<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934.
    (Fee Required)
    For the fiscal year ended December 31, 2000

[ ] Transition Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934
    (No Fee Required)

                        Commission File Number 000-23129

                            NORTHWAY FINANCIAL, INC
                            -----------------------
            (Exact name of registrant as specified in its charter)

            New Hampshire                             04-3368579
            -------------                             ----------
            (State or other jurisdiction of           (I.R.S. Employer
            incorporation or organization)            Identification No.)

            9 Main Street
            Berlin, New Hampshire                     03570
            ---------------------                     -----
            Address of principal executive offices    (Zip Code)

                                (603) 752-1171
                                --------------
             (Registrant's telephone number, including area code)

    Securities Registered Pursuant to Section 12(b) of the Act:

    None

    Securities Registered Pursuant to Section 12(g) of the Act:

    Common Stock, Par Value $1.00

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve 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 ninety days.
    YES [X] NO [ ]

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

    The number of shares of common stock held by nonaffiliates of the registrant
as of March 15, 2001 was 1,308,482 for an aggregate market value of $31,482,077.

    At March 15, 2001, there were 1,532,823 shares of common stock outstanding,
par value $1.00 per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Annual Report to Stockholders are incorporated by
reference in Item 1 of Part I and Items 7 and 8 of Part II.

Portions of the registrant's proxy statement for its 2001 Annual Meeting of
Stockholders are incorporated by reference in Items 10, 11, 12 and 13 of
Part III.
<PAGE>

                           FORM 10-K TABLE OF CONTENTS

                            NORTHWAY FINANCIAL, INC.

                                     PART I
                                     ------

ITEM 1   Business.......................................................1

ITEM 2   Properties.....................................................8

ITEM 3   Legal Proceedings..............................................8

ITEM 4   Submission of Matters to a Vote of Security Holders............8

                                     PART II
                                     -------

ITEM 5   Market for the Registrant's Common Stock and Related
         Security Holder Matters........................................8

ITEM 6   Selected Financial Data........................................9

ITEM 7   Management's Discussion and Analysis of Financial
         Condition and Results of Operations...........................11

ITEM 7A  Quantitative and Qualitative Disclosures About Market Risk....11

ITEM 8   Financial Statements and Supplementary Material...............11

ITEM 9   Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure......................................11

                                    PART III
                                    --------

ITEM 10  Directors and Executive Officers of the Registrant............11

ITEM 11  Executive Compensation........................................11

ITEM 12  Security Ownership of Certain Beneficial
         Owners and Management ........................................11

ITEM 13  Certain Relationships and Related Transactions................11

                                     PART IV
                                     -------

ITEM 14  Exhibits, Financial Statement Schedules and Reports
         on Form 8-K ..................................................12

         Signatures....................................................13

<PAGE>

  Certain statements in this report are "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such forward
looking statements may include, but are not limited to, projections of revenue,
income or loss, plans for future operations and acquisitions, and plans related
to products or services of the Company and its subsidiaries. Such forward
looking statements are subject to known and unknown risks, uncertainties and
contingencies, many of which are beyond the control of the Company. To the
extent any such risks, uncertainties and contingencies are realized, the
Company's actual results, performance or achievements could differ materially
from anticipated results, performance or achievements. Factors that might affect
such forward looking statements include, among other things, overall economic
and business conditions, interest rate fluctuations, the demand for the
Company's products and services, competitive factors in the industries in which
the Company competes, changes in government regulations, and the timing, impact
and other uncertainties of future acquisitions.

   In addition to the factors described above, the following are some additional
factors that could cause our financial performance to differ from any forward
looking statement contained herein: i) changes in interest rates and the
relative relationship between the various interest rate indices that the Company
uses; ii) a change in product mix attributable to changing interest rates,
customer preferences or competition; iii) a significant portion of the Company's
loan customers are in the hospitality business and therefore could be affected
by a slower economy, adverse weather conditions and/or rising gasoline prices;
and iv) the effectiveness of advertising, marketing and promotional programs.

   The words "believe," "expect," "anticipate," "intend," "estimate," "project"
and other expressions which are predications of or indicate future events and
trends and which do not relate to historical matters identify forward looking
statements. Reliance should not be placed on forward looking statements because
they involve known or unknown risks, uncertainties and other factors, which may
cause the actual results, performance or achievements of the Company to differ
materially from anticipated future results, performance or achievements
expressed or implied by such forward looking statements. The Company undertakes
no obligation to publicly update or revise any forward looking statement,
whether as a result of new information, future events or otherwise.

   Though the Company has attempted to list comprehensively the factors which
might affect forward looking statements, the Company wishes to caution investors
that other factors may in the future prove to be important in affecting the
Company's results of operations. New factors emerge from time to time and it is
not possible for management to predict all of such factors, nor can it assess
the impact of each such factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from forward looking statements.

