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

                                    FORM 10-Q

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

               For the Quarterly period ended: September 30, 2005

|_|   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: 0-28815

                     FIRST LITCHFIELD FINANCIAL CORPORATION
                     --------------------------------------
             (Exact name of Registrant as specified in its Charter)

                Delaware                                      06-1241321
                --------                                      ----------
    (State or other jurisdiction of                        (I.R.S. Employer
     incorporation of organization)                       Identification No.)

   13 North Street, Litchfield, CT                                06759
   -------------------------------                                -----
(Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code: (860) 567-8752

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 past 12 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 a shell company (as defined in
Exchange Act Rule 12b-2). Yes |_|   No |X|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes |_| No |X|

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common equity,  as of the latest  practicable  date:  2,032,342 shares of Common
Stock, par value $.01 per share, were outstanding at October 31, 2005.

<PAGE>
                                                                               2


                     FIRST LITCHFIELD FINANCIAL CORPORATION
                                    FORM 10-Q
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Part I - Consolidated Financial Information

Item 1 - Financial Statements

         Consolidated Balance Sheets - September 30, 2005 (unaudited) and
         December 31, 2004 .....................................................................     3

         Consolidated Statements of Income - Three and nine months ended
         September 30, 2005 and 2004 (unaudited) ...............................................     4

         Consolidated Statements of Comprehensive Income (Loss) - Three and nine
            months ended September 30, 2005 and 2004 (unaudited) ...............................     5

         Consolidated Statements of Cash Flows - Nine months ended
         September 30, 2005 and 2004 (unaudited) ...............................................     6

         Notes to Consolidated Financial Statements ............................................     7

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

Item 3 - Quantitative and Qualitative Disclosures about Market Risk ............................    26

Item 4 - Controls and Procedures ...............................................................    27

Part II - Other Information

        Item 1 - Legal Proceedings .............................................................    27

        Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds ...................    28

        Item 3 - Defaults Upon Senior Securities ...............................................    28

        Item 4 - Submission of Matters to a Vote of Security Holders ...........................    28

        Item 5 - Other Information .............................................................    28

        Item 6 - Exhibits ......................................................................    28

Signatures .....................................................................................    36
</TABLE>

<PAGE>
                                                                               3


FIRST LITCHFIELD FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               September 30,          December 31,
                                                                                    2005                  2004
                                                                               -------------         -------------
                                                                                (Unaudited)
<S>                                                                            <C>                   <C>
ASSETS
    Cash and due from banks                                                    $  16,612,139         $  12,222,713
                                                                               -------------         -------------
                                              CASH AND CASH EQUIVALENTS           16,612,139            12,222,713
                                                                               -------------         -------------
   Securities:
     Available for sale securities, at fair value                                168,570,305           173,793,755
     Held to maturity securities (fair value $49,989-2005 and $70,196-2004)           50,764                70,946
                                                                               -------------         -------------
                                                       TOTAL SECURITIES          168,621,069           173,864,701
                                                                               -------------         -------------

   Federal Home Loan Bank stock, at cost                                           3,911,700             3,182,900
   Federal Reserve Bank stock, at cost                                               225,850               225,850
   Other restricted stock, at cost                                                    50,000                50,000

   Loans Receivable, net of allowance for loan losses of
                 $1,691,553 -2005, $1,389,947-2004
                                                              NET LOANS          245,235,657           217,028,751

   Premises and equipment, net                                                     3,872,950             2,769,827
   Deferred income taxes                                                           1,410,423               908,023
   Accrued interest receivable                                                     2,254,223             2,005,064
   Cash surrender value of insurance                                               9,210,409             8,906,407
   Other assets                                                                    3,282,528             3,140,511
                                                                               -------------         -------------

                                                           TOTAL ASSETS        $ 454,686,948         $ 424,304,747
                                                                               =============         =============

LIABILITIES
   Deposits:
     Noninterest bearing                                                       $  63,788,343         $  58,409,685
     Interest bearing                                                            221,966,208           242,437,694
                                                                               -------------         -------------
                                                         TOTAL DEPOSITS          285,754,551           300,847,379
                                                                               -------------         -------------

   Federal Home Loan Bank advances                                                48,500,000            29,500,000
   Repurchase agreements with financial institutions                              62,200,000            59,900,000
   Repurchase agreements with customers                                           16,823,122               209,588
   Subordinated debt                                                               7,011,000             7,011,000
    Due to broker for security purchases                                           6,225,933                    --
    Accrued expenses and other liabilities                                         2,485,702             2,291,107
                                                                               -------------         -------------

                                                      TOTAL LIABILITIES          429,000,308           399,759,074
                                                                               -------------         -------------

