverse effect on the Company's net
interest income.  Interest rate risk arises naturally from the imbalance in
the repricing, maturity and/or cash flow characteristics of assets and
liabilities. Management's objectives are to measure, monitor and develop
strategies in response to the interest rate risk profile inherent in the
Company's consolidated balance sheet and off-balance sheet financial
instruments.

      Interest rate risk measurement and management techniques incorporate
the repricing and cash flow attributes of balance sheet and off-balance sheet
instruments as they relate to potential changes in interest rates. The level
of interest rate risk, measured in terms of the potential future effect on
net interest income, is determined through the use of modeling and other
analytical techniques under multiple interest rate scenarios. Interest rate
risk is evaluated on a quarterly basis and reviewed by the Corporate ALCO
with subsidiary risk profiles presented to the respective boards of
directors.

      The Company's Asset Liability Management Policy, approved annually by
the boards of directors, establishes interest rate risk limits in terms of
variability of net interest income under rising, flat and decreasing rate
scenarios. It is the role of the ALCO to evaluate the overall risk profile
and to determine actions to maintain and achieve a posture consistent with
policy guidelines.

      Certain imbalances causing interest rate risk to exceed policy limits
are correctable through management of asset and liability product offerings.
Depending upon the specific nature of the imbalance, it may be more efficient
and less costly to utilize off-balance sheet instruments such as interest
rate swaps, interest rate corridors and interest rate cap or floor
agreements, among other things, to correct the imbalance.  Banknorth utilized
swaps, floors and corridors to address certain interest rate risk exposures.

      A significant portion of the Company's loans are adjustable or variable
rate resulting in reduced levels of interest income during periods of falling
rates. Certain categories of deposits reach a point where market forces
prevent further reduction in the rate paid on those instruments. The net
effect of these circumstances is reduced interest income offset only by a
nominal decrease in interest expense, thereby narrowing the net interest
margin. To protect the Company from this occurrence, interest rate floors in
the notional amount of $295.0 million were used to mitigate the potential
reduction in interest income on certain adjustable and variable rate loans.
Further, in May 1998, the Company sold interest rate swaps in the notional
amount of  $50.0 million previously in use for a net gain of $254 thousand.
This gain is being amortized into interest income over the original remaining
lives of the initial swap contracts of approximately one year.  The swaps
were sold in order to reduce interest rate risk sensitivity of the Company.
In late 1998, interest rate corridors in the notional amount of $50.0 million
and interest rate swaps in the notional amount of $50.0 million were entered
into in order to mitigate the reduction in interest income in a period of
rising rates.  In a period of quickly rising interest rates, certain deposit
products will reprice more rapidly than certain fixed rate earning assets
potentially causing a reduction in interest income.  These contracts were
designed to make a portion of the Corporation's fixed rate loans sensitive to
rising rates.

      The aggregate cost of the interest rate floors and corridors was $3.2
million which is being amortized as an adjustment to the related loan yield
on a straight-line basis over the terms of the agreements.  At June 30, 1999,
the unamortized balance of these interest rate floors and corridors was $991
thousand.  The estimated fair value of these floors was $2.3 million as of
June 30, 1999.  The estimated fair value of the interest rate swap contracts
and interest rate corridors were $1.2 million and $462  thousand as of June
30, 1999.

      Banknorth utilizes an interest rate risk model widely recognized in the
financial industry to monitor and measure interest rate risk. The model
simulates the behavior of interest income and expense of all on and off
balance sheet financial instruments under different interest rate scenarios
together with a dynamic future balance sheet. Banknorth measures its interest
rate risk in terms of potential changes in net interest income.

Liquidity Risk

      Banknorth seeks to obtain favorable sources of liabilities and to
maintain prudent levels of liquid assets in order to satisfy varied liquidity
demands. Besides serving as a funding source for maturing obligations,
liquidity provides flexibility in responding to customer initiated needs.
Many factors affect the Company's ability to meet liquidity needs, including
variations in the markets served by its network of offices, its mix of assets
and liabilities, reputation and credit standing in the marketplace, and
general economic conditions.

      The Company actively manages its liquidity position through target
ratios established under its liquidity policy. Continual monitoring of these
ratios, both historically and through forecasts under multiple interest rate
scenarios, allows Banknorth to employ strategies necessary to maintain
adequate liquidity. Management has also defined various degrees of adverse
liquidity situations which could potentially occur and has prepared
appropriate contingency plans should such situations arise.

      The Company achieves its liability-based liquidity objectives in a
variety of ways. Net liabilities can be classified into three basic
categories for the purpose of managing liability-based liquidity: core
deposits, purchased liabilities, and long-term or capital market funds. Core
deposits consist of non-interest bearing demand deposits and retail deposits.
These deposits result from relatively dependable customers and commercial
banking relationships and are therefore viewed as a stable component of total
required funding. Banknorth will continue to seek funding in the most
efficient and cost effective manner as possible. Table E reflects the
components of funding for June 30, 1999 and 1998.

      Among the traditional funding instruments comprising the category of
purchased liabilities are time deposits $100 thousand and greater, Federal
funds purchased, securities sold under agreement to repurchase, borrowings
from the United States Treasury Department (Treasury, Tax and Loan accounts),
and short and long-term borrowings from the  FHLB.

      One of the principal components of purchased funding is short-term
borrowed funds through sales of securities under agreements to repurchase.
These borrowings generally represent short-term uninsured customer
investments, which are secured by Company securities. During the second
quarter of 1999, the average securities sold under agreements to repurchase
were $192.6 million, as compared to $143.2 million in the second quarter of
1998.

      Long-term purchased funding, primarily through the FHLB, was $73.3
million during the second quarter of 1999, up $13.9 million from the quarter
ended June 30, 1998 as short-term notes from the FHLB were replaced with
longer term FHLB debt at more favorable rates.

      As previously discussed, the Company utilized financial institution
borrowings pursuant to a five year credit facility to finance the NAB
acquisition.  The Company's primary source of funds to pay principal and
interest under this credit facility is dependent upon the continued ability
of the subsidiary banks to pay dividends in an amount sufficient to service
such debt.

      A secondary source of liquidity is represented by asset-based
liquidity. Asset-based liquidity consists of holdings of securities available
for sale and short-term money market investments that can be readily
converted to cash, as well as single-family mortgage loans, held for sale in
the secondary market.  Alternatively these assets may be pledged to secure
short-term borrowed funds.

      The Company also uses the capital markets as a source of liquidity.  In
May 1997, the Company established a trust to issue and sell $30.0 million in
capital securities. The net proceeds were used for general corporate
purposes. In February 1996, the Company issued 2,044,446 shares of common
stock resulting in $32.2 million in net proceeds which were used to provide a
portion of the initial capital of FMB and to help offset the reduction in the
Company's regulatory capital ratios resulting from the acquisition.

OTHER OPERATING INCOME

      Other operating income is a significant source of revenue for Banknorth
and an important factor in the Company's results of operations. Other
operating income totaled $14.5 million for the second quarter of 1999, $4.4
million or 43.1% higher than the second quarter of 1998.  For the six months
ended June 30, 1999 and 1998, other operating income was $29.3 million and
$19.0 million, respectively, an increase of $10.3 million, or 54.3%. Included
in the first half of 1999 other income was a net gain of  $2.6 million on the
curtailment of the Evergreen pension plan and $1.4 million of income from
bank-owned life insurance resulting from the death of a senior executive.
Without these one-time items, other operating income increased $6.3 million,
or 33.4%, for the six month period ended June 30, 1999 compared to the same
period of 1998.

      Investment management income. The Stratevest Group, N.A.,
("Stratevest"), the Company's investment and financial management subsidiary,
contributes the largest recurring portion of other operating income through
fees generated from trust and investment management services. Income from
such services totaled $5.0 million in the second quarter of 1999, an increase
of $1.8 million, or 58.5% over the same period of 1998.  For the six months
ended June 30, 1999, trust and investment management income was $9.8 million,
up $3.7 million, or 60.8%, over the same period of 1998.  The increase was
the result of strong sales and market conditions as well as the increase in
the managed assets as a result of the Berkshire acquisition.  The Company's
acquisition of approximately $1.0 billion in investment assets  in November
1998 was added to the Stratevest portfolio of managed assets.  This portion
of the portfolio generated approximately $1.6 million in investment
management income in the second quarter of 1999.  Total assets under
management totaled $4.1 billion, including $2.7 billion under discretionary
management, as of June 30, 1999, compared to total assets under management of
$2.9 billion, including $1.7 billion under discretionary management, as of
June 30, 1998.  Continued opportunities for increases in the generation of
Stratevest's income lie in increased sales in the Massachusetts, New York and
New Hampshire markets.  The Company is experiencing increased sales in these
areas and, accordingly, management expects continued increased levels of
trust and investment management income for 1999.