                                     PART 1
                                     ------

ITEM 1.  BUSINESS
-----------------

Description of Business
-----------------------

  Northway Financial, Inc. (the "Company") was incorporated on March 7, 1997,
under the laws of the State of New Hampshire, for the purpose of becoming the
holding company of The Berlin City Bank, a New Hampshire chartered bank
headquartered in Berlin, New Hampshire ("BCB") pursuant to a reorganization
transaction (the "BCB Reorganization") by and among the Company, BCB, and a
subsidiary of BCB, and, thereafter, effecting the merger (the "Merger") by and
among the Company, BCB and Pemi Bancorp, Inc. ("PEMI"), and its wholly owned
subsidiary, Pemigewasset National Bank, a national bank headquartered in
Plymouth, New Hampshire ("PNB"). The BCB Reorganization and the Merger became
effective on September 30, 1997. As of such date, BCB and PNB (collectively the
"Banks"), became wholly owned subsidiaries of the Company. Unless the context
otherwise requires, references herein to the "Company" include Northway
Financial, Inc. and its consolidated subsidiaries.

  The Company and its bank subsidiaries derive substantially all of their
revenue and income from the furnishing of bank and bank-related services,
principally to individuals and small and medium sized companies in New
Hampshire. The Banks operate as typical community banking institutions and do
not engage in any specialized finance or capital market activities. The Company
functions primarily as the holder of stock of its subsidiaries and assists the
management of its subsidiaries as appropriate.

  The Company is subject to regulation by the New Hampshire Bank Commissioner,
the Federal Deposit Insurance Corporation, the Comptroller of the Currency of
the United States, and the Board of Governors of the Federal Reserve System. See
"Supervision and Regulation."

  BCB, which was first organized in 1891, and PNB, which was first organized in
1881, are engaged in a general commercial banking business and offer commercial
and construction loans, real estate mortgages, consumer loans, including
personal secured and unsecured loans, and lines of credit. During 1998, the
Company, through the BCB subsidiary, established an indirect lending business
unit in Concord, New Hampshire. The unit has substantially increased the volume
of secured consumer installment loans originated for the Banks and for sale to
third parties. The Banks accept savings, time, demand, NOW and money market
deposit accounts, and offer a variety of banking services including travelers
checks, safe deposit boxes, credit card accounts, overdraft lines of credit and
wire transfer services. The Banks have 18 automatic teller machines to allow
customers limited banking services on a 24 hour basis.

  The Company is a legal entity separate and distinct from its subsidiaries. The
right of the Company to participate in any distribution of assets or earnings of
any subsidiary is subject to the prior claims of creditors of the subsidiary,
except to the extent that claims, if any, of the Company itself as a creditor
may be recognized. See "Supervision and Regulation".

  The following information concerning the Company's investment activities,
lending activities, asset quality and allowance for loan losses should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," appearing under Item 7 and the Company's
Consolidated Financial Statements and Notes thereto.

Investment Activities

  The following table presents the carrying amount of the Company's investment
securities available-for-sale and held-to-maturity as of December 31, 2000, 1999
and 1998 (dollars in thousands):

                                       2000               1999         1998
                                     ---------         ---------     ---------

Available-for-sale:
  US Treasury and other
     US government agencies          $28,780            $26,449       $17,391
  Mortgage-backed securities(1)       14,652             18,813        24,512
  Marketable equity securities         2,409              2,780         2,741
  Nonmarketable equity securities      5,424              4,456         2,038
  Corporate bonds                      1,003                 --            --
  State and political subdivisions     3,444              3,500         3,885
                                     -------            -------       -------
                                      55,712             55,998        50,567
                                     -------            -------       -------
Held-to-maturity:
  Mortgage-backed securities(1)      $ 2,252            $ 3,601       $ 5,501
  State and political subdivisions       500              1,550         1,008
                                     -------            -------       -------
                                       2,752              5,151         6,509
                                     -------            -------       -------
Total investment securities          $58,464            $61,149       $57,076
                                     =======            =======       =======

(1) Includes Collateralized Mortgage Obligations.

<PAGE>

  The following table sets forth the amortized cost of the Company's debt
obligations maturing within stated periods and their related weighted average
yields, reported on a tax equivalent basis, as of December 31, 2000 (dollars in
thousands):

<TABLE>
<CAPTION>
                                                 Maturities
                                  --------------------------------------
                                             One to    Five to     Over
                                   Within     five       ten        ten      Total
                                  One year    years     years      years      Cost
                                  --------   ------    -------     -----     -----
<S>                                 <C>      <C>       <C>        <C>        <C>
Available-for-sale:
US Treasury and other
  US government agencies            $500     $18,496   $ 8,888    $  999     $28,883
Mortgage-backed securities (1)        52         599    12,427     1,669      14,747
Corporate bonds                       --       1,006        --        --       1,006
State and political subdivisions      --         465     1,006     1,895       3,366
                                    ----     -------   -------    ------     -------
                                    $552     $20,566   $22,321    $4,563     $48,002
                                    ====     =======   =======    ======     =======
Market value                        $551     $20,466   $22,252    $4,610     $47,879
                                    ====     =======   =======    ======     =======