SHAREHOLDERS' EQUITY
   Preferred stock $.00001 par value; 1,000,000 shares authorized, no shares
   outstanding Common stock $.01 par value
     Authorized - 5,000,000 shares
     2005 - Issued - 2,137,528 shares, outstanding - 2,032,342 shares
     2004 - Issued - 2,130,843 shares, outstanding - 2,025,657 shares                 21,375                21,308
   Capital surplus                                                                19,989,742            19,892,870
   Retained earnings                                                               8,574,367             6,555,092
   Less: Treasury stock at cost- 105,186 shares                                     (701,061)             (701,061)
   Accumulated other comprehensive loss-net unrealized loss
     on available for sale securities (net of taxes)                              (2,197,783)           (1,222,536)
                                                                               -------------         -------------
                                             TOTAL SHAREHOLDERS' EQUITY           25,686,640            24,545,673
                                                                               -------------         -------------

                             TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $ 454,686,948         $ 424,304,747
                                                                               =============         =============
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>
                                                                               4


FIRST LITCHFIELD FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended September 30,   Nine Months Ended September 30,
                                                                      2005            2004              2005             2004
                                                                  ------------    ------------     ------------     ------------
<S>                                                               <C>             <C>              <C>              <C>
INTEREST AND DIVIDEND INCOME
   Interest and fees on loans                                     $  3,782,396    $  2,950,870     $ 10,541,848     $  8,324,185

   Interest and dividends on securities:
      Mortgage-backed                                                  806,893       1,238,951        2,798,590        3,709,808
      US Treasury and other                                            602,667         669,328        1,793,384        1,901,592
          State & municipal securities                                 216,159         182,588          608,900          522,535
          Corporate bonds & other securities                            52,001          44,242          152,930          110,709
   Other interest income                                                 8,054             149           17,157           10,727
                                                                  ------------    ------------     ------------     ------------
                                     TOTAL INTEREST INCOME           5,468,170       5,086,128       15,912,809       14,579,556
                                                                  ------------    ------------     ------------     ------------

INTEREST EXPENSE
   Interest on deposits:
      Savings                                                           28,240          33,743           87,762          118,407
      Money market                                                     233,156         275,443          709,486          985,730
      Time certificates of deposit in denominations
          of $100,000 or more                                          214,188         147,449          565,855          489,708
      Other time certificates of deposit                               384,253         375,762        1,073,429        1,280,468
                                                                  ------------    ------------     ------------     ------------
                                TOTAL INTEREST ON DEPOSITS             859,837         832,397        2,436,532        2,874,313
   Interest on Federal Home Loan Bank advances                         363,923         238,256        1,005,447          668,279
    Interest on repurchase agreements                                  600,269         356,210        1,517,165          927,556
   Interest on subordinated debt                                       114,634          75,990          317,058          223,112
                                                                  ------------    ------------     ------------     ------------
                                    TOTAL INTEREST EXPENSE           1,938,663       1,502,853        5,276,202        4,693,260
                                                                  ------------    ------------     ------------     ------------
                                       NET INTEREST INCOME           3,529,507       3,583,275       10,636,607        9,886,296
PROVISION FOR LOAN LOSSES                                              109,371          90,000          310,617          270,000
                                                                  ------------    ------------     ------------     ------------
                                 NET INTEREST INCOME AFTER
                                 PROVISION FOR LOAN LOSSES           3,420,136       3,493,275       10,325,990        9,616,296
                                                                  ------------    ------------     ------------     ------------
NONINTEREST INCOME
   Banking service charges and fees                                    277,617         228,213          745,778          702,655
   Trust                                                               230,154         213,858          705,640          663,779
    Losses on the sales of available
     for sale securities                                                    --         (52,866)         (44,076)         (52,866)
   Other                                                               247,925         121,395          560,085          401,156
                                                                  ------------    ------------     ------------     ------------
                                  TOTAL NONINTEREST INCOME             755,696         510,600        1,967,427        1,714,724
                                                                  ------------    ------------     ------------     ------------
NONINTEREST EXPENSE
   Salaries                                                          1,235,631       1,133,140        3,501,464        3,248,337
   Employee benefits                                                   309,751         309,089        1,022,712          997,683
   Net occupancy                                                       171,330         153,813          525,550          494,937
   Equipment                                                           115,422          99,714          322,660          284,973
   Legal fees                                                           32,397          41,965          127,385          139,216
   Directors fees                                                       34,530          36,025          108,295          107,480
   Computer services                                                   242,818         210,805          666,939          628,374
   Supplies                                                             32,489          35,228          115,749          122,091
   Commissions, services and fees                                       82,478          49,703          211,078          171,513
   Postage                                                              29,336          34,189           94,229          107,438
   Advertising                                                         180,289          72,409          357,546          249,931
   OREO & non-performing loan expenses-net                                  --              --               --            6,618
   Other                                                               446,406         338,008        1,302,068        1,069,377
                                                                  ------------    ------------     ------------     ------------
                                TOTAL NONINTEREST EXPENSES           2,912,877       2,514,088        8,355,675        7,627,968
                                                                  ------------    ------------     ------------     ------------
                                INCOME BEFORE INCOME TAXES           1,262,955       1,489,787        3,937,742        3,703,052
PROVISION FOR INCOME TAXES                                             334,654         424,745        1,066,049        1,022,112
                                                                  ------------    ------------     ------------     ------------
                                                NET INCOME        $    928,301    $  1,065,042     $  2,871,693     $  2,680,940
                                                                  ============    ============     ============     ============
INCOME PER SHARE
                                BASIC NET INCOME PER SHARE        $       0.46    $       0.53     $       1.42     $       1.33
                                                                  ============    ============     ============     ============
                              DILUTED NET INCOME PER SHARE        $       0.45    $       0.52     $       1.40     $       1.31
                                                                  ============    ============     ============     ============

