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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 September 30, 2003
| | -------------------------------------------------



OR



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



| | For the transition period from
 to
| | ----------------------------------



Commission file number 33-22224-B



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Beverly National Corporation

(Name of registrant as specified in its charter)



|Massachusetts                                                  |  | 04-2832201                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|240 Cabot Street Beverly, Massachusetts  |  | 01915     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)



Registrants
telephone number, including area code (978) 922-2100



---



Indicate by check mark whether registrant (l) has filed all reports required to be filed by Section l3 or l5(d) of the
Securities Exchange Act of 1934 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 ̈



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



Yes ̈No  x



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of November 1, 2003. 1,827,540 shares



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##### Table of Contents

BEVERLY NATIONAL CORPORATION



INDEX



|                                                                                                              |  | PAGE
|------------------------------------------------------------------------------------------------------------- |  | ----
|PART I. FINANCIAL INFORMATION                                                                                 |  |     
|                                                                                                              | 
|Item 1.                                                                                                       |  |     
|                                                                                                              | 
|Condensed Financial Information                                                                               |  |     
|                                                                                                              | 
|Consolidated Balance Sheets at September 30, 2003(Unaudited) and December 31, 2002                            |  | 3   
|                                                                                                              | 
|Consolidated Statements of Income for the Nine and Three Months Ended September 30, 2003 and 2002 (Unaudited) |  | 4   
|                                                                                                              | 
|Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002 (Unaudited)       |  | 5   
|                                                                                                              | 
|Notes to Consolidated Financial Statements (Unaudited)                                                        |  | 7   
|                                                                                                              | 
|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  
|                                                                                                              | 
|Item 4.                                                                                                       |  |     
|Controls and Procedures                                                                                       |  | 18  
|                                                                                                              | 
|PART II. OTHER INFORMATION                                                                                    |  |     
|                                                                                                              | 
|Item 1.                                                                                                       |  |     
|Legal Proceedings                                                                                             |  | 19  
|                                                                                                              | 
|Item 2.                                                                                                       |  |     
|Changes in Securities and Use of Proceeds                                                                     |  | 19  
|                                                                                                              | 
|Item 3.                                                                                                       |  |     
|Defaults Upon Senior Securities                                                                               |  | 19  
|                                                                                                              | 
|Item 4.                                                                                                       |  |     
|Submission of Matters to a Vote of Security Holders                                                           |  | 19  
|                                                                                                              | 
|Item 5.                                                                                                       |  |     
|Other Information                                                                                             |  | 19  
|                                                                                                              | 
|Item 6.                                                                                                       |  |     
|Exhibits and Reports on Form 8-K                                                                              |  | 19  
|                                                                                                              | 
|Signatures                                                                                                    |  | 20  



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##### Table of Contents

BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                                                          |  | September 30, 2003 |             |   | December 31, 2002 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ----------------- | -
|                                                                                                                                                                                                                                                          |  | (Unaudited)        |             |   |                   |  
|ASSETS                                                                                                                                                                                                                                                    |  |                    |             |   |                   |  
|Cash and due from banks                                                                                                                                                                                                                                   |  | $                  | 26,772,745  |   |                   | $
|Interest bearing demand deposits with other banks                                                                                                                                                                                                         |  |                    | 177,452     |   |                   |  
|Federal funds sold                                                                                                                                                                                                                                        |  |                    | 23,200,000  |   |                   |  
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|Cash and cash equivalents                                                                                                                                                                                                                                 |  |                    | 50,150,197  |   |                   |  
|Investments in available-for-sale securities(at fair value)                                                                                                                                                                                               |  |                    | 69,706,688  |   |                   |  
|Investments in held-to-maturity securities                                                                                                                                                                                                                |  |                    | 31,602,375  |   |                   |  
|Federal Reserve Bank stock, at cost                                                                                                                                                                                                                       |  |                    | 97,500      |   |                   |  
|Federal Home Loan Bank stock, at cost                                                                                                                                                                                                                     |  |                    | 1,041,900   |   |                   |  
|Loans, net of the allowance for loan losses of $2,207,196 and $2,012,578, respectively                                                                                                                                                                    |  |                    | 173,427,454 |   |                   |  
|Mortgages held for sale                                                                                                                                                                                                                                   |  |                    | 6,701,945   |   |                   |  
|Due from broker                                                                                                                                                                                                                                           |  |                    | 2,011,227   |   |                   |  
|Premises and equipment, net                                                                                                                                                                                                                               |  |                    | 3,971,552   |   |                   |  
|Accrued interest receivable                                                                                                                                                                                                                               |  |                    | 1,299,192   |   |                   |  
|Other assets                                                                                                                                                                                                                                              |  |                    | 4,848,252   |   |                   |  
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|Total assets                                                                                                                                                                                                                                              |  | $                  | 344,858,282 |   |                   | $
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                      |  |                    |             |   |                   |  
|                                                                                                                                                                                                                                                          |  |                   
|Deposits:                                                                                                                                                                                                                                                 |  |                    |             |   |                   |  
|Noninterest bearing                                                                                                                                                                                                                                       |  | $                  | 64,388,621  |   |                   | $
|Interest bearing                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|Regular savings                                                                                                                                                                                                                                           |  |                    | 66,834,290  |   |                   |  
|NOW accounts                                                                                                                                                                                                                                              |  |                    | 65,599,835  |   |                   |  
|Money market accounts                                                                                                                                                                                                                                     |  |                    | 48,586,914  |   |                   |  
|Time deposits                                                                                                                                                                                                                                             |  |                    | 59,343,834  |   |                   |  
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|Total deposits                                                                                                                                                                                                                                            |  |                    | 304,753,494 |   |                   |  
|Securities sold under agreements to repurchase                                                                                                                                                                                                            |  |                    | 10,972,732  |   |                   |  
|Other liabilities                                                                                                                                                                                                                                         |  |                    | 3,147,233   |   |                   |  
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|Total liabilities                                                                                                                                                                                                                                         |  |                    | 318,873,459 |   |                   |  
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|                                                                                                                                                                                                                                                          |  |                   
|Stockholders equity:                                                                                                                                                                                                                                     |  |                    |             |   |                   |  
|Preferred stock, $2.50 par value per share; 300,000 shares authorized; issued and outstanding none                                                                                                                                                        |  |                    |             |   |                   |  
|Common stock, $2.50 par value per share; 2,500,000 shares authorized; issued 1,931,093 as of September 30, 2003 and 1,905,321 as
of December 31, 2002; outstanding 1,817,963 shares as of September 30, 2003 and 1,785,841 shares as of December 31, 2002 |  |                    | 4,827,733   |   |                   |  
|Paid-in Capital                                                                                                                                                                                                                                           |  |                    | 6,103,316   |   |                   |  
|Retained earnings                                                                                                                                                                                                                                         |  |                    | 16,970,282  |   |                   |  
|Treasury stock, at cost (113,130 shares as of September 30, 2003 and 119,480 as of December 31, 2002)                                                                                                                                                     |  |                    | (1,532,133  | ) |                   |  
|Accumulated other comprehensive (loss) income                                                                                                                                                                                                             |  |                    | (384,375    | ) |                   |  
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|Total stockholders equity                                                                                                                                                                                                                                |  |                    | 25,984,823  |   |                   |  
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  
|Total liabilities and stockholders equity                                                                                                                                                                                                                |  | $                  | 344,858,282 |   |                   | $
|                                                                                                                                                                                                                                                          |  |                    |             |   |                   |  