Weighted average yield              4.92%       6.21%     6.21%     7.18%       6.29%

Held-to-maturity:
Mortgage-backed securities (1)      $ 28     $   337   $   629    $1,258      $2,252
State and political subdivisions      --          --        --       500         500
                                    ----     -------   -------    ------     -------
                                    $ 28     $   337   $   629    $1,758      $2,752
                                    ====     =======   =======    ======     =======
Market value                        $ 28     $   338   $   624    $1,741      $2,731
                                    ====     =======   =======    ======     =======
Weighted average yield              9.86%       8.60%     7.10%     7.52%       7.58%
</TABLE>

(1) Includes Collateralized Mortgage Obligations

Lending Activities
------------------

  The following table sets forth information with respect to the composition of
the Company's loan portfolio, excluding loans held for sale, as of December 31,
2000, 1999, 1998, 1997 and 1996 (dollars in thousands):

<TABLE>
<CAPTION>
                                                          December 31,
                                       ----------------------------------------------------
                                         2000       1999       1998       1997       1996
                                       --------   --------   --------   --------   --------
<S>                                    <C>        <C>        <C>        <C>        <C>
Real estate:
  Residential                          $129,805   $139,389   $146,603   $152,041   $145,847
  Commercial                            100,608     93,061     77,680    61,873      43,901
  Construction                            5,752      4,360      4,118     5,664       2,329
Commercial                               22,270     28,833     25,874    21,460      27,293
Installment                              28,177     24,147     25,070    23,476      18,733
Indirect installment                     99,359     76,431         18        --          --
Other                                     7,881      7,369      4,795     2,769       2,999
                                       --------   --------   --------   --------   --------
  Total loans                           393,852    373,590    284,158   267,283     241,102
Less:
  Unearned income                           594        824        332       526         719
  Allowance for loan losses               4,354      4,887      4,404     4,156       3,941
                                       --------   --------   --------   --------   --------
                                          4,948      5,711     4 ,736     4,682      4 ,660
                                       --------   --------   --------   --------   --------
Net loans                              $388,904   $367,879   $279,422  $262,601    $236,442
                                       ========   ========   ========  ========    ========
</TABLE>

  The following table presents the maturity distribution of the Company's real
estate construction and commercial loans at December 31, 2000 (dollars in
thousands):
                                             Percent of
                              Amount           Total
                              -------         --------
  Within one year             $ 4,738          16.91%
  One to five years             9,107          32.50
  Over five years              14,177          50.59
                              -------         -------
                              $28,022         100.00%
                              =======         =======


  The Company's real estate construction and commercial loans due after one year
at December 31, 2000 were comprised of the following (dollars in thousands):

                                 Amount
                                -------
  Fixed interest rate           $ 9,332
  Adjustable interest rate       13,952
                                -------
                                $23,284
                                =======

Analysis of the Allowance for Loan Losses
-----------------------------------------

  The following table reflects activity in the Company's allowance for loan
losses for the years ended December 31, 2000, 1999, 1998, 1997 and 1996 (dollars
in thousands):

<TABLE>
<CAPTION>
                                               Years ended December 31,
                                      ------------------------------------------
                                       2000     1999     1998     1997     1996
                                      ------   ------   ------   ------   ------
<S>                                   <C>      <C>      <C>      <C>      <C>
Balance at the beginning of period    $4,887   $4,404   $4,156   $3,941   $3,866
Charge-offs:
  Real estate                            213      159      383      452      583
  Commercial                           1,006       25       67      105       29
  Installment loans to individuals       424      120       74       48       27
  Credit card                             --       --       --        1       11
    Other                                 --       --       --        6       --
                                      ------   ------   ------   ------   ------
     Total                             1,643      304      524      612      650
                                      ------   ------   ------   ------   ------
Recoveries:
  Real estate                             32      213      115      212      160
  Commercial                              --       21       98       55       11
  Installment loans to individuals        96       12       17       19       28
  Credit card                              2        1        2        4       14
    Other                                 --       --       --        2       --
                                      ------   ------   ------   ------   ------
     Total                               130      247      232      292      213
                                      ------   ------   ------   ------   ------
Net charge-offs                        1,513       57      292      320      437
Provision charged to expense             980      540      540      535      512
                                      ------   ------   ------   ------   ------
Balance at the end of period          $4,354   $4,887   $4,404   $4,156   $3,941
                                      ======   ======   ======   ======   ======

Ratio of net charge-offs to average
  loans                                 0.39%    0.02%    0.11%    0.12%    0.20%
</TABLE>

Allocation of the Allowance for Loan Losses
-------------------------------------------