   Dividends Per Share                                            $       0.14    $       0.12     $       0.42     $       0.36
                                                                  ============    ============     ============     ============
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>
                                                                               5


FIRST LITCHFIELD FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

<TABLE>
<CAPTION>
Three months ended September 30,                                                          2005                2004
                                                                                      -----------         -----------
<S>                                                                                   <C>                 <C>
Net income                                                                            $   928,301         $ 1,065,042
Unrealized holding gains (losses) on securities:
       Unrealized holding gains (losses) arising during the period, net of taxes       (1,014,597)          1,664,288
                                                                                      -----------         -----------

Comprehensive income (loss)                                                           $   (86,296)        $ 2,729,330
                                                                                      ===========         ===========

<CAPTION>
Nine months ended September 30,                                                           2005                2004
                                                                                      -----------         -----------
<S>                                                                                   <C>                 <C>
Net income                                                                            $ 2,871,693         $ 2,680,940
Unrealized holding losses on securities:
       Unrealized holding losses arising during the period, net of taxes                 (975,247)         (1,306,443)
                                                                                      -----------         -----------

Comprehensive income                                                                  $ 1,896,446         $ 1,374,497
                                                                                      ===========         ===========
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>
                                                                               6


FIRST LITCHFIELD FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)

<TABLE>
<CAPTION>
                                                                                               Nine Months Ended September 30,
                                                                                                   2005               2004
                                                                                              ------------        ------------
<S>                                                                                           <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                    $  2,871,693        $  2,680,940
Adjustments to reconcile net income to net cash
  provided by operating activities:
       Amortization and accretion of premiums and discounts
          on investment securities, net                                                            294,292             148,109
       Provision for loan losses                                                                   310,617             270,000
       Depreciation and amortization                                                               301,565             269,526
       Losses on sale of available for sale securities                                              44,076              52,866
       Loans originated for sale                                                                        --            (277,000)
       Proceeds from sales of loans held for sale                                                       --             277,000
       Gain on disposals of bank premises and equipment                                              1,744                 817
       Gain from the sale of foreclosed real estate                                                     --             (45,138)
       Increase in accrued interest receivable                                                    (249,159)           (130,244)
       Increase in other assets                                                                    (85,983)           (452,996)
       Increase in cash surrender value of insurance                                              (279,252)           (275,579)
       (Increase) decrease in deferred loan origination costs                                      (72,873)            117,323
       Increase in amount due to broker for security purchases                                   6,225,933                  --
       Increase in accrued expenses and other liabilities                                          193,794             235,257
                                                                                              ------------        ------------

           Net cash provided by operating activities                                             9,556,447           2,870,881
                                                                                              ------------        ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Available for sale securities:
       Proceeds from maturities and principal payments                                          17,761,950          31,070,921
       Purchases                                                                               (25,902,269)        (75,766,871)
       Proceeds from sales                                                                      11,547,754          31,511,090
Held to maturity mortgage-backed securities:
       Proceeds from principal payments                                                             20,182              32,715
Purchase of Federal Home Loan Bank stock                                                          (728,800)           (793,100)
Net increase in loans                                                                          (28,476,337)        (19,715,830)
Proceeds from the sale of repossessed assets                                                        20,845                  --
Purchase of bank premises and equipment                                                         (1,406,432)           (270,496)
Proceeds from sale of foreclosed real estate                                                            --             345,138
Purchases of bank owned life insurance                                                             (24,750)                 --
Proceeds from sale of bank premises and equipment                                                       --                 100
                                                                                              ------------        ------------

       Net cash used in investing activities                                                   (27,187,857)        (33,586,333)
                                                                                              ------------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in savings, money market and
  demand deposits                                                                              (15,729,585)          6,108,753
Net increase (decrease in certificates of deposit)                                                 636,757         (12,305,095)
Net increase in short term Federal Home Loan Bank advances                                      10,000,000           9,300,000
Repayments on Federal Home Loan Bank advances                                                  (20,000,000)                 --
Proceeds from Federal Home Loan Bank advances                                                   29,000,000                  --
Net increase in securities sold under agreements to repurchase                                   2,300,000          29,032,909
Net increase in repurchase agreements with customers                                            16,613,534                  --
Proceeds from the exercise of stock options                                                         51,747             356,968
Dividends paid on common stock                                                                    (851,617)           (689,105)
                                                                                              ------------        ------------

       Net cash provided by financing activities                                                22,020,836          31,804,430
                                                                                              ------------        ------------

       Net increase in cash and cash equivalents                                                 4,389,426           1,088,978

CASH AND CASH EQUIVALENTS, at beginning of period                                               12,222,713          12,702,308
                                                                                              ------------        ------------