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



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##### Table of Contents

BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



|                                                                 |  | Nine Months Ended  |            | Three Months Ended
|---------------------------------------------------------------- |  | ------------------ | ---------- | ------------------
|                                                                 |  | September 30, 2003 |            |                   
|INTEREST INCOME:                                                 |  |                    |            |                   
|Interest and fees on loans                                       |  | $                  | 9,204,700  |                   
|Interest and dividends on investment securities:                 |  |                    |            |                   
|Taxable                                                          |  |                    | 1,964,759  |                   
|Tax-exempt                                                       |  |                    | 26,007     |                   
|Dividends on marketable equity securities                        |  |                    | 11,757     |                   
|Other interest                                                   |  |                    | 163,393    |                   
|                                                                 |  |                    |            |                   
|Total interest and dividend income                               |  |                    | 11,370,616 |                   
|                                                                 |  |                    |            |                   
|                                                                 |  |                    |            |                   
|INTEREST EXPENSE:                                                |  |                    |            |                   
|Interest on deposits                                             |  |                    | 2,201,770  |                   
|Interest on securities sold under agreements to repurchase       |  |                    | 11,496     |                   
|                                                                 |  |                    |            |                   
|Total interest expense                                           |  |                    | 2,213,266  |                   
|                                                                 |  |                    |            |                   
|                                                                 |  |                    |            |                   
|Net interest and dividend income                                 |  |                    | 9,157,350  |                   
|                                                                 |  |                    |            |                   
|Provision for loan losses                                        |  |                    | 120,000    |                   
|                                                                 |  |                    |            |                   
|Net interest and dividend income after provision for loan losses |  |                    | 9,037,350  |                   
|                                                                 |  |                    |            |                   
|                                                                 |  |                    |            |                   
|NON-INTEREST INCOME:                                             |  |                    |            |                   
|Income from fiduciary activities                                 |  |                    | 1,154,842  |                   
|Service charges on deposit accounts                              |  |                    | 491,592    |                   
|Other deposit fees                                               |  |                    | 294,702    |                   
|Mortgage servicing income (loss)                                 |  |                    | (11,465    | )                 
|Gain on sale of securities                                       |  |                    | 247,982    |                   
|Other income                                                     |  |                    | 499,746    |                   
|                                                                 |  |                    |            |                   
|Total non-interest income                                        |  |                    | 2,677,399  |                   
|                                                                 |  |                    |            |                   
|                                                                 |  |                    |            |                   
|NON-INTEREST EXPENSE:                                            |  |                    |            |                   
|Salaries and employee benefits                                   |  |                    | 5,374,071  |                   
|Occupancy expense                                                |  |                    | 776,378    |                   
|Equipment expense                                                |  |                    | 416,761    |                   
|Contributions                                                    |  |                    | 93,425     |                   
|Data processing fees                                             |  |                    | 414,509    |                   
|Marketing and public relations                                   |  |                    | 251,275    |                   
|Stationery and supplies                                          |  |                    | 172,025    |                   
|Professional fees                                                |  |                    | 312,965    |                   
|Other expense                                                    |  |                    | 1,124,817  |                   
|                                                                 |  |                    |            |                   
|Total non-interest expense                                       |  |                    | 8,936,226  |                   
|                                                                 |  |                    |            |                   
|Income before income taxes                                       |  |                    | 2,778,523  |                   
|Income taxes                                                     |  |                    | 1,070,596  |                   
|                                                                 |  |                    |            |                   
|Net Income                                                       |  | $                  | 1,707,927  |                   
|                                                                 |  |                    |            |                   
|                                                                 |  |                    |            |                   
|Earnings per share:                                              |  |                    |            |                   
|Weighted average shares outstanding                              |  |                    | 1,809,346  |                   
|                                                                 |  |                    |            |                   
|Weighted average diluted shares outstanding                      |  |                    | 1,900,590  |                   
|                                                                 |  |                    |            |                   
|Earnings per common share                                        |  | $                  | 0.94       |                   
|Earnings per common share, assuming dilution                     |  | $                  | 0.90       |                   
|Dividends per share                                              |  | $                  | 0.60       |                   
|Special dividend per share                                       |  | $                  |           |                   



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



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BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2003 and 2002