  The following table sets forth the breakdown of the Company's allowance for
loan losses in the Company's portfolio by category of loan and the percentage of
loans in each category to total loans in the respective portfolios at the dates
indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                                                December 31,
                  ----------------------------------------------------------------------------------------------------------
                           2000                1999                1998                1997                   1996
                  -------------------- -------------------- -------------------- --------------------  ---------------------
                           Percent of            Percent of           Percent of          Percent of             Percent of
                         loans in each         loans in each        loans in each       loans in each          loans in each
                          category to           category to          category to         category to            category to
                  Amount  total loans  Amount   total loans Amount   total loans Amount  total loans   Amount   total loans
                  ------ ------------- ------  ------------ ------  ------------ ------ -------------  ------  ------------
<S>               <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>        <C>        <C>
Commercial        $  719       5.7%    $  530       7.7%    $  651       9.1%    $  613       8.0%     $  821       1.3%
Real estate:
  Commercial &
  Construction     1,009      27.0      1,773      26.1      1,325      28.8      1,251      25.3       1,186       9.2
  Residential      1,159      32.9        503      37.3      1,478      51.6      1,395      56.5       1,323      60.5
Installment        1,440      32.4      1,125      26.9        210       8.8        198       8.8         188       7.8
Other                 26       2.0         60       2.0         58       1.7         55       1.0          52       1.2
Unallocated           --       N/A        896       N/A        682       N/A        644       N/A         650       N/A
                  ------     -----     ------     -----     ------     -----     ------     -----      ------     -----
                  $4,354     100.0%    $4,887     100.0%    $4,404     100.0%    $4,156     100.0%     $3,941     100.0%
                  ======     =====     ======     =====     ======     =====     ======     =====      ======     =====
</TABLE>

Deposits
--------

  The information set forth on page 29 of the Company's 2000 Annual Report to
Stockholders is incorporated herein by reference.

Supervision and Regulation
--------------------------
General
-------
  In addition to state and federal laws generally applicable to businesses and
employers, the Company, PNB and BCB are further regulated by federal and state
laws and regulations applicable to financial institutions and their parent
companies. State and federal banking laws have as their principal objective
either the maintenance of safety and soundness of financial institutions and the
federal deposit insurance system or the protection of consumers or classes of
consumers, rather than the protection of stockholders of a bank or its parent
company. To the extent the following discussion describes statutory or
regulatory provisions, it is qualified in its entirety by reference to the
particular statute or regulation.

The Company
-----------
  As a bank holding company registered under the Bank Holding Company Act of
1956, as amended (the "BHC Act"), the Company is subject to substantial
regulation and supervision by the Board of Governors of the Federal Reserve
Board (the "Federal Reserve Board") and is required to file periodic reports and
such additional information as the Federal Reserve Board may require. The
Federal Reserve Board also makes periodic inspections of the Company and its
subsidiaries. Under the BHC Act, the Company is prohibited, with certain
exceptions, from acquiring direct or indirect ownership or control of more than
5 percent of the voting shares of any company which is not a bank and from
engaging in any business other than that of banking, managing or controlling
banks or furnishing services to, or acquiring premises for, its affiliated
banks, except that the Company may engage in and own voting shares of companies
engaging in certain activities determined by the Federal Reserve Board, by order
or by regulation, to be so closely related to banking or to managing or
controlling banks "as to be a proper incident thereto."

  The Gramm-Leach-Bliley Act (the "Act") established a comprehensive framework
to permit affiliations among banks, securities firms, insurance firms and other
financial companies by substantially modifying the BHC Act to authorize bank
holding companies that qualify and elect to become "financial holding companies"
to engage in securities, insurance and other activities that are financial in
nature or incidental to a financial activity and allowing subsidiaries of banks
to engage in a broad range of financial activities that are not permitted for
banks themselves. The activities of bank holding companies would continue to be
limited to activities authorized currently under the BHC Act. The Company is
qualified but has not elected to become a "financial holding company" at this
time and is therefore subject to the restrictions of the BHC Act as outlined
above.

  The Federal Reserve Board has adopted capital adequacy guidelines pursuant to
which it assesses the adequacy of capital in examining and supervising a bank
holding company and in analyzing applications to it under the BHC Act. These
capital adequacy guidelines generally require bank holding companies to maintain
total capital equal to 8% of total risk-adjusted assets and off-balance sheet
items (the "Total Risk-Based Capital Ratio"), with at least one-half of that
amount consisting of Tier I, or core capital, and the remaining amount
consisting of Tier II, or supplementary capital. Tier I capital for bank holding
companies generally consists of the sum of common stockholders' equity and
perpetual preferred stock (subject in the case of the latter to limitations on
the kind and amount of such stocks which may be included as Tier I capital),
less goodwill. Tier II capital generally consists of hybrid capital instruments;
perpetual preferred stock, which is not eligible to be included in Tier I
capital; term subordinated debt and intermediate-term preferred stock; and,
subject to limitations, general allowances for loan losses. Assets are adjusted
under the risk-based guidelines to take into account different risk
characteristics.