CASH AND CASH EQUIVALENTS, at end of period                                                   $ 16,612,139        $ 13,791,286
                                                                                              ============        ============
SUPPLEMENTAL INFORMATION Cash paid during the period for:
       Interest on deposits and borrowings                                                    $  5,030,970        $  4,678,626
                                                                                              ============        ============
       Income taxes                                                                           $    850,500        $    750,900
                                                                                              ============        ============
Non-cash investing and financing activities:
       Accrued dividends declared                                                             $    284,394        $    230,958
                                                                                              ============        ============
       Due to broker for securities purchases                                                 $  6,225,933        $         --
                                                                                              ============        ============
       Transfer of loans to repossessed assets                                                $     31,687        $         --
                                                                                              ============        ============
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>
                                                                               7


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    The consolidated  balance sheet at December 31, 2004 has been derived from
      the audited financial statements at that date, but does not include all of
      the information and footnotes required by accounting  principles generally
      accepted  in  the  United   States  of  America  for  complete   financial
      statements.

2.    The accompanying  unaudited  consolidated financial statements and related
      notes have been  prepared  pursuant  to the rules and  regulations  of the
      Securities and Exchange Commission.  Accordingly,  certain information and
      footnote disclosures normally included in financial statements prepared in
      accordance with  accounting  principles  generally  accepted in the United
      States  of  America  have  been   omitted   pursuant  to  such  rules  and
      regulations.  The  accompanying  financial  statements  and related  notes
      should be read in conjunction with the audited financial statements of the
      Company and notes thereto for the fiscal year ended December 31, 2004.

      These  financial  statements  reflect,  in the opinion of Management,  all
      adjustments,  consisting of only normal recurring  adjustments,  necessary
      for a fair  presentation  of the  Company's  financial  position  and  the
      results of their operations and its cash flows for the periods  presented.
      The results of  operations  for the three and nine months ended  September
      30, 2005 are not necessarily  indicative of the results of operations that
      may be expected for all of 2005.

3.    The  Company is  required  to present  basic  income per share and diluted
      income  per share in its  statements  of  income.  Basic  income per share
      amounts are computed by dividing net income by the weighted average number
      of common shares outstanding. Diluted income per share assumes exercise of
      all potential common stock in weighted average shares outstanding,  unless
      the effect is  antidilutive.  The  Company is also  required  to provide a
      reconciliation of the numerator and denominator used in the computation of
      both basic and diluted income per share.

      The following is information about the computation of net income per share
      for the three and nine month  periods  ended  September 30, 2005 and 2004.
      The 2004 information has been restated to give  retroactive  effect to all
      stock dividends for the periods presented.

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                            September 30, 2005
                                                   ----------------------------------

                                                      Net                   Per Share
                                                    Income       Shares       Amount
                                                    ------       ------       ------
<S>                                                <C>          <C>          <C>
      Basic Net Income Per Share
        Income available to common shareholders    $ 928,301    2,030,137    $    .46
                                                                             ========

      Effect of Dilutive Securities
        Options Outstanding                               --       18,973

      Diluted Net Income Per Share
        Income available to common shareholders    ---------    ---------
        plus assumed conversions                   $ 928,301    2,049,110    $    .45
                                                   =========    =========    ========
</TABLE>

<PAGE>
                                                                               8


<TABLE>
<CAPTION>
                                                                                           Three Months Ended
                                                                                           September 30, 2004
                                                                                 ------------------------------------

                                                                                     Net                    Per Share
                                                                                   Income        Shares       Amount
                                                                                   ------        ------       ------
<S>                                                                              <C>            <C>          <C>
      Basic Net Income Per Share
        Income available to common shareholders                                  $1,065,042     2,020,889    $    .53
                                                                                                             ========

      Effect of Dilutive Securities
        Options Outstanding                                                              --        24,503

      Diluted Net Income Per Share
        Income available to common shareholders                                  ----------    ----------
        plus assumed conversions                                                 $1,065,042     2,045,392    $    .52
                                                                                 ==========    ==========    ========

<CAPTION>
                                                                                            Nine Months Ended
                                                                                           September 30, 2005
                                                                                 ------------------------------------
                                                                                     Net                    Per Share
                                                                                   Income        Shares       Amount
                                                                                   ------        ------       ------
<S>                                                                              <C>            <C>          <C>
      Basic Net Income Per Share
        Income available to common shareholders                                  $2,871,693     2,028,374    $   1.42
                                                                                                             ========

      Effect of Dilutive Securities
        Options Outstanding                                                              --        21,249

      Diluted Net Income Per Share
        Income available to common shareholders                                  ----------    ----------
        plus assumed conversions                                                 $2,871,693     2,049,623    $   1.40
                                                                                 ==========    ==========    ========

<CAPTION>
                                                                                          Nine Months Ended
                                                                                         September 30, 2004
                                                                                 ------------------------------------