(Unaudited)





Reconciliation of net income to net cash (used in) provided by operating activities:



|                                                      |  | 9/30/2003 |            |   | 9/30/2002 |  
|----------------------------------------------------- |  | --------- | ---------- | - | --------- | -
|Net income                                            |  | $         | 1,707,927  |   |           | $
|                                                      |  |          
|(Increase) decrease in mortgages held for sale        |  |           | (9,053,446 | ) |           |  
|Benefit for mortgages held for sale                   |  |           | 0          |   |           |  
|Decrease in mortgage servicing rights                 |  |           | 64,086     |   |           |  
|Depreciation expense                                  |  |           | 514,225    |   |           |  
|Gain on sale of securities                            |  |           | (247,982   | ) |           |  
|Provision for loan losses                             |  |           | 120,000    |   |           |  
|(Increase) decrease in interest receivable            |  |           | (150,902   | ) |           |  
|Decrease in interest payable                          |  |           | (43,044    | ) |           |  
|(Decrease) increase in accrued expenses               |  |           | 17,586     |   |           |  
|Decrease (increase) in prepaid expenses               |  |           | 81,573     |   |           |  
|Decrease in other liabilities                         |  |           | (31,194    | ) |           |  
|(Increase) decrease in other assets                   |  |           | 621,586    |   |           |  
|(Increase) decrease in RABBI Trust trading securities |  |           | 37,075     |   |           |  
|Amortization expense of investment securities         |  |           | 498,535    |   |           |  
|Accretion income of investment securities             |  |           | (14,137    | ) |           |  
|Change in deferred loan costs, net                    |  |           | 34,444     |   |           |  
|                                                      |  |           |            |   |           |  
|Total adjustments                                     |  |           | (7,551,595 | ) |           |  
|                                                      |  |           |            |   |           |  
|Net cash (used in) provided by operating activities   |  |           | (5,843,668 | ) |           |  
|                                                      |  |           |            |   |           |  



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BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2003
and 2002

(Unaudited)

(Continued)



|                                                                      |  | 9/30/2003 |             |   | 9/30/2002 |  
|--------------------------------------------------------------------- |  | --------- | ----------- | - | --------- | -
|Cash flows from investing activities:                                 |  |           |             |   |           |  
|Purchases of investment securities available-for-sale                 |  |           | (79,130,367 | ) |           |  
|Purchases of investment securities held-to-maturity                   |  |           | (30,794,954 | ) |           |  
|Proceeds from sales of investment securities available-for-sale       |  |           | 13,875,547  |   |           |  
|Proceeds from payments of investment securities available-for-sale    |  |           | 14,770,691  |   |           |  
|Proceeds from maturities of investment securities available-for-sale  |  |           | 32,686,000  |   |           |  
|Proceeds from maturities of investment securities held-to-maturity    |  |           | 105,000     |   |           |  
|Purchases of Federal Home Loan Bank stock                             |  |           | (297,100    | ) |           |  
|Loan originations and principal collections, net                      |  |           | 21,667,064  |   |           |  
|Recoveries of previously charged off loans                            |  |           | 119,327     |   |           |  
|Capital expenditures                                                  |  |           | (68,081     | ) |           |  
|Premiums paid on life insurance policies                              |  |           | (1,000,000  | ) |           |  
|                                                                      |  |           |             |   |           |  
|                                                                      |  |          
|Net cash (used in) provided by investing activities                   |  |           | (28,066,873 | ) |           |  
|                                                                      |  |           |             |   |           |  
|                                                                      |  |          
|Cash flows from financing activities:                                 |  |           |             |   |           |  
|Net increase in demand deposits, NOW, money market & savings accounts |  |           | 20,638,538  |   |           |  
|Net increase (decrease) in time deposits                              |  |           | 2,852,980   |   |           |  
|Increase in securities sold under agreements to repurchase            |  |           | 10,972,732  |   |           |  
|Proceeds from exercise of stock options                               |  |           | 213,861     |   |           |  
|(Purchase) or proceeds from issuance of treasury stock                |  |           | 85,979      |   |           |  
|Dividends paid                                                        |  |           | (1,085,017  | ) |           |  
|                                                                      |  |           |             |   |           |  
|                                                                      |  |          
|Net cash provided by (used in) financing activities                   |  |           | 33,679,073  |   |           |  
|                                                                      |  |           |             |   |           |  
|                                                                      |  |          
|Net change in cash and cash equivalents                               |  |           | (231,468    | ) |           |  
|Cash & cash equivalents beginning of year                             |  |           | 50,381,665  |   |           |  
|                                                                      |  |           |             |   |           |  
|                                                                      |  |          
|Cash & cash equivalents at September 30:                              |  | $         | 50,150,197  |   |           | $
|                                                                      |  |           |             |   |           |  
|                                                                      |  |          
|Supplemental disclosures:                                             |  |           |             |   |           |  
|Mortgages held for sale transferred to loans                          |  | $         | 3,974,001   |   |           | $
|Interest paid                                                         |  | $         | 2,256,311   |   |           | $
|Income taxes paid                                                     |  | $         | 601,473     |   |           | $



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



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##### Table of Contents

BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(Unaudited)



|1. | BASIS OF PRESENTATION
|-- | ---------------------



The interim condensed consolidated financial statements contained herein are unaudited but, in the opinion of management, include all adjustments which
are necessary to make the financial statements not misleading. All such adjustments are of a normal recurring nature. The results of operations for any interim period are not necessarily indicative of results that may be expected for the year ended
December 31, 2003.



The year-end condensed balance sheet data
was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.



|2. | EARNINGS PER SHARE
|-- | ------------------



Earnings per share calculations are based on the weighted-average number of common shares outstanding during the period.