  In addition to the risk-based capital requirements, the Federal Reserve Board
requires bank holding companies to maintain a minimum leverage capital ratio of
Tier I capital (defined by reference to the risk-based capital guidelines) to
total assets (the "Leverage Ratio") of 3.0%. Total assets for this purposes does
not include goodwill and any other intangible assets and investments that the
Federal Reserve Board determines should be deducted from Tier I capital. The
Federal Reserve Board has announced that the 3.0% Leverage Ratio requirement is
the minimum for the top-rated bank holding companies without any supervisory,
financial or operational weaknesses or deficiencies or those, which are not
experiencing or anticipating significant growth. The Company, however, expects
to be subjected to required ratios of 4% to 5% or more.

  The Company is currently in compliance with both the Risk-Based Capital Ratio
and the Leverage Ratio requirements. At December 31, 2000, we had a Tier I
Risk-Based Capital Ratio and a Total Risk-Based Capital Ratio equal to 10.37%
and 11.60%, respectively, and a Leverage Ratio equal to 7.42%. U.S. bank
regulatory authorities and international bank supervisory organizations,
principally the Basel Committee on Banking Supervision, currently are
considering changes to the risk-based capital adequacy framework which
ultimately could affect the appropriate capital guidelines.

  The Act and its implementing regulations also contain several other provisions
that will affect the operations of the Company's banking subsidiaries. These
include new customer privacy regulations and requirements, and an increase in
disclosure requirements for The Community Reinvestment Act's ("CRA") related
activities. The Company is in the process of developing practices and procedures
to comply with these provisions and expects to have them in place within the
mandated deadlines required by the Act.

PNB
---
  PNB is a national banking association, organized under the National Bank Act.
As such, its primary regulatory authority is the Comptroller of the Currency of
the United States (the "Comptroller"). The Comptroller regularly examines
national banks and their operations. In addition, operations of national banks
are subject to federal statutes and regulations. Such statutes and regulations
relate to required capital and reserves, investments, loans, mergers, payment of
dividends, issuance of securities and many other aspects of operations. Capital
requirements applicable to PNB are substantially similar to those adopted by the
Federal Reserve Board regarding bank holding companies as described above.

  The Comptroller's approval is required for a national bank to pay dividends if
the total dividends declared by a national bank in any year will exceed the
total of its net profits for that year combined with its retained net profits
for the preceding two years, less any required transfer to surplus. The
Comptroller also has authority to approve or disapprove mergers, consolidations,
the establishment of branches and similar corporate actions. The Comptroller
also has the power to prevent a national bank from engaging in unsafe or unsound
practices or violating applicable laws in conducting its business.

  PNB is also subject to applicable provisions of New Hampshire law insofar as
they do not conflict with or are not otherwise preempted by federal banking law.

BCB
---
  BCB is organized under New Hampshire law and is subject to the regulations of
the New Hampshire Bank Commissioner, the Federal Deposit Insurance Corporation,
and the Federal Reserve Board. BCB's operations are subject to various
requirements and restrictions under the laws of the United States and the State
of New Hampshire, including those related to the maintenance of adequate levels
of capital, the payment of dividends, investments, the nature and amount of
loans which can be originated and the rate of interest that can be charged
thereon, and other activities. Capital requirements applicable to BCB are
substantially similar to those adopted by the Federal Reserve Board regarding
bank holding companies as described above.

  Both BCB and PNB are subject to the provisions of the CRA. Under the terms of
the CRA, the appropriate federal bank regulatory agency is required, in
connection with its examination of a subsidiary institution, to assess such
institution's record in meeting the credit needs of the communities served by
the institution, including those of low and moderate income neighborhoods. The
regulatory agency's assessment of the institution's record is made available to
the public.

  An institution's CRA rating is taken into account by its regulators in
considering various types of applications. In addition, an institution receiving
a rating of substantial noncompliance is subject to civil money penalties or a
cease and desist order under Section 8 of the Federal Deposit Insurance Act
("FDIA"). CRA remains a critical component of the regulatory examination
process. CRA examination results and related concerns have been cited as a
reason to reject and or modify branching and merger applications by various
federal and state banking agencies. Formation of a "financial holding company"
under the Act is also dependent of the maintenance of a "satisfactory" CRA
rating.

  The banking industry in the United States, which includes commercial banks,
savings and loan associations, mutual savings banks, capital stock savings
banks, credit unions, and bank and savings and loan holding companies, is part
of the broader financial services industry which includes insurance companies,
mutual funds, and the brokerage industry, among others. In recent years, intense
market demands and economic pressures have eroded once clearly defined industry
classifications and have forced financial services institutions to diversify
their services, increase returns on deposits, and become more cost effective as
a result of competition with one another and with new types of financial
services companies, including non-bank competitors.

Government Monetary Policy
--------------------------

  The Company's banking subsidiaries are affected by the credit policies of
monetary authorities, including the Federal Reserve Board. An important function
of the Federal Reserve Board is to regulate the national supply of bank credit.
Among the instruments of monetary policy used by the Federal Reserve Board are
open market operations in U. S. Government securities, changes in the discount
and fed funds rates, reserve requirements on member bank deposits, and funds
availability regulations. The monetary policies of the Federal Reserve Board
have in the past had a significant effect on the operations of financial
institutions, including the Company and its subsidiaries, and will continue to
do so in the future. Changing conditions in the national economy and money
markets, as well as the impact of actions by monetary and fiscal authorities,
make it difficult to predict the effect of future changes in interest rates,
deposit levels or loan demand on the business and income of the Company and its
subsidiaries.