      Service charges on deposit accounts.  Service charges on deposit
accounts, $3.4 million for the three months ended June 30, 1999, were $454
thousand, or 15.4% above the same period of 1998. The increase in service
charges was primarily the result of improved charge policies implemented in
late 1997 and the Berkshire branch acquisition, which added on average $292.7
million in deposits in the second quarter of 1999.

      Mortgage banking income.  Mortgage banking income, which is comprised
of loan servicing income and  net loan transactions amounted to $1.3 million
for the three months ended June 30, 1999. This category of income was up $95
thousand, or 7.9%, from June 30, 1998.

      Net loan transaction income is generated through the origination and
subsequent sale of mortgage products into the secondary mortgage market.  Net
loan transaction income in the second quarter of 1999 amounted to $596
thousand, $289 thousand lower than the same period of 1998.  In 1998, the
Company experienced record level production throughout the year, which
created strong sales activity.  The sales activity in the second quarter of
1999 has returned to more normal levels as interest rates rose and
refinancing activity slowed.  The current production in 1999 is primarily new
mortgage originations as the home buying season has begun and interest rates
remain relatively low.

      Card product income. Card product income represents the fees and
interchange income generated by the use of Banknorth issued credit (Visa) and
debit cards.  This income category increased $206 thousand, to $748 thousand,
in the second quarter of 1999 as compared to the second quarter of 1998 as
the volume of debit card transactions increased given the addition of the
Berkshire customers and improved consumer acceptance and usage of the
product. For the six months ended June 30, 1999 and 1998, card product income
was $1.4 million and $972 thousand, respectively.

      ATM income.  ATM income represents the income generated from the ATM
network operated by Banknorth for the benefit of its customers.  ATM income
amounted to $671 thousand for the three months ended June 30, 1999 compared
to $523 thousand for the three months ended June 30, 1998.  The increase in
ATM income over the last year was the result of the terminal convenience fee,
assessed for non customer usage, in all states in which the Company operates
and the addition of the Berkshire ATMs to the Banknorth network.  For the six
months ended June 30, 1999 and 1998, ATM income was $1.3 million and $1.0
million, respectively.  Fee income is expected to remain at approximately that
level for the remainder of 1999.

      Bank-owned life insurance income. In the fourth quarter of 1997,
Banknorth purchased $40.0 million of bank-owned life insurance ("BOLI"),
which resulted in approximately $552 thousand and $553 thousand of income in
the second quarters of 1999 and 1998, respectively and $1.1 million in the
year to date periods ended June 30, 1999 and 1998.  The BOLI was purchased as
a financing tool for employee benefits. The value of life insurance financing
is the tax-preferred status of life insurance cash values. The purchase of
the life insurance policy results in an interest sensitive asset on the
Company's consolidated balance sheet that provides monthly tax-free income to
the Company.  The largest risk to the BOLI program is credit risk of the
insurance carriers. To mitigate this risk, the Company selected insurance
carriers with a minimum rating of A (Best rating) and further, annual
financial condition reviews are completed on all carriers.  Securities
available for sale were allowed to mature or were sold in order to provide
the funding necessary to implement the bank-owned life insurance program. As
a result of this transaction, the Company benefits in future periods from the
tax-free nature of income generated from the life insurance policies.  In
general, the yield received from the bank-owned life insurance is comparable
to the yield previously received on the securities available for sale,
thereby causing the Company's earnings stream to benefit from the tax
characteristics of the bank-owned life insurance.

      Net gain on curtailment of pension plan.  As noted earlier, the Company
recorded, in the first quarter of 1999, a net gain of $2.6 million from the
curtailment of the Evergreen pension plan resulting from the combination of
the former Evergreen and Banknorth pension plans following the merger.  This
is a non-recurring income item.  All employees of Banknorth are now
participants in a single pension plan.

      Bank-owned life insurance claim.  During the second quarter of 1999,
the Company recorded $1.4 million of income from BOLI resulting from the
death of a senior executive.  The income is non-recurring and tax-exempt.

      Other income. Other income amounted to $1.3 million for the three
months ended June 30, 1999, compared to $1.1 million for the three months
ended June 30, 1998.  For the six months ended June 30, 1999 and 1998, other
income was $2.2 million and $2.0 million, respectively. The largest portions
of this income category are from personal banking and commercial banking
fees, including safe deposit box and official checks.  The increase is
primarily as a result of the ten additional branches acquired in the
Berkshire region of Massachusetts.

OTHER OPERATING EXPENSES

      Other operating expenses for the second quarter was $36.3 million, $4.1
million, or 12.8%, above expense levels in the second quarter of 1998. The
majority of the increase in operating expenses was due to  $913 thousand in
additional goodwill expense, $1.3 million in additional compensation and
benefit expenses and $593 million in occupancy. The Company's efficiency
ratio was 58.43% in the second quarter of 1999, down from 59.81% from the
same period one year earlier.  For the six months ended June 30, 1999 and
1998, other operating expense was $72.6 million and $64.7 million,
respectively.  The efficiency ratio on a year to date basis was 58.50% for
the first half of 1999 compared to 60.58% for the same period of 1998.

      Compensation.  Compensation expense increased by $1.1 million, or 8.8%,
in the second quarter of 1999 in comparison to the second quarter of 1998.
The increase in this expense is primarily due to an increase in performance
based compensation recorded in 1999 in comparison to 1998.  Sales and
performance based compensation in 1999 for the trust subsidiary, subsidiary
banks and overall Company exceeded those accrued or paid to date in 1998.
Additionally, severance expense of $130 thousand was recorded in the second
quarter of 1999 as the facilities management of the Company was outsourced.
Finally, temporary help expense in the second quarter of 1999 exceeded that
of the second quarter of 1998 by $110 thousand as the integration of the
Evergreen, Berkshire and trust operations is being completed. Year to date,
compensation expense increased $1.6 million or 6.2%.  Benefits expenses also
increased by 4.2% between the three months ended June 30, 1999 and 1998.

      Net occupancy.  Net occupancy costs increased $593 thousand or 25.2%
from $2.4 million for the three months ended June 30, 1998 to $2.9 million
for the three months ended June 30, 1999.  As noted earlier, in the Berkshire
acquisition, the Company acquired ten additional banking offices and its
corresponding occupancy costs.  Occupancy expenses are expected to remain at
this level throughout 1999.

      Equipment and software.  Equipment and software expense was $2.5
million and $2.4 million for the three months ended June 30, 1999 and 1998,
respectively. Banknorth continuously invests in upgraded technology in order
to offer enhanced products and services or to create operating efficiencies.

      Data processing. Data processing fees include payments to Banknorth's
vendors of mainframe systems and site management, credit card processing, ATM
transaction processing and shareholder accounting services.  These fees
decreased $159 thousand or 8.3% in the second quarter of 1999 in comparison
to the same period of 1998 primarily due to the reduction in core application
processing costs as a result of the merger with Evergreen. In 1998, the data
processing costs consisted of two mainframe site management contracts.  One
contract was terminated upon the merger with Evergreen, thereby reducing the
overall data processing costs.  Offsetting this favorable change in data
processing expense, the Company recognized $300 thousand in data processing
costs for the outside servicing of the purchased Berkshire private banking
relationships.  This outside servicing expense was eliminated in the second
quarter of 1999.

      Other real estate owned. Expenses relating to other real estate owned
and repossessed assets decreased for the second quarter of 1999 by $89
thousand as compared to June 30, 1998 as the holding cost of these properties
declined.  Included in this expense category in the second quarter of 1999 are
net gains on the sale of other real estate owned and repossessed assets in the
amount of $103 thousand.  Net gains on sales in the second quarter of 1998
were $117 thousand. Year to date, OREO expense continue to be low at $207
thousand in 1999, compared to $497 thousand in 1998. Management anticipates
the level of other real estate owned and repossession expenses to remain
steady throughout the year.