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. Diluted EPS reflects the potential dilution that could occur if the 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.



|3. | RECLASSIFICATION
|-- | ----------------



Certain amounts for prior periods have been reclassified to be consistent with the current statement presentation.



|4. | IMPACT OF NEW ACCOUNTING STANDARDS
|-- | ----------------------------------



Statement of Financial Accounting Standards No. 141 improves the consistency of the accounting and reporting for business combinations by requiring that
all business combinations be accounted for under a single method  the purchase method. Use of the pooling-of-interests method is no longer permitted. Statement No. 141 requires that the purchase method be used for business combinations
initiated after June 30, 2001. There was no impact on the consolidated financial statements upon adoption of this Statement.



Statement of Financial Accounting Standards No. 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. The
amortization of goodwill ceases upon adoption of the Statement, which for most companies, was January 1, 2002. There was no impact on the consolidated financial statements upon adoption of this Statement.



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In August 2001, the FASB issued SFAS No. 144 Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supercedes SFAS No. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, but retains the basic recognition and measurement model for assets held for use and held for sale. The provisions of SFAS No. 144 were required to be adopted starting with fiscal years beginning after December 15,
2001. This Statement did not have a material impact on the Corporations consolidated financial statements.



In June 2002, the FASB issued SFAS No. 146 Accounting for Costs Associated with Exit or Disposal Activities. This Statement requires that a
liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31,
2002. This Statement did not have any material impact on the Corporations consolidated financial statements.



|5. | STOCK DIVIDEND
|-- | --------------



In May 2002, the Corporation declared a stock dividend of 5%. Earnings per share data and other per share data for prior dates and periods have been
restated to reflect the stock dividend.



|6. | STOCK BASED COMPENSATION
|-- | ------------------------



At September 30, 2003, the Corporation has three stock-based compensation plans. The Corporation accounts for those plans under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. Accordingly, no compensation cost has been recognized for its fixed stock option plans. The following table illustrates
the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based compensation.



|                                                                                                                                   |  | For the Nine Months Ended September 30, |           | For the Three Months Ended September 30,
|---------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | --------- | ----------------------------------------
|                                                                                                                                   |  | 2003                                    |           | 2002                                    
|Net income, as reported                                                                                                            |  | $                                       | 1,707,927 |                                         
|Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                         | 35,181    |                                         
|                                                                                                                                   |  |                                         |           |                                         
|Pro forma net income                                                                                                               |  | $                                       | 1,672,746 |                                         
|                                                                                                                                   |  |                                         |           |                                         
|Earnings per share:                                                                                                                |  |                                         |           |                                         
|Basic  as reported                                                                                                                |  | $                                       | .94       |                                         
|Basic  pro forma                                                                                                                  |  | $                                       | .92       |                                         
|Diluted  as reported                                                                                                              |  | $                                       | .90       |                                         
|Diluted  pro forma                                                                                                                |  | $                                       | .88       |                                         





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PART I  FINANCIAL INFORMATION



|Item 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



Introduction



The following discussion includes Beverly National Corporation (Corporation) and its subsidiaries, Beverly National Bank
(Bank), Cabot Street Realty Trust (CSRT) and the Banks wholly owned subsidiaries, Beverly Community Development Corporation (CDC) and Hannah Insurance Agency, Inc. (Hannah). The purpose of Hannah
is to market life insurance, annuities, and long term care insurance products. The purpose of the CDC is to promote lending in Beverlys low and moderate-income census tracks.



Summary



Net interest and dividend income decreased $269,697 and non-interest income decreased
$103,209 during the first nine months of 2003, as compared with the first nine months of 2002. Non-interest expense decreased $622,655, compared to the corresponding period. As a result, the Corporations net income for the nine months ended
September 30, 2003, was $1,707,927, as compared to the Corporations net income of $1,555,299 for the nine month period ended September 30, 2002. This is an increase of $152,628 or 9.8%. Primary earnings per share totaled $.94 for the nine
months ended September 30, 2003, as compared to primary earnings per share of $.89 for the nine months ended September 30, 2002. On a fully diluted basis, earnings per share for the first nine months of 2003 amounted to $.90 as compared with $.84
for the same period in 2002. The Corporation declared and paid dividends in January, April and July 2003 totaling $.60 per share as compared with $.57 per share during the same period in 2002. In addition, a special cash dividend of $.05 per share
was paid in June 2002 in conjunction with the Banks celebration of its first 200 years of service and operation.



During the first nine months of 2003, the Corporations total assets increased $34,329,928 or 11.1% and amounted to $344,858,282 at September 30, 2003. The change in
assets was reflected in a decrease in Federal Funds Sold of $9,800,000 or 29.7% and an increase of investment securities of $45,590,755 or 80.2%. The changes in the loan portfolio and mortgages held for sale for the nine months were as follows: net
loans decreased $17,966,835 or 9.4% and mortgages held for sale increased $5,079,445 or 313.1%. Approximately $10.9 million in residential mortgages were sold in the secondary market during the first nine months of 2003. Deposits increased
$23,491,518 or 8.4% during the first nine months of 2003. As a result, total deposits increased from $281,261,976 at December 31, 2002 to $304,753,494 at September 30, 2003. Non-interest bearing deposits increased from $59,917,671 at December 31,
2002 to $64,388,621 at September 30, 2003. A new sweep product was introduced during the third quarter 2003. The balance at September 30, 2003 totaled $10,972,732.