                                                                                     Net                    Per Share
                                                                                   Income        Shares       Amount
                                                                                   ------        ------       ------
<S>                                                                              <C>            <C>          <C>
      Basic Net Income Per Share
        Income available to common shareholders                                  $2,680,940     2,013,323    $   1.33
                                                                                                             ========

      Effect of Dilutive Securities
        Options Outstanding                                                              --        27,549

      Diluted Net Income Per Share
        Income available to common shareholders                                  ----------    ----------
        plus assumed conversions                                                 $2,680,940     2,040,872    $   1.31
                                                                                 ==========    ==========    ========
</TABLE>

4.   Other comprehensive income, which is comprised solely of the change in
     unrealized gains and losses on available for sale securities, is as
     follows:

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                       September 30, 2005
                                                                          ------------------------------------------

                                                                           Before-Tax                     Net-of-Tax
                                                                              Amount          Taxes          Amount
                                                                          -----------     -----------    -----------
<S>                                                                       <C>             <C>            <C>
Unrealized holding losses arising during the period                       $(1,537,268)    $   522,671    $(1,014,597)
Add: reclassification adjustment for amounts recognized in net income              --              --             --
                                                                          -----------     -----------    -----------

Unrealized holding loss on available for sale securities, net of taxes    $(1,537,268)    $   522,671    $(1,014,597)
                                                                          ===========     ===========    ===========
</TABLE>

<PAGE>
                                                                               9


<TABLE>
<CAPTION>
                                                                                            Three Months Ended
                                                                                             September 30, 2004
                                                                             ---------------------------------------------------

                                                                              Before-Tax                             Net-of-Tax
                                                                                Amount              Taxes              Amount
                                                                             ------------       ------------        ------------
<S>                                                                          <C>                <C>                 <C>
Unrealized holding gains arising during the period                           $  2,468,782       $   (839,386)       $  1,629,396
Add: reclassification adjustment for amounts recognized in net income              52,866            (17,974)             34,892
                                                                             ------------       ------------        ------------

Unrealized holding gain on available for sale securities, net of taxes       $  2,521,648       $   (857,360)       $  1,664,288
                                                                             ============       ============        ============

<CAPTION>
                                                                                             Nine Months Ended
                                                                                             September 30, 2005
                                                                             ---------------------------------------------------

                                                                              Before-Tax                             Net-of-Tax
                                                                                Amount              Taxes              Amount
                                                                             ------------       ------------        ------------
<S>                                                                          <C>                <C>                 <C>
Unrealized holding losses arising during the period                          $ (1,521,723)      $    517,386        $ (1,004,337)
Add: reclassification adjustment for amounts recognized in net income              44,076            (14,986)             29,090
                                                                             ------------       ------------        ------------

Unrealized holding loss on available for sale securities, net of taxes       $ (1,477,647)      $    502,400        $   (975,247)
                                                                             ============       ============        ============

<CAPTION>
                                                                                             Nine Months Ended
                                                                                             September 30, 2004
                                                                             ---------------------------------------------------

                                                                              Before-Tax                             Net-of-Tax
                                                                                Amount              Taxes              Amount
                                                                             ------------       ------------        ------------
<S>                                                                          <C>                <C>                 <C>
Unrealized holding losses arising during the period                          $ (2,032,325)      $    690,990        $ (1,341,335)
Add: reclassification adjustment for amounts recognized in net income              52,866            (17,974)             34,892
                                                                             ------------       ------------        ------------

Unrealized holding loss on available for sale securities, net of taxes       $ (1,979,459)      $    673,016        $ (1,306,443)
                                                                             ============       ============        ============
</TABLE>

5. The Bank has a noncontributory defined benefit pension plan (the "Plan") that
covers  substantially  all employees who have  completed one year of service and
have  attained  age 21.  The  benefits  are  based on years of  service  and the
employee's  compensation  during the last five years of  employment.  The Bank's
funding  policy is to  contribute  amounts  to the Plan  sufficient  to meet the
minimum funding requirements set forth in ERISA, plus such additional amounts as
the Bank may  determine  to be  appropriate  from  time to time.  The  actuarial
information has been calculated  using the projected unit credit method.  During
the first quarter of 2005,  the Bank's  pension plan was curtailed as the Bank's
Board of Directors  approved the  cessation of benefit  accruals  under the Plan
effective  April 30, 2005.  Because of this action,  for the Plan year beginning
November 15, 2004, contributions will no longer be made by the Bank.