      Advertising and marketing. Advertising and marketing expenses were $1.2
million for the three months ended June 30, 1999, $119 thousand, or 11.2%
higher than the first three months of 1998. In 1998, Banknorth introduced a
market branding campaign and increased its marketing efforts in target
markets. Marketing expenses are expected to be higher throughout 1999 in
comparison to 1998.  Year to date, advertising and marketing expenses were
$294 thousand or 14.5% higher in 1999 compared to 1998.

      Communications. Communications expenses totaled $940 thousand in the
second quarter of 1999, and $732 thousand in the second quarter of 1998. The
increase in communication expenses was primarily due to the expansion of the
voice/data communication network to accommodate the aforementioned acquired
locations of Banknorth.

      Amortization of goodwill. Amortization of goodwill amounted to $2.2
million in second quarter of 1999 compared to $1.3 million in the second
quarter of 1998. The increased goodwill amortization is the result of the
Berkshire acquisition completed in November 1998, which generated an
additional $54.2 million in goodwill or $3.6 million in amortization per year
as this goodwill will be amortized over 15 years. Based on existing goodwill,
the 1999 goodwill amortization expense is expected to be $8.7 million.

      Capital securities.  The capital securities issued in May 1997, which
created Tier I capital, gave rise to expense of $789 thousand in the second
quarters of 1999 and 1998.  As mentioned previously, incremental investment
purchases were made in an effort to offset the cost of the capital securities
through increased net interest income.  Funding for the investments was
primarily in the form of borrowings from the FHLB.

      Merger and acquisition related expenses.  The merger expenses incurred
in the first six months of 1999, related to the merger with Evergreen,
amounted to approximately $1.2 million, or $788 thousand, after income tax
effect.  The majority of these expenses were employment-related costs and
data processing conversion and termination costs.

      Other expenses.  Other expenses totaled $4.0 million and $3.1 million
for the three months ended June 30, 1999 and 1998, respectively.  The
majority of the increase was due to additional operating expenses of a larger
institution, including postage and delivery, check sale costs,  and network
charges.  Additionally, the Company increased its investment in low-income
housing projects during 1998, which resulted in a greater amount of
writedowns in the second quarter of 1999 compared to the second quarter of
1998.  These low-income housing projects generate significant tax credits and
reduce the Company's effective tax rate from the statutory level.  Year to
date, other expense increased $1.2 million or 18.7%.  Expenses in this
category are expected to continue at approximately this level throughout the
year.

SUBSIDIARY BANK MERGER

      On May 24, 1999, the Company merged one of its subsidiary banks,
Woodstock National Bank, into another subsidiary bank, First Vermont Bank,
with Woodstock National Bank's three offices becoming branch offices of First
Vermont Bank.  The conversion costs totaled approximately $400 thousand.

YEAR 2000 COMPLIANCE

      Historically, some computer software and hardware and firmware systems,
and equipment or machinery with embedded processors or processing
instructions (sometimes referred to as "embedded processors"), were written
to recognize and process dates with the year written with two digits.  For
dates on or after January 1, 2000 (when four digits will be necessary to
identify dates accurately), or for periods beginning before, and ending on or
after January 1, 2000, such software, hardware and firmware systems and
embedded processors may not be able to recognize or properly process dates or
information including dates or time periods.  Among other things, this may
cause computers to produce incorrect information, to shut down, to cause
other systems or equipment to shut down or malfunction, or to malfunction in
other ways, and may cause equipment or machinery with embedded processors to
malfunction or to shut down.  This is often referred to as, among other
things, the "Year 2000 problem."

      In order to assure, to the extent possible, that the Year 2000 problem
does not impair their ability to do business or subject them to liability,
companies are advised to determine whether and to what extent their
information technology or physical resources may be affected by Year 2000
problems, to repair, replace or retire the affected systems or assets, and to
test the new systems or assets to assure that they will not be affected by
the Year 2000 problem (which is often referred to as being "year 2000
compliant").  Some new hardware, software or equipment, and some revisions or
upgrades of hardware, software or equipment, may have so-called "bugs" or may
prove to be incompatible with existing or other new or upgraded systems or
components.  As a result, the testing of the changed components, and of
systems and subsystems as a whole, is critical and experience has shown that
the process is time consuming.

      In order to protect the integrity of the banking system, the Federal
Reserve Board and other federal banking regulatory agencies (collectively
known as the "Federal Financial Institutions Examination Council," or
"FFIEC") have issued guidelines to financial institutions for addressing the
Year 2000 problem and set milestones that financial institutions are expected
to meet in becoming Year 2000 compliant and testing to assure compliance.  In
broad outline, those guidelines provide that (i) by September 30, 1997,
financial institutions should have identified, assessed and begun remediation
of mission critical systems; (ii) by June 30, 1998, institutions should be
continuing remediation of mission critical systems and have completed
development of testing strategies and plans; (iii) by September 1, 1998,
institutions should be continuing system remediation and should have begun
testing of internal mission critical systems; (iv) by December 31, 1998,
institutions should have substantially completed testing of internal mission
critical systems; (v) by June 30, 1999, institutions relying on service
providers should have substantially completed system testing and all
institutions should have begun external  testing with third parties (such as
other financial institutions, business partners and payment system
providers); and (vi) by June 30, 1999, institutions should have completed
testing of mission critical systems and substantially completed all
implementation of those systems.

      Banknorth's Year 2000 remediation and compliance program (the "Year
2000 Project") is managed by a Project Group consisting of representatives
from more than 25 business units and functional departments within Banknorth
and its subsidiaries.  The Project is directed by a Banknorth Vice President
and is overseen by the Banknorth Board and the board of directors of each
subsidiary.

      Banknorth has completed a preliminary assessment of all its computer
software, hardware and firmware systems, and equipment and machinery with
embedded processors (including vaults and other security systems, elevators
and HVAC systems).  Banknorth believes that it has identified all components,
systems, equipment and databases that might not be able to function properly
as a result of the Year 2000 problems and has formulated a plan to replace,
upgrade or revise affected software, to upgrade or replace affected hardware
and equipment, and to remediate affected data and databases.  Banknorth
substantially completed the replacements, upgrades and revisions of the
affected software, hardware and equipment by December 31, 1998.  Banknorth
began compliance testing of components and systems in July, 1998 and
substantially completed its compliance testing of vital banking systems by
the end of 1998.  Testing will continue on an ongoing and industry-wide basis
thereafter.

      Substantially all of Banknorth's mission critical systems are
outsourced or are purchased software packages.  As a result, much of the
remediation and testing process is dependent on the accuracy of work
performed by, and the Year 2000 compliance of software, hardware and firmware
and equipment provided by, vendors.  Banknorth has initiated discussions with
its vendors and monitored their Year 2000 compliance programs and the
compliance of their products or services with required standards.  Where
possible, Banknorth is also considering and where appropriate is arranging,
alternate service or software providers in cases where it appears that
vendors may not timely provide adequate solutions.

      The economic cost of the Year 2000 Project includes not just direct
incremental amounts expended by Banknorth for repairing, upgrading or
replacing hardware, software and facilities, but also the use of internal
resources devoted to the Year 2000 Project that would otherwise have been
devoted to other business opportunities.  It is difficult to quantify the
economic cost of internal resources of the Project.  However, Banknorth
estimates that over the life of this Project, between 1996 and 2000, it will
utilize approximately $5.5 million to $7.5 million of internal resources on
this effort.  These are internal resources that would have been utilized for
other business opportunities and do not necessarily represent additional
operating expenditures or costs.  As of June 30, 1999, approximately $5.2
million of these amounts have been expended.  Further, Banknorth's direct
incremental expenditures for the Year 2000 Project are estimated at $3.7
million over this five year period.  The largest of these costs relates to
the purchase and installation of a new branch platform.  Although this
estimate includes hardware and equipment expenditures, which would have been
made even absent the Year 2000 problem as part of normal operations, such
expenditures are included in the estimates since the timing of these
purchases and upgrades was accelerated due to the Year 2000 Project.  As of
June 30, 1999, approximately $1.3 million of the direct incremental
expenditures have been made.