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NINE MONTHS ENDED SEPTEMBER
30, 2003

AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2002



Net Interest and Dividend Income



Net interest and dividend income for the nine months ended September 30, 2003 totaled $9,157,350 as compared to $9,427,047 for the same
period in 2002, representing a decrease of $269,697 or 2.9%. Total interest and dividend income equaled $11,370,616 for the nine months ended September 30, 2003 as compared to $12,888,201 for the same time period in 2002, a decrease of $1,517,585 or
11.8%. Loan income for the nine months ended September 30, 2003, totaled $9,204,700 as compared to $10,275,877 for the same time period in 2002. This decrease of $1,071,177 or 10.4% reflects the re-pricing of the portfolio in a lower interest rate
environment and sales of fixed rate residential mortgages. Interest and dividends on taxable securities for the nine months ended September 30, 2003 totaled $1,964,759 as compared to $2,348,370 for the same period in 2002. This is a decrease of
$383,611 or 16.4% and is attributable to a lower interest rate environment. The interest and dividends on tax-exempt securities increased $4,741 or 22.3% during the first nine months of 2003 as compared with the same period of 2002. The other
interest earned including Federal Funds Sold, totaled $163,393 for the nine months ended September 30, 2003 as compared to $236,978 the same time period in 2002 due to the lower interest rate environment.



Deposit interest expense equaled $2,201,770 for the nine months ended September 30, 2003, as
compared to $3,461,154 for the same period in 2002. This decrease of $1,259,384 or 36.4% reflects the current strategy of managing the cost of funds of the Bank, in a lower rate environment. The Bank generally pays competitive rates for its deposit
base in the local market.



Provision for
Loan Losses



Credit risk is inherent in the business of extending loans.
The Bank maintains an allowance or reserve for credit losses through charges to earnings. The loan loss provision for the nine months ended September 30, 2003 was $120,000 as compared to $214,890 for the same period in 2002. Managements
assessment of the potential for continued weakness in the economy and the potential erosion of collateral values were the primary factors that warranted the provision despite the current sound quality of the Banks portfolio. (See
Allowance for Loan Losses).



Non-interest Income



Non-interest income totaled $2,677,399
for the nine months ended September 30, 2003 as compared to $2,780,608 for the nine months ended September 30, 2002. This is a decrease of $103,209 or 3.7%. Income from fiduciary activities totaled $1,154,842 for the nine months ended September 30,
2003 as compared to $1,229,927 for the nine months ended September 30, 2002. This decrease of $75,085 or 6.1% can be attributed to the lower market values of the trust department holdings upon which trust fees are based and their effect on the trust
portfolio. Service charges on deposit accounts totaled $491,592 for the nine months ended September 30, 2003, as compared to $374,470 for the same time period in 2002. This increase of $117,122 or



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31.3% is due to increased service charges for traditional and electronic banking along with a higher number of accounts
serviced. Other deposit fees increased $45,923 or 18.5% for the nine months ended September 30, 2003 as compared to the same time period in 2002. The mortgage servicing income decreased $108,918 for the nine months ended September 30, 2003 as
compared to September 30, 2002. This decrease was due to a high level of mortgages paid off in comparison to new loans booked. Gain on sale of securities totaled $247,982 for the nine months ending September 30, 2003 as compared to gain on sale of
securities of $299,567 for the corresponding period in 2002. Other income for the nine-month period ended September 30, 2003 totaled $499,746 as compared to $530,412 for the nine-month period ended September 30, 2002, a decrease of $30,666 or 5.8%.



Non-interest Expense



Non-interest expense totaled $8,936,226 for the nine months ended September 30, 2003, as
compared to $9,558,881 for the same time period in 2002. This is a decrease of $622,655 or 6.5%. This decrease is primarily attributed to stronger cost controls. Salaries and benefits totaled $5,374,071 for the nine months ended September 30, 2003
and $5,579,266 for the same time period in 2002. This is a decrease of $205,195 or 3.7% due to adjustments to fringe benefits. Occupancy expense totaled $776,378 for the nine months ended September 30, 2003 as compared to $777,591 for the same
period in 2002, which is a decrease of $1,213 or 0.2%. This is due to lower repair and maintenance costs. The costs of equipment totaled $416,761 for the nine months ended September 30, 2003 as compared to $490,114 for the same period in 2002.
Decreased equipment depreciation and maintenance costs created this situation. Data processing fees totaled $414,509 for the nine months ended September 30, 2003 as compared to $431,062 for the corresponding time in 2002. This is a decrease of
$16,553 or 3.8%, which is due to a renegotiated data processing contract. Professional fees decreased $124,363 or 28.4% due to reduced legal fees and no recruiting expenses in 2003. Stationery and supplies increased $19,096 for the nine months ended
September 30, 2003 as compared to the same time period in 2002. Contributions decreased $28,616 or 23.5% for the nine months ended September 30, 2003 as compared to the same time period in 2002. Marketing and public relations decreased $43,552 or
14.8% for the nine months ended September 30, 2003 as compared to the same time period in 2002. This is due to additional non-recurring 2002 expenses related to the 200thanniversary celebration of the Corporations main subsidiary Beverly National Bank. Other expenses totaled $1,124,817 for the nine months ended September
30, 2003 as compared to $1,273,723 for the same period in 2002. This reflects a decrease of $148,906 or 11.7%.



Income Taxes



The income tax provision for the nine months ended September 30, 2003 totaled $1,070,596 in comparison to an income tax provision of $878,585 for the same time period in
2002. This reflects an increase of taxable income.



Net Income



Net income amounted to $1,707,927 for the nine
months ended September 30, 2003 as compared to net income of $1,555,299 for the same period in 2002, which is an increase of $152,628 or 9.8%. The earnings increase is primarily due to higher service charges on deposit accounts and cost control on
non-interest expense for the first nine months of 2003 as compared to the corresponding period in 2002.