Competition
-----------

  The Company's banking subsidiaries face significant competition in their
respective market from commercial banks, savings banks, credit unions, consumer
finance companies, insurance companies, "non-bank banks," mutual funds,
government agencies, investment management companies, investment advisors,
brokers and investment bankers. In addition, increasing consolidation within the
banking and financial services industry, as well as increased competition from
larger regional and out-of-state banking organizations and non-bank providers of
various financial services, may adversely affect the Company's ability to
achieve its financial goals. Federal banking laws permit adequately capitalized
bank holding companies to venture across state lines to offer banking services
through bank subsidiaries to a wider geographic market. Consequently, it is
possible for large organizations to enter many new markets including the markets
served by the Company. Certain of these competitors, by virtue of their size and
resources, may enjoy certain efficiencies and competitive advantages over the
Company in pricing, delivery, and marketing of their products and services. It
is not possible to assess what impact these changes in the regulatory
environment will have on the Company. Many of these large competitors have
significantly more financial resources, larger market share and greater name
recognition in the market areas served by the Company.

  BCB and PNB compete in this environment by providing a broad range of
financial services, competitive interest rates and a personal level of service
that, combined, tend to retain the loyalty of its customers in its market areas
against competitors with far larger resources. To a lesser extent, convenience
of branch locations and hours of operations are also considered competitive
advantages of the Banks.

Employees
---------

  As of December 31, 2000, the Company and its subsidiaries had approximately
240 full-time equivalent employees. The Company considers its employee relations
to be good.

ITEM 2.  PROPERTIES
-------------------

  The Company operates 18 branch offices and a loan origination facility in the
central and northern New Hampshire towns of Berlin, Conway (4), Gorham (2),
Groveton, Littleton, West Ossipee, West Plymouth, Plymouth, Campton, Ashland,
North Woodstock, Tilton (2), Franklin and Concord. The Company also operates a
limited services facility at the Plymouth Regional High School. Thirteen of
these offices, including its main offices in Berlin, New Hampshire and Plymouth,
New Hampshire, are located in properties it owns. The Company leases five of its
branches and the loan origination facility under five-year leases expiring
between May 31, 2001 and November 20, 2004. Thirteen of the Company's branches
have drive-up facilities and all are equipped with automated teller machines.

ITEM 3.  LEGAL PROCEEDINGS
--------------------------

  The Company is not a party to, nor are any of its subsidiaries the subject of,
any material pending legal proceedings, other than ordinary routine litigation
incidental to the business.

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

  No matters were submitted to a vote of security holders during the quarter
ended December 31, 2000.

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
------------------------------------------------------------------------------
MATTERS
-------

  The Company's common stock is traded on The Nasdaq Stock Market, Inc.'s
National Market under the symbol "NWFI." The following table sets forth, for the
periods indicated, the high and low closing sale prices for the common stock, as
reported by the Nasdaq National Market, and the dividends paid on the common
stock:

                                                   Price Per Share
                                         --------------------------------------
                                            Low     High    Dividends Per Share
                                         --------  -------  -------------------
               2000       4th Quarter     $21.50   $24.13        $0.15
                          3rd Quarter     $22.13   $24.75        $0.15
                          2nd Quarter     $20.00   $23.50        $0.15
                          1st Quarter     $20.00   $26.38        $0.15

               1999       4th Quarter     $26.00   $28.75        $0.14
                          3rd Quarter     $26.00   $29.75        $0.14
                          2nd Quarter     $25.25   $30.25        $0.14
                          1st Quarter     $29.75   $31.00        $0.14

  On March 15, 2001, the closing sales price of the common stock on the Nasdaq
National Market was $24.06 per share. As of such date, there were approximately
1,445 holders of record of the Company common stock.

  The Company intends to continue to pay dividends on a quarterly basis subject
to, among other things, the financial condition and earnings of the Company,
capital requirements, and other factors, including applicable governmental
regulations. No dividends will be payable unless declared by the Board of
Directors and then only to the extent funds are legally available for the
payment of such dividends.

ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------

  The following table sets forth the selected consolidated financial information
of the Company for the five years in the period ended December 31, 2000. This
selected consolidated financial information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing under Item 7 and the Company's Consolidated Financial
Statements and Notes thereto. As a result of the Merger described under Item 1,
the selected consolidated financial data for 1997 and 1996 reflects the combined
results of operations and financial position of the Company and PEMI restated
for such periods pursuant to the pooling of interests method of accounting.