      Banknorth has commenced a customer awareness program to inform its
customers (both depositors and borrowers) of the Year 2000 problem,
Banknorth's responses to the problem and the potential impact of the problem
on the customers and their business.  Banknorth and its subsidiaries have had
awareness sessions with their customers and are taking into account
customers' Year 2000 compliance in evaluating and rating loans.  Banknorth
Group, Inc. is aware that if borrowers suffer losses or illiquidity because
of their own Year 2000 problems (or the Year 2000 problems of others with
whom they do business or on whom they are dependent) Banknorth's subsidiary
banks may suffer credit losses or experience illiquidity.  The standard loan
documentation of Banknorth's subsidiary banks has been revised to include
representations that the borrower is Year 2000 compliant and to give the bank
the right to examine the borrower's systems and procedures in order to
determine Year 2000 compliance.

      Banknorth believes that the key risk factors associated with the Year
2000 are those it cannot directly control, primarily the readiness of key
suppliers and service providers, the readiness of the public infrastructure,
and as noted above, the readiness of its credit customers.  However,
Banknorth and its subsidiaries have developed contingency plans and
strategies and so-called "work arounds" for each non-compliant system and the
possible failure of systems and resources that have been tested as compliant.
The contingency plans vary with the affected systems.  Among other things,
Banknorth has designated certain of its local banks as "key branches" and
will equip them properly, so that the Banknorth banks can continue banking
operations even if there are electrical outages because local utilities are
not Year 2000 compliant.  Banknorth is also arranging to have temporary help
available so that, in event of the failure of a mission critical system, the
functions affected by the system failure can be performed manually.

      The determination of the effect of Banknorth's own non-compliance with
Year 2000 requirements or the non-compliance of its vendors or customers is
complex and depends on numerous variables and unknowns.  Without remediation,
the failure of critical software systems at any of the Banknorth banks or at
other banks could impair the ability of the banks to do business, the failure
of large or numerous borrowers to timely pay their loans could impair the
capital of one or more banks, and the failure of embedded processors would
adversely affect the physical security of the banks.  However, Banknorth
believes that, as a result of its remediation and testing efforts and its
contingency plans, that worst case scenario is not likely.

      Banknorth has created a working group separate from the Year 2000 group
to deal with the implementation of the merger and the integration of
Evergreen and Banknorth information technology systems.  As a result, it is
expected that the merger will not affect the timely completion of the Year
2000 Project.  In addition, since the Banknorth systems will be implemented
in the combined Company, the merger should not affect the ability of the
systems of the combined Company to be Year 2000 compliant.

INCOME TAXES

      In the second quarter of 1999, Banknorth recognized income tax expense
of $5.9 million, as compared to $5.0 million in second quarter of 1998. The
effective rate was 29.57% in the second quarter of 1999 compared to 30.82% in
the second quarter of 1998. The tax expense on the Company's income was lower
than tax expense at the statutory rate of 35%, due primarily to tax-exempt
income, including loans, securities and BOLI, as well as tax credits received
on low-income housing projects.  The recording of the $1.4 million in tax-
exempt income from a BOLI claim in the second quarter of 1999 was primarily
the cause of the decline in the effective rate from the second quarter of
1998 to the second quarter of 1999.  For the six months ended June 30, 1999,
the effective tax rate was 30.55% compared to 30.80% for the same period of
1998.

CAPITAL RESOURCES

      Consistent with its long-term goal of operating a sound and profitable
financial organization, Banknorth strives to maintain a "well capitalized"
company according to regulatory standards. Historically most of the Company's
capital requirements have been provided through retained earnings.

      In October 1997, Banknorth announced a stock buyback plan.  The Company
planned to buy back up to 5%, or 782,665 shares of its outstanding common
stock.  As part of the merger with Evergreen, however, the stock buyback
program was rescinded in July 1998.  As of June 30, 1999, the Company held
343,807 treasury shares, all of which were purchased under the October 1997
stock buyback plan.

      The Company (including, prior to 1989, its corporate predecessors) has
historically paid regular quarterly cash dividends on its common stock.
Since 1993, the Company's dividend has increased from a level of $.05 per
share to most recently $.18 per share in January 1999 and March 1999.  The
Board makes decisions regarding payment of dividends based upon the Company's
earnings outlook and other relevant factors.

      On February 24, 1998, the Board of Directors approved a 2-for-1 split
of its common stock effected in the form of a 100% stock dividend.  The new
shares were issued April 6, 1998, to shareholders of record on March 20,
1998. The stock split was recorded as of December 31, 1997 by a transfer of
$7.8 million from capital surplus to common stock, representing the $1.00 par
value for each additional share issued.  Further, on August 15, 1996, the
Board of Directors of the Evergreen Bancorp, Inc. approved a 2-for-1 split
effected in the form of a 100% stock dividend and was recorded by a transfer
of $4.3 million from capital surplus to common stock. All per share data has
been restated to reflect the splits.

      The Company's principal source of funds to pay cash dividends and the
cost of capital securities and to service long-term debt requirements is
dividends from its subsidiary banks. Various laws and regulations restrict
the ability of banks to pay dividends to their shareholders.  During 1998, as
part of its plan to adequately capitalize FMB for regulatory purposes after
the Berkshire acquisition and to allow Stratevest to purchase the private
banking relationships associated with the Berkshire branches, the Company re-
deployed accumulated capital of certain of its subsidiary banks through the
payment of a special dividend. Because the special dividend exceeded
applicable regulatory limitations, the subsidiary banks obtained approval
from the applicable regulatory agencies for the payment of that portion of
the dividend.

      Additionally, in connection with the Evergreen merger, Evergreen Bank
paid a special dividend to the parent company.  As the special dividend
exceeded applicable regulatory limitations, Evergreen Bank obtained approval
from the OCC for the payment of that portion of the dividend which exceeded
such regulatory limitations.

      As a result of these capital redeployments, the payment of dividends by
the Company in the future will require the generation of sufficient future
earnings by the subsidiary banks

      At June 30, 1999, Banknorth's Tier I capital was $293.8 million, or
9.36% of total risk-adjusted assets, compared to $317.3 million and 11.14% as
of June 30, 1998. The decrease in the Tier I capital is attributable to the
$54.2 million in additional goodwill generated by the Berkshire branch
acquisition. The ratio of Tier I capital to total quarterly average adjusted
assets (leverage ratio) was 6.82%, and 7.97% as of June 30, 1999 and 1998,
respectively. Banknorth is "well capitalized" at June 30, 1999 according to
regulatory definition, and thereby, exceed all minimum regulatory capital
requirements. Table I, Capital Ratios, provides the components of capital as
of various dates.


TABLE A.  Mix of Average Earning Assets

<TABLE>
<CAPTION>
                                                           Three Months                                        Percentage of
                                                          Ended June 30,                         % of      Total Earning Assets
                                                    --------------------------                  Total      --------------------
(Dollars in thousands)                                   1999          1998         Change      Change        1999      1998
                                                      -------------------------------------------------------------------------

<S>                                                   <C>           <C>           <C>           <C>          <C>       <C>
Loans, net of unearned income
 and unamortized loan fees and costs:
  Commercial, financial and agricultural              $  564,748    $  585,169    $ (20,421)     (7.6)%       13.9%     15.5%
  Construction and land development                       66,666        35,634       31,032      11.6          1.7       0.9
  Commercial real estate                                 761,452       576,665      184,787      69.1         18.8      15.2
  Residential real estate                              1,018,779     1,062,828      (44,049)    (16.5)        25.1      28.1
  Credit card receivables                                 31,873        28,573        3,300       1.2          0.8       0.7
  Lease receivables                                       80,309        74,846        5,463       2.0          2.0       2.0
  Other installment                                      328,669       297,759       30,910      11.6          8.1       7.9
                                                      ----------------------------------------------------------------------
    Total loans, net of unearned income and
     unamortized loan fees and costs                   2,852,496     2,661,474      191,022      71.4         70.4      70.3

Securities available for sale:
  U.S. Treasuries and Agencies                           172,329       231,983      (59,654)    (22.3)         4.3       6.1
  States and political subdivisions                       41,575         6,974       34,601      13.0          1.0       0.2
  Mortgage-backed securities                             689,213       509,285      179,928      67.3         17.0      13.5
  Corporate debt securities                              185,068       217,128      (32,060)    (12.0)         4.6       5.7
  Equities and other securities                           49,220        45,403        3,817       1.4          1.2       1.2
  Net unrealized gain (loss)                              (3,165)        5,891       (9,056)     (3.4)        (0.1)      0.2
                                                      ----------------------------------------------------------------------

    Total securities available for sale,
     at fair value                                     1,134,240     1,016,664      117,576      44.0         28.0      26.9