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THREE MONTHS ENDED SEPTEMBER 30, 2003

AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2002



Net Interest and Dividend Income



Net interest and dividend income for the three months ended September 30, 2003 totaled $3,070,227 as compared to $3,165,240 for the same period in 2002, representing a
decrease of $95,013 or 3.0%. Total interest and dividend income equaled $3,727,208 for the three months ended September 30, 2003 as compared to $4,189,923 for the same time period in 2002, representing a decrease of $462,715 or 11.0%. Loan income
for the three months ended September 30, 2003, totaled $2,941,141 as compared to $3,463,589 for the same time period in 2002. This decrease of $522,448 or 15.1% reflects the re-pricing of the portfolio in a lower interest rate environment. Interest
and dividends on taxable securities for the three months ended September 30, 2003 totaled $718,207 as compared to $590,171 for the same period in 2002. This is an increase of $128,036 or 21.7% and is attributable to a higher volume of investment
balances in a lower interest rate environment. The interest and dividends on tax-exempt securities increased $2,579 or 40.3% during the third quarter of 2003 as compared with the same quarter of 2002. The other interest earned including Federal
Funds Sold decreased $72,579 or 56.9% for the three months ended September 30, 2003 when compared to the same time period in 2002 due to a lower interest rate environment.



Deposit interest expense equaled $645,800 for the three months ended September 30, 2003, as compared to $1,024,683 for the same period in
2002. This decrease of $378,883 or 37.0% reflects the current strategy of managing the cost of funds of the Bank, in a lower rate environment. The Bank generally pays competitive rates for its deposit base in the local market.



Provision for Loan Losses



Credit risk is inherent in the business of extending loans. The Bank maintains an allowance
or reserve for credit losses through charges to earnings. There was no loan loss provision for the three months ended September 30, 2003, as compared to $69,000 for the same period in 2002.



Non-interest Income



Non-interest income totaled $644,348 for the three months ended September 30, 2003 as
compared to $1,014,023 for the three months ended September 30, 2002. This is a decrease of $369,675 or 36.5%. Income from fiduciary activities totaled $371,774 for the three months ended September 30, 2003 as compared to $388,440 for the three
months ended September 2002. This decrease of $16,666 or 4.3% can be attributed to the lower market values of the trust departments holdings upon which trust fees are based and their effect on the trust portfolio. Service charges on deposit
accounts totaled $165,434 for the three months ended September 30, 2003, as compared to $133,244 for the



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same time period in 2002. This increase of $32,190 or 24.2% is due to increased service charges for traditional and
electronic banking along with a higher number of accounts serviced. Other deposit fees increased $4,985 or 5.5% for the three months ended September 30, 2003 as compared to the same time period in 2002. The mortgage servicing income decreased
$62,252 for the three months ended September 30, 2003 as compared to September 30, 2002. This is due to a higher volume of paid off mortgages. Gain on sale of securities totaled $27,379 for the three months ending September 30, 2003 as compared to
gains on sale of securities of $206,898 for the corresponding period in 2002. Other income for the three-month period ended September 30, 2003 totaled $32,947 as compared to $181,360 for the three-month period ended September 30, 2002, a decrease of
$148,413 or 81.8%. This variance is primarily due to lower gains posted in 2003 on the sales of mortgages.



Non-interest Expense



Non-interest expense totaled $2,812,306 for the three months ended September 30, 2003, as compared to $3,149,036 for the same time period in 2002. This is a decrease of
$336,730 or 10.7%. This decrease is primarily attributed to new cost controls. Salaries and benefits totaled $1,643,989 for the three months ended September 30, 2003 and $1,757,233 for the same time period in 2002. This decrease of $113,244 or 6.4%
is due to adjustments to employee benefits. Occupancy expense totaled $251,756 for the three months ended September 30, 2003 as compared to $260,089 for the same period in 2002, which is a decrease of $8,333 or 3.2%. This is due to decreased rent,
repair and maintenance costs. The costs of equipment totaled $124,492 for the three months ended September 30, 2003 as compared to $163,869 for the same period in 2002. Decreased equipment depreciation and maintenance costs created this situation.
Data processing fees totaled $136,906 for the three months ended September 30, 2003 as compared to $123,373 for the corresponding time in 2002. This is an increase of $13,533 or 11.0%, which is due to higher volumes of accounts and additional
services used. Professional fees decreased $35,487 or 20.9% due to lower legal expenses and no recruiting expenses in 2003. Stationery and supplies increased $17,594 for the three months ended September 30, 2003 as compared to the same time period
in 2002. Contributions decreased $36,812 or 53.5% for the three months ended September 30, 2003 as compared to the same time period in 2002. Marketing and public relations decreased $23,169 or 24.1% for the three months ended September 30, 2003 as
compared to the same time period in 2002. This is due to additional non-recurring 2002 expenses related to the 200thanniversary celebration of the Corporations main subsidiary, Beverly National Bank. Other expenses totaled $350,312 for the three months ended September 30, 2003 as compared to $461,747 for the same period in 2002. This reflects a decrease of
$111,435 or 24.1%.



Income Taxes



The income tax provision for the three months ended September 30, 2003
totaled $343,500 in comparison to an income tax provision of $360,800 for the same time period in 2002. This reflects a decrease of taxable income.



Net Income



Net income amounted to $558,769 for the three months ended September 30, 2003 as compared to net income of $600,427 for the same period in 2002, which is a decrease of
$41,658 or 6.9%. The earnings decrease is primarily due to a a tight net interest margin, lower gain on mortgage sales, lower gain on sales of securities, despite higher service charges on deposit accounts and a vigorous focus on cost control for
the third quarter 2003 as compared to the corresponding period in 2002.







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Allowance for Loan Losses



The Bank formally determines the adequacy of the allowance for loan losses on a quarterly
basis. This determination is based on assessment of credit quality or risk rating of loans. Loans are initially risk rated when originated and are reviewed periodically. If there is deterioration in the credit, the risk rating is
adjusted accordingly.



The allowance also includes a component resulting from
the application of the measurement criteria of Statements of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan (SFAS 114). Impaired loans receive individual evaluation of the allowance necessary on
a quarterly basis. Impaired loans are defined in the Banks Loan Policy as those instances in which it is probable that the Bank will not be able to collect all principal and interest due according to the terms of the note.