Components of net periodic benefit cost for the three months ended September 30:

                                                          2005           2004
                                                        --------       --------
      Service cost                                      $     --       $ 64,889
      Interest cost                                       52,516         48,050
      Expected return on plan assets                     (58,310)       (56,573)
      Amortization of unrealized loss                     13,222         11,009
                                                        --------       --------
      Net periodic benefit cost                         $  7,428       $ 67,375
                                                        ========       ========

<PAGE>
                                                                              10


Components of net periodic benefit cost for the nine months ended September 30:

                                                         2005            2004
                                                      ---------       ---------
      Service cost                                    $      --       $ 194,667
      Interest cost                                     157,548         144,150
      Expected return on plan assets                   (174,930)       (169,719)
      Amortization of unrealized loss                    39,666          33,027
                                                      ---------       ---------
      Net periodic benefit cost                       $  22,284       $ 202,125
                                                      =========       =========

6. The Bank is a member of the Federal  Home Loan Bank of Boston (the  "FHLBB").
As a member of the FHLBB, the Bank has access to a preapproved line of credit of
up to 2% of its total  assets and the  capacity to borrow up to 30% of its total
assets.  In accordance with an agreement with the FHLBB, the Bank is required to
maintain  qualified  collateral,  as defined in the FHLBB  Statement of Products
Policy,  free and clear of liens,  pledges and  encumbrances  for the  advances.
FHLBB  stock  and  certain  loans  which  aggregate  approximately  100%  of the
outstanding  advance are used as collateral.  Federal Home Loan Bank advances as
of September 30, 2005 are as follows:

                        due 10/1/05        10,000,000 @ 4.0625%
                        due 12/8/05         2,000,000 @ 2.36%
                        due 2/10/06         3,000,000 @ 3.39%
                        due 7/18/06         4,500,000 @ 2.33%
                        due 7/16/07         4,500,000 @ 2.59%
                        due 8/27/07         5,000,000 @ 3.76%
                        due 7/18/08         4,500,000 @ 3.27%
                        due 6/24/10         5,000,000 @ 4.15%
                        due 5/29/12         5,000,000 @ 4.32%
                        due 9/04/12         5,000,000 @ 4.38%
                                          -----------

                           Total          $48,500,000
                                          ===========

As of September 30, 2005, the Bank had borrowings  under  repurchase  agreements
with  financial   institutions  totaling   $62,200,000.   This  amount  includes
borrowings:

                        due 12/27/05        7,000,000 @ 3.08%
                        due  1/30/06        3,000,000 @ 2.10%
                        due  1/31/06        5,000,000 @ 3.32%
                        due  1/28/07        4,000,000 @ 3.60%
                        due  2/19/07       10,000,000 @ 2.74%
                        due  2/25/07        4,650,000 @ 2.40%
                        due  4/26/08        7,000,000 @ 4.19%
                        due 10/27/07        7,000,000 @ 3.26%
                        due  7/28/08        5,000,000 @ 3.25%
                        due  7/31/08        5,000,000 @ 3.27%
                        due  2/25/09        4,550,000 @ 3.20%
                                          -----------
                           Total          $62,200,000
                                          ===========

<PAGE>
                                                                              11


7. A reconciliation of the anticipated  income tax expense (computed by applying
the Federal  statutory income tax rate of 34% to the income before taxes) to the
provision  for  income  taxes as  reported  in the  statements  of  income is as
follows:

<TABLE>
<CAPTION>
                                                                       For the three months ended September 30,
                                                                      2005                             2004
                                                          -------------------------       ------------------------------
<S>                                                       <C>                   <C>       <C>                        <C>
Provision for income taxes at statutory Federal rate      $   429,405           34%       $   506,528                34%
Increase (decrease) resulting from:
   Tax exempt income                                         (105,566)          (8)           (89,553)               (6)
   Nondeductible interest expense                               5,544            1              3,739                --
   Other                                                        5,271           --              4,031                 1
                                                          ------------------------        -----------------------------
Provision for income taxes                                $   334,654           27%       $   424,745                29%
                                                          ========================        =============================

<CAPTION>
                                                                       For the nine months ended September 30,
                                                                      2005                             2004
                                                          -------------------------       ------------------------------
<S>                                                       <C>                   <C>       <C>                        <C>
Provision for income taxes at statutory Federal rate      $ 1,338,832           34%       $ 1,259,038                34%
Increase (decrease) resulting from:
   Tax exempt income                                         (303,091)          (8)          (259,794)               (7)
   Nondeductible interest expense                              14,494           --             11,091                --
   Other                                                       15,814            1             11,777                 1
                                                          ------------------------        -----------------------------
Provision for income taxes                                $ 1,066,049           27%       $ 1,022,112                28%
                                                          ========================        =============================
</TABLE>

8. The amortized cost,  gross  unrealized  gains,  gross  unrealized  losses and
approximate fair values of securities which are classified as available for sale
and held to maturity at September 30, 2005 and December 31, 2004 are as follows:

<TABLE>
<CAPTION>
AVAILABLE FOR SALE                                                           September 30, 2005
                                                 ------------------------------------------------------------------------
                                                                        Gross               Gross
                                                   Amortized         Unrealized           Unrealized            Fair
                                                     Cost               Gains               Losses              Value
                                                 -------------      -------------       -------------       -------------
<S>                                              <C>                <C>                 <C>                 <C>
Debt Securities:
    U.S. Treasury securities                    $   4,292,256      $          --       $     (63,162)      $   4,229,094
    U.S. Government Agency securities              57,951,462                 --            (933,050)         57,018,412
    State and Municipal Obligations                24,598,733            425,919             (70,660)         24,953,992
    Corporate and Other Bonds                       3,001,996                 --              (9,496)          2,992,500
                                                -------------      -------------       -------------       -------------
                                                   89,844,447            425,919          (1,076,368)         89,193,998
                                                -------------      -------------       -------------       -------------