Investment securities, held to maturity:
  U.S. Treasuries and Agencies                             3,191        13,040       (9,849)     (3.7)         0.1       0.4
  States and political subdivisions                       10,947        12,806       (1,859)     (0.7)         0.3       0.3
  Mortgage-backed securities                               4,907        12,724       (7,817)     (2.9)         0.1       0.3
  Corporate debt securities                                   10            10           --        --           --        --
                                                      ----------------------------------------------------------------------

    Total investment securities, held to maturity,
     at amortized cost                                    19,055        38,580      (19,525)     (7.3)         0.5       1.0

Loans held for sale                                       28,232        41,921      (13,689)     (5.1)         0.7       1.1

Money market investments                                  18,208        26,110       (7,902)     (3.0)         0.4       0.7
                                                      ----------------------------------------------------------------------
Total earning assets                                  $4,052,231    $3,784,749    $ 267,482     100.0%       100.0%    100.0%
                                                      ======================================================================
</TABLE>


TABLE B. Loan Portfolio

<TABLE>
<CAPTION>
                                                At June 30,                        At December 31,             % Change
                              ----------------------------------------------    ---------------------    --------------------
                                      1999                     1998                     1998
                              ---------------------    ---------------------    ---------------------
                                                                                                         06/30/99    06/30/99
                                Amount      Percent      Amount      Percent      Amount      Percent     versus      versus
(Dollars in thousands)                                                                                   06/30/98    12/31/98
                              -----------------------------------------------------------------------------------------------

<S>                           <C>           <C>        <C>           <C>        <C>           <C>          <C>        <C>
Commercial, financial, and
 agricultural                 $  593,921     20.5%     $  581,369     21.9%     $  690,170     24.3%        2.2%      (13.9)%

Real estate:
  Construction and land
   development                    61,295      2.1          36,883      1.4          45,704      1.6        66.2        34.1
  Commercial                     779,573     26.9         578,342     21.8         615,503     21.7        34.8        26.7
  Residential                  1,012,226     34.8       1,056,486     39.6       1,041,667     36.7        (4.2)       (2.8)
                              ---------------------------------------------------------------------------------------------
    Total real estate          1,853,094     63.8       1,671,711     62.8       1,702,874     60.0        10.9         8.8
                              ---------------------------------------------------------------------------------------------
Credit card receivables           31,907      1.1          28,863      1.1          33,205      1.2        10.5        (3.9)
Lease receivables                 79,920      2.8          74,943      2.8          79,001      2.8         6.6         1.2
Other installment                343,597     11.8         301,779     11.4         331,856     11.7        13.9         3.5
                              ---------------------------------------------------------------------------------------------
    Total installment            455,424     15.7         405,585     15.3         444,062     15.7        12.3         2.6
                              ---------------------------------------------------------------------------------------------
Total loans                    2,902,439    100.0       2,658,665    100.0       2,837,106    100.0         9.2         2.3

Less: allowance for loan
 losses                           47,135      1.6          40,570      1.5          44,537      1.6        16.2         5.8
                              ---------------------------------------------------------------------------------------------
Net loans                     $2,855,304     98.4%     $2,618,095     98.5%     $2,792,569     98.4%        9.1%        2.2%
                              =============================================================================================
</TABLE>

TABLE C. Securities Available for Sale and Securities Held to Maturity

<TABLE>
<CAPTION>

                                                                   At June 30,           At  December 31,
                                                             ------------------------    ----------------
(Dollars in thousands)                                          1999          1998            1998
                                                             --------------------------------------------

<S>                                                          <C>           <C>              <C>
Securities available for sale:
  U.S. Treasuries and Agencies                               $  165,796    $  217,413       $  165,683
  States and political subdivisions                              48,522         7,816            7,806
  Mortgage-backed securities                                    672,530       521,297          711,540
  Corporate debt securities                                     211,203       230,291          188,154
  Equities and other securities                                  49,209        45,350           48,791
  Net unrealized gain (loss)                                    (14,010)        7,244            5,891
                                                             -----------------------------------------

    Fair value of securities available for sale              $1,133,250    $1,029,411       $1,127,865
                                                             =========================================
Investment securities, held to maturity:
  U.S. Treasuries and Agencies                               $    3,192    $    6,965       $    3,582
  States and political subdivisions                              10,182        12,475           11,443
  Mortgage-backed securities                                      4,703        10,178            5,510
  Corporate debt securities                                          10            10               10
                                                             -----------------------------------------

    Amortized cost of investment securities,
     held to maturity                                        $   18,087    $   29,628       $   20,545
                                                             =========================================

    Fair value of investment securities, held to maturity    $   18,389    $   30,644       $   21,606
                                                             =========================================

    Excess of fair value over recorded value                 $      302    $    1,016       $    1,061

    Fair value as a % of amortized cost                           101.7%        103.4%           105.2%

</TABLE>

Note:  There were no holdings of any single issuer that, when taken in
       aggregate, exceeded 10% of shareholders' equity at June 30, 1999.


TABLE D.  Average Balances, Yields, and Net Interest Margins

<TABLE>
<CAPTION>

                                                                                Three Months Ended June 30,
                                                            -------------------------------------------------------------------
                                                                          1999                               1998
                                                            --------------------------------    -------------------------------
                                                                          Interest   Average                 Interest   Average
                                                             Average      Income/    Yield/     Average      Income/    Yield/
                                                             Balance      Expense     Rate      Balance      Expense     Rate
                                                            -------------------------------------------------------------------

<S>                                                         <C>           <C>         <C>      <C>           <C>         <C>
(Dollars in thousands)
Earning assets:
  Money market investments                                  $   18,208    $   211     4.65%    $   26,110    $   367     5.64%
  Securities available for sale, at fair value (1 and 2)     1,134,240     17,283     6.09      1,016,664     16,168     6.42
  Loans held for sale                                           28,232        530     7.53         41,921        799     7.64
  Investment securities, held to maturity (2)                   19,055        395     8.31         38,580        755     7.85
  Loans, net of unearned income and
   unamortized loan fees and costs (2 and 3)                 2,852,496     60,737     8.54      2,661,474     59,369     8.95
                                                            ---------------------              ---------------------
      Total earning assets                                   4,052,231     79,156     7.83      3,784,749     77,458     8.22

Cash and due from banks                                        125,671                            102,018
Allowance for loan losses                                      (46,538)                           (40,833)
Other assets                                                   236,550                            170,320
                                                            ----------                         ----------
      Total assets                                          $4,367,914                         $4,016,254
                                                            ==========                         ==========

Interest-bearing liabilities:
  NOW accounts & money market savings                       $1,467,248     11,593     3.17     $1,208,185     11,005     3.65
  Regular savings                                              345,450      2,052     2.38        307,265      1,987     2.59
  Time deposits $100 thousand and greater                      261,780      3,358     5.15        223,996      3,142     5.63
  Time deposits under $100 thousand                          1,017,285     12,831     5.06        997,295     13,679     5.50
                                                            ---------------------              ---------------------
      Total interest-bearing deposits                        3,091,763     29,834     3.87      2,736,741     29,813     4.37
  Short-term borrowed funds                                    305,526      3,286     4.31        424,048      5,608     5.30
  Long-term debt                                                73,337      1,126     6.16         59,459        947     6.39
                                                            ---------------------              ---------------------
      Total interest-bearing liabilities                     3,470,626     34,246     3.96      3,220,248     36,368     4.53
                                                            -----------------------------------------------------------------
Non-interest bearing deposits                                  494,857                            410,469
Other liabilities                                               46,330                             40,374
Capital securities                                              30,000                             30,000
Shareholders' equity                                           326,101                            315,163
                                                            ----------                         ----------
      Total liabilities, capital securities and
       shareholders' equity                                 $4,367,914                         $4,016,254
                                                            ==========                         ==========
Net interest income                                                       $44,910                             $41,090
                                                                          =======                             =======
Interest rate differential                                                            3.87%                              3.69%
                                                                                      ====                               ====
Net interest margin                                                                   4.44%                              4.36%
                                                                                      ====                               ====

Notes:
<F1>  For the purpose of these computations, the average yield is based on
      amortized cost.
<F2>  Tax exempt income has been adjusted to a tax equivalent basis by tax
      effecting such interest at the Federal (35%) rate.
<F3>  Includes principal balances of non-accrual loans and industrial revenue
      bonds.
</TABLE>