Commercial loans and residential mortgages are considered to be impaired under any one of the
following circumstances: Non-accrual status; Loans over 90 days delinquent; Troubled debt restructures consummated after December 31, 1994; or Loans classified as doubtful, meaning that they have weaknesses which make collection or
liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.



An individual allowance for an impaired loan is based upon an assessment of the present value of expected future cash flows discounted at the loans effective
interest rate or the fair value of the collateral if the loan is collateral dependent.



The loss factor applied as a general allowance is determined by a periodic analysis of the Allowance for Loan Losses. This analysis considers historical loan losses and delinquency figures. It also looks at delinquency trends.



Concentrations of credit and local economic factors are also evaluated on a periodic
basis. Historical average net losses by loan type are examined and any identified trends are assessed. The Banks loan mix over that same period of time is also analyzed. A loan loss allocation is made for each type of loan and multiplied by
the loan mix percentage for each loan type to produce a weighted average factor.



At September 30, 2003, the allowance for loan losses totaled $2,207,196 representing 352.2% of non-performing loans. Non-performing loans totaled $626,627, which represented 0.34% of total loans and mortgages held for sale. At September 30,
2002, the allowance for loan losses amounted to $1,963,138, representing 319% of non-performing loans. At September 30, 2002, non-performing loans totaled $614,569, which represented 0.31% of total loans and mortgages held for sale. A total of
$44,709 of loans were charged off by the Bank during the first nine months of 2003 as compared to $473,075 charged off during the corresponding period in 2002. A total of $119,327 was recovered of previously charged-off loans during the first nine
months ended September 30, 2003 compared to $238,837 recovered during the corresponding period of 2002. Management believes that the allowance for loan losses is adequate. Using the best available information, no assurances can be given that future
additions to the allowance will not be necessary based on changes in economic and real estate market conditions, further information obtained regarding problem loans, identification of additional problem loans and other factors,



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both within and outside of managements control. The overall level of non-performing loans remains low. Accordingly,
while the overall quality of the loan portfolio remains strong, management will continue to monitor economic conditions and the performance of the portfolio in order to maintain an adequate allowance for loan losses. Additionally, with expectations
of the Bank to grow its loan portfolio, ongoing periodic provisions to the allowance are likely to be necessary to maintain adequate coverage ratios.



Capital Resources



As of September 30, 2003, the Corporation had total capital in the amount of $25,984,823 as compared with $25,433,145 at December 31, 2002, which represents an increase
of $551,678 or 2.2%. Generally, banks are required to maintain Tier 1 capital at a level equal to or greater than 4.0% of their total assets. As of September 30, 2003, the Banks Tier 1 capital amounted to 7.04% of total assets. At September
30, 2003, the Banks ratio of risk-based capital to risk weighted assets amounted to 13.29%, which satisfies the applicable risk based capital requirements. As of December 31, 2002, the Banks Tier 1 capital amounted to 6.78% of total
assets and risk-based capital amounted to 12.10% of total risk based assets.



Generally, bank holding companies are required to maintain Tier 1 capital at a level equal to or greater than 4.0% of their total assets. As of September 30, 2003, the Corporations Tier 1 capital amounted to 7.75% of total assets. At
September 30, 2003, the Corporations ratio of risk-based capital to risk weighted assets amounted to 14.47%, which satisfies the applicable risk based capital requirements. As of December 31, 2002, the Corporations Tier 1 capital
amounted to 7.87% of total assets and risk-based capital amounted to 13.79% of total risk based assets.



The capital ratios of the Corporation and the Bank exceed all regulatory requirements, and both institutions are considered to be well capitalized by their respective federal bank supervisory agencies.



Liquidity



The primary function of asset/liability management is to assure adequate liquidity and
maintain an appropriate balance between interest-sensitive earning assets and interest-bearing liabilities. Liquidity management involves the ability to meet the cash flow requirements of customers who may be either depositors wanting to withdraw
funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. The Corporations interest rate sensitivity management practices seek to provide consistency in the maintenance of net interest margins and
to foster the sustainable growth of net interest income despite changing interest rates.



Certain marketable investment securities, particularly those of shorter maturities, are the principal source of asset liquidity. The Corporation maintains such securities in an available for sale account as a
liquidity resource. Securities maturing in one year or less amounted to $3,380,280 at September 30, 2003 or 3.3% of the investment securities portfolio, and $3,134,580 at December 31, 2002, representing 5.6% of the investment securities portfolio.
Assets such as federal funds sold, mortgages held for sale, payments of mortgage-backed securities, as well as maturing loans are also sources of liquidity. The Corporations goals and general practices are to be substantially neutral with
respect to interest rate sensitivity and maintain a net cumulative gap at one year of less than 15% of total earning



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assets. The Corporations current practices are consistent with these objectives.



Forward-Looking Statements



This Form 10-Q and future filings made by the Corporation with the Securities and Exchange
Commission, as well as other filings, reports and press releases made or issued by the Corporation and the Bank, and oral statements made by executive officers of the Corporation and the Bank, may include forward-looking statements relating to such
matters as:



| | (a) | assumptions concerning future economic and business conditions and their effect on the economy in general and on the markets in which the Corporation and the Bank do business, and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | expectations for revenues and earnings for the Corporation and Bank.
| | --- | --------------------------------------------------------------------



Such forward-looking statements are based on assumptions rather than historical or current facts and, therefore, are inherently uncertain and subject to risk. For those
statements, the Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Act of 1995.