<TABLE>
<CAPTION>
At or for the years ended December 31,                  2000       1999       1998       1997       1996
----------------------------------------------------------------------------------------------------------
<S>                                                  <C>         <C>        <C>        <C>        <C>
(Dollars in thousands, except per share data)

Balance Sheet Data:
Total assets                                         $485,144    $462,552   $403,972   $377,866   $372,581
Investment securities available-for-sale               55,712      55,998     50,567     57,141     90,530
Investment securities held-to-maturity                  2,752       5,151      6,509     11,312     12,199
Loans, net of unearned income                         393,258     372,766    283,826    266,757    240,383
Allowance for loan losses                               4,354       4,887      4,404      4,156      3,941
Other real estate owned                                    25         115        158        222        202
Deposit assumption premium                              5,098       1,271        860      1,161      1,462
Deposits (1)                                          391,772     343,029    350,921    322,063    322,315
Securities sold under agreements to repurchase          9,390       7,468      6,791      6,146      4,620
Stockholders' equity                                   41,562      39,286     40,956     37,526     33,663

Income Statement Data:
Net interest and dividend income                     $ 21,253    $ 19,342   $ 17,536   $ 17,027   $ 15,717
Provision for loan losses                                 980         540        540        535        512
Noninterest income                                      2,688       2,722      2,018      1,680      1,602
Noninterest expense                                    16,695      15,798     12,910     11,859     10,976
Net income                                              4,159       3,764      4,068      4,039      3,857

Per Common Share Data:
Net income                                           $   2.61    $   2.25   $   2.35   $   2.33   $   2.23
Cash dividends declared                                  0.60        0.56       0.42       0.55       0.52
Book value                                              26.74       24.32      23.67      21.67      19.44
Tangible book value                                     23.41       23.54      23.18      21.00      18.59

Selected Ratios:
Return on average assets                                 0.86%       0.90%      1.06%      1.07%      1.05%
Return on average equity                                10.29        9.37      10.25      11.14      12.04
Dividend payout                                         22.96       25.03      17.90      23.69      23.13
Average equity to average assets                         8.31        9.62      10.35       9.60       8.69
</TABLE>

(1)  1998 includes a short-term money market deposit of $14,500.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------

   The information set forth on pages 8 through 18 of the Company's 2000 Annual
Report to Stockholders is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

   Information regarding quantitative and qualitative disclosures about market
risk is included in "Management's Discussion and Analysis of Financial Condition
and Results of Operations" appearing under Item 7 of this Annual Report on Form
10-K and is hereby incorporated by reference in this Item 7A.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY MATERIAL
-------------------------------------------------------

   The information set forth on pages 19 through 41 of the Company's 2000 Annual
Report to Stockholders is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------

   None.

<PAGE>

                                    PART III
                                    --------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-----------------------------------------------------------

   The information required by this item is incorporated by reference to the
information set forth under the captions "Information Concerning Directors and
Nominees" and "Executive Officers" in the Company's definitive proxy statement
to be delivered in connection with its 2001 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION
-------------------------------

   The information required by this item is incorporated by reference to the
information set forth under the caption "Executive Compensation" in the
Company's definitive proxy statement to be delivered in connection with its 2001
Annual Meeting of Stockholders, provided however, that the "Report of the Human
Resources and Compensation Committee on Executive Compensation" and the "Stock
Price Performance Graph" contained in such proxy statement are not incorporated
by reference herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

   The information required by this item is incorporated by reference to the
information set forth under the caption "Security Ownership of Management" in
the Company's definitive proxy statement to be delivered in connection with its
2001 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

   The information required by this item is incorporated by reference to the
information set forth under the caption "Certain Relationships and Related
Transactions" in the Company's definitive proxy statement to be delivered in
connection with its 2001 Annual Meeting of Stockholders.

<PAGE>

                                     PART IV
                                     -------

ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
------------------------------------------------------------------------

   (a)The following documents are filed as part of this Annual Report on Form
      10-K:

      (1) Financial Statements:

          Auditor's  Independent  Report set forth on Page 18 of the Company's
          2000 Annual Report to Stockholders

          Consolidated Statements of Financial Condition as of December 31, 2000
          and 1999 set forth on Page 20 of the Company's 2000 Annual Report to
          Stockholders

          Consolidated Statements of Income for the years ended December 31,
          2000, 1999 and 1998 set forth on Page 19 of the Company's 2000 Annual
          Report to Stockholders

          Consolidated Statements of Changes in Stockholders Equity for the
          years ended December 31, 2000, 1999 and 1998 set forth on Page 21 of
          the Company's 2000 Annual Report to Stockholders

          Consolidated Statements of Comprehensive Income for the years ended
          December 31, 2000, 1999 and 1998 set forth on Page 21 of the Company's
          2000 Annual Report to Stockholders

          Consolidated Statements of Cash Flows for the years ended December 31,
          2000, 1999 and 1998 set forth on Page 22 of the Company's 2000 Annual
          Report to Stockholders

          Notes to Consolidated Financial Statements set forth on Pages 23
          through 39 of the Company's 2000 Annual Report to Stockholders

      (2) Financial Statement Schedules:

          None

      (3)The Exhibits which are filed with this report or which are
         incorporated herein by reference are set forth in the Exhibit Index.
         The Exhibit Index is incorporated herein by reference.