TABLE D.  Average Balances, Yields, and Net Interest Margins

<TABLE>
<CAPTION>

                                                                               Six Months Ended June 30,
                                                            -------------------------------------------------------------------
                                                                          1999                               1998
                                                            --------------------------------    -------------------------------
                                                                          Interest   Average                 Interest   Average
                                                             Average      Income/    Yield/     Average      Income/    Yield/
                                                             Balance      Expense     Rate      Balance      Expense     Rate
                                                            -------------------------------------------------------------------

<S>                                                         <C>           <C>         <C>      <C>           <C>         <C>
(Dollars in thousands)
Earning assets:
  Money market investments                                  $   18,828    $    413    4.42%    $   20,569    $    584    5.73%
  Securities available for sale, at fair value (1 and 2)     1,130,830      34,326    6.12        992,969      31,849    6.51
  Loans held for sale                                           32,298       1,155    7.21         35,957       1,258    7.06
  Investment securities, held to maturity (2)                   19,562         791    8.15         47,718       1,847    7.81
  Loans, net of unearned income and
   unamortized loan fees and costs (2 and 3)                 2,844,234     120,889    8.57      2,651,956     118,039    8.98
                                                            ----------    --------             ----------    --------
      Total earning assets                                   4,045,752     157,574    7.85      3,749,169     153,577    8.26

Cash and due from banks                                        126,093                             98,747
Allowance for loan losses                                      (45,924)                           (40,023)
Other assets                                                   237,919                            169,018
                                                            ----------                         ----------
      Total assets                                          $4,363,840                         $3,976,911
                                                            ==========                         ==========
Interest-bearing liabilities:
  NOW accounts & money market savings                       $1,456,663      23,136    3.20     $1,176,781      21,306    3.65
  Regular savings                                              342,119       4,093    2.41        307,885       3,990    2.61
  Time deposits $100 thousand and greater                      256,535       6,637    5.22        219,529       6,147    5.65
  Time deposits under $100 thousand                          1,032,952      26,381    5.15      1,001,144      27,336    5.51
                                                            ----------    --------             ----------    --------
      Total interest-bearing deposits                        3,088,269      60,247    3.93      2,705,339      58,779    4.38
  Short-term borrowed funds                                    305,046       6,497    4.29        430,809      11,385    5.33
  Long-term debt                                                73,737       2,258    6.18         52,789       1,693    6.47
                                                            ----------    --------             ----------    --------
      Total interest-bearing liabilities                     3,467,052      69,002    4.01      3,188,937      71,857    4.54
                                                            ----------    --------             ----------    --------
Non-interest bearing deposits                                  495,053                            402,931
Other liabilities                                               47,958                             39,547
Capital securities                                              30,000                             30,000
Shareholders' equity                                           323,777                            315,496
                                                            ----------                         ----------
      Total liabilities, capital securities and
       shareholders' equity                                 $4,363,840                         $3,976,911
                                                            ==========                         ==========
Net interest income                                                       $ 88,572                           $ 81,720
                                                                          ========                           ========
Interest rate differential                                                            3.84%                              3.72%
                                                                                      ====                               ====
Net interest margin                                                                   4.41%                              4.39%
                                                                                      ====                               ====


Notes:
<F1>  For the purpose of these computations, the average yield is based on
      amortized cost.
<F2>  Tax exempt income has been adjusted to a tax equivalent basis by tax
      effecting such interest at the Federal (35%) rate.
<F3>  Includes principal balances of non-accrual loans and industrial revenue
      bonds.
</TABLE>


TABLE E. Average Sources of Funding

<TABLE>
<CAPTION>

                                                 Three Months                                   Percentage of
                                                Ended June 30,                Change            Total Funding
                                           ------------------------    --------------------    ---------------
(Dollars in thousands)                        1999          1998        Amount      Percent     1999      1998
                                           -------------------------------------------------------------------

<S>                                        <C>           <C>           <C>          <C>        <C>       <C>
Non-interest bearing deposits              $  494,857    $  410,469    $  84,388     20.6%      12.4%     11.3%
Retail deposits:
  Regular savings                             345,450       307,265       38,185     12.4        8.7       8.5
  Time deposits under $100 thousand         1,017,285       997,295       19,990      2.0       25.7      27.5
  NOW accounts & money market savings       1,467,248     1,208,185      259,063     21.4       37.0      33.2
                                          -------------------------------------------------------------------
    Total retail deposits                   2,829,983     2,512,745      317,238     12.6       71.4      69.2
                                          -------------------------------------------------------------------

    Total core deposits                     3,324,840     2,923,214      401,626     13.7       83.8      80.5

Time deposits $100 thousand and greater       261,780       223,996       37,784     16.9        6.6       6.2
Federal funds purchased                        13,839         8,631        5,208     60.3        0.3       0.2
Securities sold under agreements to
 repurchase                                   192,587       143,150       49,437     34.5        4.9       3.9
Borrowings from U.S. Treasury                  13,496        16,304       (2,808)   (17.2)       0.3       0.5
Short-term notes from FHLB                     85,604       255,963     (170,359)   (66.6)       2.2       7.0
Long-term notes from FHLB                      65,962        49,253       16,709     33.9        1.7       1.4
                                          -------------------------------------------------------------------

    Total purchased liabilities               633,268       697,297      (64,029)    (9.2)      16.0      19.2

Bank term loan                                  7,375        10,206       (2,831)   (27.7)       0.2       0.3
                                          -------------------------------------------------------------------
    Total  funding                         $3,965,483    $3,630,717    $ 334,766      9.2%     100.0%    100.0%
                                           ===================================================================

</TABLE>


TABLE F. Volume and Yield Analysis

<TABLE>
<CAPTION>

                                                     Three Months
                                                    Ended June 30,                        Due to
                                                  ------------------                -------------------
                                                   1999       1998       Change      Volume     Rate
                                                  -----------------------------------------------------

<S>                                               <C>        <C>        <C>         <C>         <C>
(In thousands)
Interest income (FTE):
  Money market investments                        $   211    $   367    $  (156)    $   (92)    $   (64)
  Securities available for sale, at fair value     17,283     16,168      1,115       1,947        (832)
  Loans held for sale                                 530        799       (269)       (258)        (11)
  Investment securities, held to maturity             395        755       (360)       (404)         44
  Loans                                            60,737     59,369      1,368       4,089      (2,721)
                                                  -----------------------------
      Total interest income                        79,156     77,458      1,698       5,325      (3,627)
                                                  -----------------------------

Interest expense:
  NOW accounts & money market savings              11,593     11,005        588       2,034      (1,446)
  Regular savings                                   2,052      1,987         65         226        (161)
  Time deposits $100 thousand and greater           3,358      3,142        216         484        (268)
  Time deposits under $100 thousand                12,831     13,679       (848)        246      (1,094)
  Short-term borrowed funds                         3,286      5,608     (2,322)     (1,275)     (1,047)
  Long-term debt                                    1,126        947        179         213         (34)
                                                  -----------------------------
      Total interest expense                       34,246     36,368     (2,122)      2,454      (4,576)
                                                  ----------------------------------------------------
Net interest income (FTE)                         $44,910    $41,090    $ 3,820     $ 2,871     $   949
                                                  =====================================================

</TABLE>

Increases and decreases in interest income and interest expense due to both
rate and volume have been allocated to volume on a consistent basis.


TABLE F. Volume and Yield Analysis

<TABLE>
<CAPTION>

                                                     Six Months
                                                     Ended June 30,                         Due to
                                                  ------------------                  -------------------
                                                   1999        1998       Change       Volume      Rate
                                                  -------------------------------------------------------

<S>                                               <C>         <C>         <C>         <C>         <C>
(In thousands)
Interest income (FTE):
  Money market investments                        $    413    $    584    $  (171)    $   (37)    $  (134)
  Securities available for sale, at fair value      34,326      31,849      2,477       4,385      (1,908)
  Loans held for sale                                1,155       1,258       (103)       (130)         27
  Investment securities, held to maturity              791       1,847     (1,056)     (1,136)         80
  Loans                                            120,889     118,039      2,850       8,242      (5,392)
                                                  -------------------------------
      Total interest income                        157,574     153,577      3,997      11,584      (7,587)
                                                  -------------------------------

Interest expense:
  NOW accounts & money market savings               23,136      21,306      1,830       4,456      (2,626)
  Regular savings                                    4,093       3,990        103         408        (305)
  Time deposits $100 thousand and greater            6,637       6,147        490         958        (468)
  Time deposits under $100 thousand                 26,381      27,336       (955)        832      (1,787)
  Short-term borrowed funds                          6,497      11,385     (4,888)     (2,666)     (2,222)
  Long-term debt                                     2,258       1,693        565         641         (76)
                                                  -------------------------------
      Total interest expense                        69,002      71,857     (2,855)      5,526      (8,381)
                                                  -------------------------------------------------------
Net interest income (FTE)                         $ 88,572    $ 81,720    $ 6,852     $ 6,058     $   794
                                                  =======================================================

</TABLE>

Increases and decreases in interest income and interest expense due to both
rate and volume have been allocated to volume on a consistent basis.