The Corporation notes that a variety of factors could cause the actual results or experience to differ materially from the anticipated results or other expectations
described or implied by such forward-looking statements. The risks and uncertainties that may affect the operation, performance, development and results of the Corporations and Banks business include the following:



| | (a) | the risk of adverse changes in business conditions in the banking industry generally and in the specific markets in which the Bank operates;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | changes in the legislative and regulatory environment that negatively impact the Corporation and Bank through increased operating expenses;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | increased competition from other financial and non-financial institutions;
| | --- | --------------------------------------------------------------------------



| | (d) | the impact of technological advances; and
| | --- | -----------------------------------------



| | (e) | other risks detailed from time to time in the Corporations filings with the Securities and Exchange Commission.
| | --- | ----------------------------------------------------------------------------------------------------------------



Such developments could have an adverse impact on the Corporations and the Banks
financial position and results of operation.



|I
TEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- |  | ----------------------------------------------------------



Market risk is the risk of loss from adverse changes in market prices. In particular, the market price of interest-earning assets and liabilities may be affected by
changes in interest rates. Since net interest income (the difference or spread between the interest earned on loans and investments and the interest paid on deposits and borrowings) is the Corporations primary source of revenue, interest rate
risk is the most significant non-credit related market risk to which the Corporation is exposed. Net interest income is affected by changes in interest rates as well as fluctuations in the level and duration of the Corporations assets and
liabilities.



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Interest rate risk is the exposure of net interest income to adverse movements in interest rates. In addition to directly
impacting net interest income, changes in interest rates can also affect the amount of new loan originations, the ability of borrowers to repay variable rate loans, the volume of loan prepayments and re-financings, the carrying value of investment
securities classified as available for sale and the flow and mix of deposits.



The Corporations Asset/Liability Management Committee, comprised of the President and Chief Executive Officer of the Corporation, the Senior Vice President and Chief Financial Officer, the Senior Vice President and Senior Lending
Officer, and marketing, retail and finance officers, is responsible for managing interest rate risk in accordance with policies approved by the Board of Directors regarding acceptable levels of interest rate risk, liquidity, and capital. This
committee generally meets weekly and sets the rates paid on deposits, approves loan pricing and reviews investment transactions. This Asset/Liability Management Committee reports to the Risk Management Committee, which is comprised of several
Directors, the President and Chief Executive Officer, the Senior Vice President and Chief Financial Officer, and the Senior Vice President and Senior Lender.



The Corporation is subject to interest rate risk in the event that rates either increase or decrease. In the event that interest rates increase, the value of net assets
(the liquidation value of stockholders equity) would increase because the Corporation is asset sensitive, the assets will re-price faster than liabilities. At September 30, 2003, it is estimated that an increase in interest rates of 200 basis
points (for example, an increase in the prime rate from 4.25% to 6.25%) would increase the value of net interest income by $382,358. If interest rates were to decrease, the value of net interest income would decrease.



Although the value of net assets is subject to risk if interest rates rise (but not if rates
fall) the opposite is true of the Corporations earnings. If interest rates were to increase, net interest income would increase because the Corporation has more interest-earning assets which would re-price than it has interest-bearing
liabilities which would re-price. As a result, net interest income is instead subject to the risk of a decline in rates. Not only are there fewer interest-bearing liabilities to re-price, but many of these liabilities could not re-price much lower
because the rates paid on them are already low. Accordingly, if interest rates were to decrease by 200 basis points (for example, a decrease in the prime rate from 4.25% to 2.25%) it is estimated that net interest income would decrease by $936,306.
On the other hand, if interest rates were to increase, net interest income would be expected to increase.



At September 30, 2003, it was estimated that the value of the net assets of the Corporation would increase by $1,123,907 if interest rates were to increase by 200 basis points and that the Corporations net
assets of the corporation would increase by $7,796,106 if interest rates were to decline by 200 basis points. The year-to-year change in these estimates is a result of increased volume in longer term assets which would lengthen the duration of the
net assets of the Corporation.



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##### Table of Contents

|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



The Corporation maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Corporations Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to the Corporations management, including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure based closely on the definition of disclosure controls and procedures in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.



As of the
quarter ended September 30, 2003, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporations management, including the Corporations Chief Executive Officer and the Corporations
Chief Financial Officer, of the effectiveness of the design and operation of the Corporations disclosure controls and procedures. Based on the foregoing, the Corporations Chief Executive Officer and Chief Financial Officer concluded that
the Corporations disclosure controls and procedures were effective.



During the quarter ended September 30, 2003, there were no significant changes in the Corporations internal control over financial reporting that has materially affected, or is reasonably likely to materially affect the internal
control over financial reporting subsequent to the date the Corporation completed its evaluation. Therefore, no corrective actions were taken.



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##### Table of Contents

PART II  Other Information



|Item 1. |  | Legal Proceedings                                   |  | None
|------- |  | --------------------------------------------------- |  | ----
|        |  |                                                    
|Item 2. |  | Changes in Securities and Use of Proceeds           |  | None
|        |  |                                                    
|Item 3. |  | Defaults Upon Senior Securities                     |  | None
|        |  |                                                    
|Item 4. |  | Submission of Matters to a Vote of Security Holders |  | None
|        |  |                                                    
|Item 5. |  | Other Information                                   |  | None
|        |  |                                                    
|Item 6. |  | Exhibits and Reports on Form 8-K                    |  |     



a.
Exhibits



10.32 Donat A. Fournier Salary Continuation
Agreement dated August 11, 2003



11.0 Computation of Per Share
Earnings



31.1-Rule
13a-14(a)/15d-14(a)    Certification



31.2-Rule 13a-14(a)/15d-14(a)    Certification



32.1-Section 1350 Certifications



b. Reports on Form 8-K:



The
Corporation filed the following reports on Form 8-K during the quarter ended September 30, 2003:



1. The Corporation filed a Form 8-K on July 17, 2003 to report that the Corporation had issued a press release related to its earnings and dividend
payment.



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SIGNATURES



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



|                        |  |  |  | BEVERLY NATIONAL CORPORATION (Registrant)
|----------------------- |  |  |  | -----------------------------------------
|                        |  |  | 
|Date: November 12, 2003 |  |  |  | By:                                      
|                        |  |  |  |                                          
|                        |  |  | 
|Date: November 12, 2003 |  |  |  | By:                                      
|                        |  |  |  |                                          



20