   (b) The Company filed no Reports on Form 8-K during the quarter ended
December 31, 2000.

   (c) See Item 14(a)(3) above

   (d) See Item 8 to this Annual Report on Form 10-K

<PAGE>

                                   SIGNATURES

   Pursuant to requirements of Section 13 or 15(d) 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.

                             NORTHWAY FINANCIAL, INC.

   March 20, 2001            BY: /S/ William J. Woodward
                                 ---------------------------------
                                 William J. Woodward
                                 Chairman of the Board, President & Chief
                                 Executive Officer (Principal Executive Officer)

   March 20, 2001            BY: /S/George L. Fredette
                                 ---------------------------------
                                 Senior Vice President, Chief Financial
                                 Officer and Treasurer
                                 (Principal Financial and Accounting Officer)

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

          Signature                       Title                       Date
          ---------                       -----                       ----

/S/ William J. Woodward       Chairman of the Board, President    March 20, 2001
----------------------------  and CEO
William J. Woodward


/S/ Fletcher W. Adams         Vice Chairman of the Board          March 19, 2001
----------------------------
Fletcher W. Adams


/S/ John D. Morris            Director                            March 20, 2001
----------------------------
John D. Morris


/S/ John H. Noyes             Director                            March 20, 2001
----------------------------
John H. Noyes


/S/ Barry J. Kelley           Director                            March 20, 2001
----------------------------
Barry J. Kelley


/S/ Randall G. Labnon         Director                            March 20, 2001
----------------------------
Randall G. Labnon


                              Director                            March __, 2001
----------------------------
Stephen G. Boucher


/S/ Peter H. Bornstein        Director                            March 20, 2001
----------------------------
Peter H. Bornstein


/S/ Charles H. Clifford, Jr.  Director                            March 20, 2001
----------------------------
Charles H. Clifford, Jr.


/S/ Arnold P. Hanson, Jr.     Director                           March 14, 2001
----------------------------
Arnold P. Hanson, Jr.


/S/ Bruce W. Keough           Director                           March 17, 2001
----------------------------
Bruce W. Keough

<PAGE>

                                INDEX OF EXHIBITS

Exhibit Number  Description of Exhibit
--------------  ----------------------
2.1             Agreement and Plan of Merger, dated as of March 14, 1997, by and
                among Northway Financial, Inc., The Berlin City Bank, Pemi
                Bancorp, Inc. and Pemigewasset National Bank (the "Merger
                Agreement") (incorporated by reference to Exhibit 2.1 to
                Registration Statement No. 333-33033).

3.1             Amended and Restated Articles of Incorporation of Northway
                Financial, Inc. (incorporated by reference to Exhibit 3.1 to
                Registration Statement No. 333-33033).

3.2             By-laws of Northway Financial, Inc (incorporated by reference to
                Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
                year ended December 31, 1997).

4               Form of Certificate representing the Company Common Stock
                (reference is also made to Exhibits 3.1 and 3.2) (incorporated
                by reference to Exhibit 4 to Registration Statement No.
                333-33033).

10.1            Employment Agreement for William J. Woodward (incorporated by
                reference to Exhibit 10.1 to the Company's Annual Report on Form
                10-K for the year ended December 31, 1997).

10.2            Employment Agreement for Fletcher W. Adams (incorporated by
                reference to Exhibit 10.2 to the Company's Annual Report on Form
                10-K for the year ended December 31, 1997).

10.3            Amendment to the Employment Agreement for William J. Woodward.
                (incorporated by reference to Exhibit 10.3 to the Company's
                Annual Report on Form 10-K for the year ended December 31,
                1998).(2)

10.4            Amendment to the Employment Agreement for Fletcher W. Adams.
                (incorporated by reference to Exhibit 10.4 to the Company's
                Annual Report on Form 10-K for the year ended December 31,
                1998). (2)

10.5            Northway Financial, Inc. 1999 Stock Option and Grant Plan
                (incorporated by reference to Exhibit 4.1 to Registration
                Statement No. 333-83571 dated July 23,1999). (2)

10.6            Employment Agreement for George L. Fredette (incorporated by
                reference to Exhibit 10.7 to the Company's Annual Report on Form
                10-K for the year ended 1999). (2)

10.7            Form of Key Employee Agreement (incorporated by reference to
                Exhibit 10.8 to the Company's Annual Report on Form 10-K for the
                year ended 1999). (2)

10.8            Form of Collateral Assignment Split Dollar Agreement.(1)(2)

13              Northway Financial, Inc. Annual Report to Stockholders(1)

21              List of Subsidiaries(1)

23              Consent of Shatswell, MacLeod & Company, P.C. (1)

(1)   Filed herewith
(2)   (2) Management contract or compensatory plan required to be filed
      as an exhibit to this form pursuant to Item 14(c) of this report