TABLE G.  Non-Performing Assets

<TABLE>
<CAPTION>

                                                     At            At           At
                                                  June 30,    December 31,    June 30,
(Dollars in thousands)                              1999          1998          1998
                                                  ------------------------------------

<S>                                               <C>            <C>          <C>
Loans on non-accrual status:
  Commercial, financial and agricultural          $ 4,344        $ 3,816      $ 4,317
  Real estate:
    Construction and land development                 439             19           36
    Commercial                                      6,672          2,518        2,146
    Residential                                     6,754          6,153        7,714
  Other installment                                    --             23          214
                                                  -----------------------------------
      Total non-accrual                            18,209         12,529       14,427

Restructured loans:
  Real estate:
    Commercial                                         --          5,940           --
    Residential                                        30             32           33
  Other installment                                     5              5            5
                                                  -----------------------------------
      Total restructured                               35          5,977           38

Past-due 90 days or more and still accruing:
  Commercial, financial and agricultural              250          1,216          560
  Real estate:
    Commercial                                         --             62          511
    Residential                                        --             36          464
  Credit card receivables                             252            177          197
  Lease receivables                                   224            185           32
  Other installment                                   626            812          538
                                                  -----------------------------------
      Total past-due 90 days or more
       and still accruing                           1,352          2,488        2,302
                                                  -----------------------------------

Total non-performing loans                         19,596         20,994       16,767

Other real estate owned (OREO)                        733          3,324        3,159
Non-real estate and repossessed assets                 --             11          184
                                                  -----------------------------------

Total foreclosed and repossessed assets (F/RA)        733          3,335        3,343
                                                  -----------------------------------

Total non-performing assets                       $20,329        $24,329      $20,110
                                                  ===================================

Allowance for loan losses (All)                    47,135         44,537       40,570
ALL coverage of non-performing loans               240.53%        212.14%      241.97%
Non-performing assets as a % of (loans & F/RA)       0.70           0.86         0.76
Non-performing assets to total assets                0.46           0.55         0.50

Note:  Installment loans are generally charged off at 120 days past due.
</TABLE>


TABLE H.  Summary of Loan Loss Experience

<TABLE>
<CAPTION>

                                                  Six Months        Twelve Months         Six Months
                                                Ended June 30,    Ended December 31,    Ended June 30,
(Dollars in thousands)                               1999                1998                1998
                                                ------------------------------------------------------

                                                  <C>                 <C>                 <C>
Loans outstanding-end of period                   $2,902,439          $2,837,106          $2,658,665
Average loans outstanding-period to date           2,844,234           2,684,169           2,651,915

Allowance for loan losses at beginning
 of period                                            44,537              38,551              38,551

Allowance related to purchase acquisitions                --               2,200                  --

Loans  charged off:
  Commercial, financial and agricultural                (236)             (2,318)             (1,401)
  Real estate:
    Commercial                                          (526)               (209)               (133)
    Residential                                         (380)             (1,916)             (1,006)
                                                  --------------------------------------------------
      Total real estate                                 (906)             (2,125)             (1,139)

  Credit card receivables                               (481)               (878)               (300)
  Lease receivables                                     (503)             (1,646)               (781)
  Other installment                                   (2,464)             (4,763)             (2,037)
                                                  --------------------------------------------------
      Total installment                               (3,448)             (7,287)             (3,118)

      Total loans charged off                         (4,590)            (11,730)             (5,658)
                                                  --------------------------------------------------

Recoveries on loans, previously charged off:
  Commercial, financial and agricultural                 447               1,673                 541
  Real estate:
    Construction and land development                      3                  15                   9
    Commercial                                           396                 542                 337
    Residential                                          200                 829                 413
                                                  --------------------------------------------------
      Total real estate                                  599               1,386                 759

  Credit card receivables                                 73                 111                  42
  Lease receivables                                      404               1,190                 604
  Other installment                                    1,390               1,811               1,056
                                                  --------------------------------------------------
      Total installment                                1,867               3,112               1,702

      Total recoveries on loans                        2,913               6,171               3,002
                                                  --------------------------------------------------

Loans charged off,  net of recoveries                 (1,677)             (5,559)             (2,656)
                                                  --------------------------------------------------

Provision for loan losses                              4,275               9,345               4,675
                                                  --------------------------------------------------

Allowance for loan losses at end of period        $   47,135          $   44,537          $   40,570
                                                  ==================================================

Loans charged off, net (annualized),
 as a % of average total loans                          0.12%               0.21%               0.20%
Provision for loan losses (annualized)
 as a % of average total loans                          0.30                0.35                0.35
Allowance for loan losses
 as a % of period-end total loans                       1.62                1.57                1.53

</TABLE>



TABLE I. Capital Ratios

<TABLE>
<CAPTION>

                                                          At            At            At               At              At
                                                       June 30,      March 31,    December 31,    September 30,     June 30,
(Dollars in thousands)                                   1999          1999          1998             1998            1998
                                                      ----------------------------------------------------------------------

<S>                                                   <C>           <C>            <C>             <C>             <C>
Total risk-adjusted on-balance sheet assets (1)(3)    $2,971,280    $2,866,111     $2,880,854      $2,701,146      $2,696,843
Total risk-adjusted off-balance sheet items              163,762       162,430        174,890         158,508         152,035
                                                      -----------------------------------------------------------------------
Total risk-adjusted assets                            $3,135,042    $3,028,541     $3,055,744      $2,859,654      $2,848,878
                                                      =======================================================================

Total risk-adjusted assets / average total  assets,
  net of fair value adjustments and goodwill (1)(3)        72.89%        70.75%         73.49%          71.25%          71.52%

Total shareholders' equity                            $  329,962    $  324,465     $  321,262      $  334,017      $  320,227
Fair value adjustments (1)                                 8,875        (1,110)        (3,759)        (10,281)         (4,589)
Corporation-obligated manditorily redeemable
  capital securities                                      30,000        30,000         30,000          30,000          30,000
Goodwill                                                 (75,602)      (77,835)       (80,224)        (27,154)        (28,476)
Other Intangibles (3)                                        144           144             70            (145)            137
                                                      -----------------------------------------------------------------------

Total Tier I capital                                     293,379       275,664        267,349         326,437         317,299
Maximum allowance for loan losses (2)                     39,286        37,953         38,275          35,820          35,672
                                                      -----------------------------------------------------------------------
Total capital                                         $  332,665    $  313,617     $  305,624      $  362,257      $  352,971
                                                      =======================================================================

Quarterly average total assets,
  net of fair value adjustments and goodwill (1)(3)   $4,301,187    $4,280,729     $4,158,082      $4,013,768      $3,983,182
Allowance for loan losses                                 47,135        45,658         44,537          41,746          40,570

Total capital to total risk-adjusted assets                10.61%        10.36%         10.00%          12.67%          12.39%
Tier I capital to total risk-adjusted assets                9.36          9.10           8.75           11.42           11.14
Tier I capital to total quarterly average
  adjusted assets (Leverage)                                6.82          6.44           6.43            8.13            7.97

Notes:
<F1>  The market valuation relating to securities available for sale included
      in shareholders' equity and total assets on consolidated balance sheets
      has been excluded in the above ratios.
<F2>  The maximum allowance for loan losses used in calculating total capital
      is the period-end allowance for loan losses or 1.25% of risk-adjusted
      assets prior to the allowance limitation, whichever is lower.
<F3>  Mortgage servicing assets, included in total assets on the consolidating
      balance sheets, that exceed 90% of fair market value of these assets,
      have been excluded in the above ratios.
</TABLE>


SUMMARY OF QUARTERLY FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                                 1999                                     1998
                                                      ---------------------------     --------------------------------------------
(In thousands, except share and per share data)            Q2              Q1              Q4              Q3              Q2
                                                      ---------------------------------------------------------------------------