Mortgage-Backed Securities:
   GNMA                                             5,615,398                 --            (137,587)          5,477,811
   FNMA                                            54,145,759              2,055          (1,867,443)         52,280,371
   FHLMC                                           20,294,676              5,866            (658,141)         19,642,401
                                                -------------      -------------       -------------       -------------
                                                   80,055,833              7,921          (2,663,171)         77,400,583
                                                -------------      -------------       -------------       -------------

Marketable Equity Securities                        2,000,000                 --             (24,276)          1,975,724
                                                -------------      -------------       -------------       -------------

Total available for sale securities             $ 171,900,280      $     433,840       $  (3,763,815)      $ 168,570,305
                                                =============      =============       =============       =============

<CAPTION>
                                                                             December 31, 2004
                                                 ------------------------------------------------------------------------
                                                                        Gross               Gross
                                                   Amortized         Unrealized           Unrealized            Fair
                                                     Cost               Gains               Losses              Value
                                                 -------------      -------------       -------------       -------------
<S>                                              <C>                <C>                 <C>                 <C>
Debt Securities:
    U.S. Treasury securities                     $   5,292,694      $      15,742       $     (30,915)      $   5,277,521
    U.S. Government Agency securities               43,962,574             44,262            (828,456)         43,178,380
    State and Municipal Obligations                 18,078,583            573,799             (13,259)         18,639,123
    Corporate and Other Bonds                        3,007,856                 --             (13,856)          2,994,000
                                                 -------------      -------------       -------------       -------------
                                                    70,341,707            633,803            (886,486)         70,089,024
                                                 -------------      -------------       -------------       -------------
Mortgage-Backed Securities:
   GNMA                                              6,999,501             35,965             (12,548)          7,022,918
   FNMA                                             63,486,399              6,439          (1,250,920)         62,241,918
   FHLMC                                            32,818,476             48,630            (427,211)         32,439,895
                                                 -------------      -------------       -------------       -------------
                                                   103,304,376             91,034          (1,690,679)        101,704,731
                                                 -------------      -------------       -------------       -------------

Marketable Equity Securities                         2,000,000                 --                  --           2,000,000
                                                 -------------      -------------       -------------       -------------

Total available for sale securities              $ 175,646,083      $     724,837       $  (2,577,165)      $ 173,793,755
                                                 =============      =============       =============       =============
</TABLE>

<PAGE>
                                                                              12


<TABLE>
<CAPTION>
HELD TO MATURITY                                               September 30, 2005
                                       -------------------------------------------------------------------
                                                             Gross              Gross
                                         Amortized        Unrealized         Unrealized           Fair
                                           Cost              Gains             Losses             Value
                                       ------------      ------------      ------------       ------------
<S>                                    <C>               <C>               <C>                <C>
Mortgage-Backed Securities:
   GNMA                                $     50,764      $         --      $       (775)      $     49,989
   FHLMC                                         --                --                --                 --
                                       ------------      ------------      ------------       ------------
Total held to maturity securities      $     50,764      $         --      $       (775)      $     49,989
                                       ============      ============      ============       ============

<CAPTION>
                                                               December 31, 2004
                                       -------------------------------------------------------------------
                                                             Gross             Gross
                                         Amortized        Unrealized         Unrealized           Fair
                                           Cost              Gains             Losses             Value
                                       ------------      ------------      ------------       ------------
<S>                                    <C>               <C>               <C>                <C>
Mortgage-Backed Securities:
   GNMA                                $     58,564      $         --      $       (750)      $     57,814
   FHLMC                                     12,382                --                --             12,382
                                       ------------      ------------      ------------       ------------
Total held to maturity securities      $     70,946      $         --      $       (750)      $     70,196
                                       ============      ============      ============       ============
</TABLE>

At September 30, 2005, gross unrealized holding losses on available for sale and
held  to  maturity  securities  totaled  $3,764,590.   Of  the  securities  with
unrealized  losses,  there  were  thirty-one  securities  that  have  been  in a
continuous  unrealized  loss position for a period of twelve months or more. The
unrealized losses on these securities  totaled $2,831,851 at September 30, 2005.
Management  does not believe  that any of the  unrealized  losses are other than
temporary as they relate to debt and  mortgage-backed  securities issued by U.S.
Government and U. S. Government  sponsored  agencies,  and are due to changes in
the interest rate  environment.  The Company has both the intent and the ability
to hold these  securities until maturity or until the fair value fully recovers.
In  addition,   management  considers  the  issuers  of  the  securities  to  be
financially  sound and the Company will receive all  contractual  principal  and
interest related to these  investments.  As a result,  Management  believes that
these unrealized  losses will not have a negative impact on future earnings or a
permanent  effect  on  capital.   However,   Management  periodically  evaluates
investment alternatives to properly manage the overall balance sheet. The timing
of sales and reinvestments is based on various factors,  including  management's
evaluation of interest rate risks and liquidity needs.