<S>                                                   <C>             <C>             <C>             <C>             <C>
Statement of Income:
  Interest and dividend income                        $    78,448     $    77,858     $    78,656     $    77,216     $    77,075
  Interest expense                                         34,246          34,756          36,106          36,695          36,368
                                                      ---------------------------------------------------------------------------
    Net interest income                                    44,202          43,102          42,550          40,521          40,707
  Provision for loan losses                                 2,275           2,000           2,335           2,335           2,335
                                                      ---------------------------------------------------------------------------
    Net interest income after provision
     for loan losses                                       41,927          41,102          40,215          38,186          38,372
                                                      ---------------------------------------------------------------------------

  Other operating income:
    Income from trust and investment management fees        4,975           4,833           3,791           2,946           3,139
    Service charges on deposit accounts                     3,402           3,198           2,969           2,861           2,948
    Mortgage banking income                                 1,290           1,324           1,391           1,812           1,195
    Card product income                                       748             613             686             569             542
    ATM income                                                671             619             635             618             523
    Bank owned life insurance                                 552             539             569             567             553
    Net securities transactions                               143             225             526             319             103
    Net gain on curtailment of pension plan                    --           2,577              --              --              --
    Bank owned life insurance claim                         1,389
    All other                                               1,290             901           1,079           1,149           1,105
                                                      ---------------------------------------------------------------------------
      Total other operating income                         14,460          14,829          11,646          10,841          10,108

  Other operating expenses:
    Compensation and employee benefits                     17,344          16,775          17,554          15,705          16,073
    Net occupancy, equipment and software                   5,489           5,483           4,852           4,697           4,732
    Data processing                                         1,767           2,102           1,472           1,756           1,926
    FDIC deposit insurance and other regulatory               306             294             292             284             283
    Other real estate owned and repossession                   53             154             331             239             142
    Amortization of goodwill                                2,234           2,164           1,779           1,321           1,321
    Capital securities                                        789             789             789             789             789
    Merger and acquisition related expenses                    60           1,173          21,968              --              --
    All other                                               8,275           7,340           7,507           6,702           6,931
                                                      ---------------------------------------------------------------------------
      Total other operating expenses                       36,317          36,274          56,544          31,493          32,197
                                                      ---------------------------------------------------------------------------
Income before income tax expense (benefit)                 20,070          19,657          (4,683)         17,534          16,283
Income tax expense (benefit)                                5,935           6,203            (321)          5,416           5,019
                                                      ---------------------------------------------------------------------------
Net income (loss)                                     $    14,135     $    13,454     $    (4,362)    $    12,118     $    11,264
                                                      ===========================================================================

Average Balances:
  Loans                                               $ 2,852,496     $ 2,835,880     $ 2,755,824     $ 2,675,888     $ 2,661,474
  Loans held for sale                                      28,232          36,409          36,490          34,435          41,921
  Securities available for sale, at fair value          1,134,240       1,127,381       1,123,294       1,041,605       1,016,664
  Investment securities, held to maturity                  19,055          20,076          22,965          26,046          38,580
  Money market investments                                 18,208          19,454          22,376          40,415          26,110
                                                      ---------------------------------------------------------------------------
      Total earning assets                              4,052,231       4,039,200       3,960,949       3,818,389       3,784,749
  Other assets                                            315,683         320,474         281,190         233,103         231,505
                                                      ---------------------------------------------------------------------------
      Total assets                                    $ 4,367,914     $ 4,359,674     $ 4,242,139     $ 4,051,492     $ 4,016,254
                                                      ===========================================================================

  Non interest-bearing deposits                       $   494,857     $   495,452     $   477,977     $   431,872     $   410,469
  Interest-bearing deposits                             3,091,763       3,084,735       2,957,813       2,767,727       2,736,741
                                                      ---------------------------------------------------------------------------
      Total deposits                                    3,586,620       3,580,187       3,435,790       3,199,599       3,147,210
  Short-term borrowed funds                               305,526         304,361         320,459         382,313         424,048
  Long-term debt                                           73,337          74,141          74,634          74,534          59,459
  Other liabilities                                        46,330          49,604          43,466          41,825          40,374
  Guaranteed preferred beneficial interests in
   Corporation's junior subordinated debentures            30,000          30,000          30,000          30,000          30,000
  Shareholders' equity                                    326,101         321,381         337,790         323,221         315,163
                                                      ---------------------------------------------------------------------------
      Total liabilities, guaranteed preferred
       beneficial interests in Corporation's junior
       subordinated debentures and shareholders'
       equity                                         $ 4,367,914     $ 4,359,674     $ 4,242,139     $ 4,051,492     $ 4,016,254
                                                      ===========================================================================

Loans charged off, net of recoveries                  $       798     $       879     $     1,743     $     1,160     $     1,654
Non-performing assets, p.e.                                20,329          23,656          24,329          25,694          20,110

Share and Per Share Data:
  Basic wtd. avg. number of shares                     23,379,073      23,353,668      23,203,566      23,226,319      23,258,549
  Basic earnings per share (Basic EPS)                $      0.60     $      0.58     $     (0.19)    $      0.52     $      0.48
  Diluted wtd. avg. number of shares                   23,665,780      23,663,808      23,552,615      23,613,000      23,685,137
  Diluted earnings per share (Diluted EPS)            $      0.60     $      0.57     $     (0.19)    $      0.51     $      0.48

  Tangible book value                                       10.94           10.63           10.40           13.26           12.61

  Closing price at period end                               33.00           28.25           37.63           29.25           37.00

Key Ratios:
  Return on average assets                                   1.30            1.25           (0.41)%          1.19%           1.12%
  Return on average shareholders' equity                    17.39           16.98           (5.12)          14.87           14.34
  Net interest margin, fte                                   4.44            4.39            4.31            4.26            4.36
  Efficiency ratio                                          58.43           58.56           59.71           57.83           59.81
  As a % of risk-adjusted assets, p.e. :
    Total capital                                           10.61           10.36           10.00           12.67           12.39
    Tier 1 capital                                           9.36            9.10            8.75           11.42           11.14
  As a % of quarterly average total assets:
    Tier 1 capital (regulatory leverage)                     6.82            6.44            6.43            8.13            7.97
  Tangible shareholders' equity, to tangible
    assets, p.e.                                             5.86            5.79            5.58            7.60            7.24

Note:  All share and per share data has been restated to give retroactive
       effect to stock splits.
</TABLE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The following matters were submitted to a vote of security holders at the
Annual Meeting of Shareholders of Banknorth Group, Inc. on May 11, 1999:

1.    To elect five directors to serve until the 2002 Annual Meeting of
      Shareholders;

2.    To ratify the selection of the independent public accounting firm of
      KPMG LLP as the Company's external auditors for 1999.

The results of the votes were as follows:

                                                     WITHHELD/     BROKER
        MATTER                 FOR        AGAINST       FOR       NON-VOTE
        ------                 ---        -------    ---------    --------
Election of Directors:
  Kathleen Hoisington       17,826,926        ---     279,411        N/A
  Douglas G. Hyde, Esq.     17,858,632        ---     247,705        N/A
  Anthony J. Mashuta        17,886,977        ---     219,360        N/A
  Angelo Pizzagalli         17,875,024        ---     231,313        N/A
  Thomas P. Salmon, Esq.    17,893,540        ---     212,797        N/A

Selection of Auditors
  KPMG Peat Marwick LLP     18,202,990     42,161      43,186        N/A


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (b)  Reports on Form 8-K

              Form 8-K, filed June 4, 1999, Banknorth announcing that it and
              Peoples Heritage Financial Group, Inc. ("PHFG") had entered
              into an Agreement and Plan of Merger, dated June 1, 1999,
              which sets forth the terms and conditions pursuant to which
              the Company would be merged with and into PHFG and PHFG would
              change its name to "Banknorth Group, Inc."


                                 SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 10-Q to be signed on its
behalf by the undersigned thereunto duly authorized.


                                       BANKNORTH GROUP, INC.
                                            Registrant

Date:  8/13/99                         /S/ William H. Chadwick
                                       -------------------------------------
                                       William H. Chadwick
                                       President and Chief Executive Officer

Date:  8/13/99                         /S/ Thomas J. Pruitt
                                       -------------------------------------
                                       Thomas J. Pruitt
                                       Executive Vice President and Chief
                                       Financial Officer