9. A summary of the Bank's loan portfolio at September 30, 2005 and December 31,
2004 is as follows:

                                                   2005               2004
                                               --------------------------------

      Real estate--residential mortgage        $ 155,539,189      $ 148,661,814
      Real estate--commercial mortgage            37,792,455         33,655,103
      Real estate--construction                   29,611,362         11,596,972
      Commercial                                  18,976,935         17,910,953
      Installment                                  4,664,972          6,315,197
      Other                                           70,883             80,118
                                               -------------      -------------
                       TOTAL LOANS               246,655,796        218,220,157
      Net deferred loan origination costs            271,414            198,541
      Allowance for loan losses                   (1,691,553)        (1,389,947)
                                               -------------      -------------
                       NET LOANS               $ 245,235,657      $ 217,028,751
                                               =============      =============


<PAGE>
                                                                              13


Changes in the  allowance  for loan losses for the periods  ended  September 30,
2005 and December 31, 2004 are as shown below:

<TABLE>
<CAPTION>
                                                 Nine months         Twelve months
                                             ended September 30,  ended December 31,
                                                    2005                 2004
                                             -------------------  ------------------
<S>                                             <C>                 <C>
Balance at beginning of the year                $   1,389,947       $   1,149,454
Provision for loan losses                             310,617             360,000
Loans charged off                                     (43,444)           (184,970)
Recoveries of loans previously charged off             34,433              65,463
                                                -------------       -------------

Balance at end of period                        $   1,691,553       $   1,389,947
                                                =============       =============
</TABLE>

The following table  summarizes the Bank's  nonperforming  loans as of September
30, 2005 and December 31, 2004.

<TABLE>
<CAPTION>
                                             September 30, 2005   December 31, 2004
                                             ------------------   -----------------
<S>                                             <C>                 <C>
Nonaccrual loans                                $     328,495       $   1,634,999

Loans past due in excess of 90 days and
   accruing interest                                    2,613                  --
                                                -------------       -------------

Total nonperforming assets                      $     331,108       $   1,634,999
                                                =============       =============
</TABLE>

10. A summary of the Bank's deposits at September 30, 2005 and December 31, 2004
is as follows:

<TABLE>
<CAPTION>
                                                                2005              2004
                                                            ------------------------------
<S>                                                         <C>               <C>
      Noninterest bearing:
          Demand                                            $ 63,788,343      $ 58,409,685
                                                            ------------      ------------
      Interest bearing:
          Savings                                             54,323,939        57,934,199
          Money market                                        81,087,786        98,585,769
          Time certificates of deposit in
            denominations of $100,000 or more                 29,821,137        25,823,673
          Other time certificates of deposit                  56,733,346        60,094,053
                                                            ------------      ------------
               Total Interest bearing deposits               221,966,208       242,437,694
                                                            ------------      ------------
                                        TOTAL DEPOSITS      $285,754,551      $300,847,379
                                                            ============      ============
</TABLE>

Included  in  deposits  as of  September  30,  2005 and  December  31,  2004 are
approximately  $2,809,000 and  $4,318,000,  respectively,  of brokered  deposits
which have varying maturities through May 2007 and September 2006, respectively.

<PAGE>
                                                                              14


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

GENERAL

First Litchfield Financial  Corporation (the "Company"),  a Delaware corporation
formed in 1988, is the one-bank  holding  company for The First National Bank of
Litchfield  (the "Bank"),  a national bank supervised and examined by the Office
of the  Comptroller  of the  Currency  (the  "OCC").  The Bank is the  Company's
primary subsidiary and only source of income. The Bank has two subsidiaries, The
Lincoln  Corporation  and Litchfield  Mortgage  Service  Corporation,  which are
Connecticut  corporations.  The  purpose of The Lincoln  Corporation  is to hold
property such as real estate,  personal property,  securities,  or other assets,
acquired by the Bank through  foreclosure  or otherwise to compromise a doubtful
claim or  collect  a debt  previously  contracted.  The  purpose  of  Litchfield
Mortgage Service  Corporation is to operate as a passive  investment  company in
accordance with Connecticut law.

Both the Company and the Bank are headquartered in Litchfield,  Connecticut. The
Bank is a full-service  commercial bank serving both  individuals and businesses
generally  within  Litchfield  County  Connecticut.  Deposits  are insured up to
specific limits of the Federal Deposit  Insurance Act by the Bank Insurance Fund
("BIF"), which is administered by the Federal Deposit Insurance Corporation (the
"FDIC").  The Bank's lending activities include loans secured by residential and
commercial  mortgages.   Other  loan  products  include  consumer  and  business
installment  lending, as well as other secured and nonsecured lending.  The Bank
has seven  banking  locations  located in the towns of  Torrington,  Litchfield,
Washington,  Marble Dale,  Goshen and Roxbury,  Connecticut.  The newest banking
facility, located in downtown Torrington,  Connecticut, opened in March of 2003.
In May of 2005,  the Bank received  approval from the OCC to open a full service
branch in Canton, Connecticut. The Branch is scheduled to open in early 2006. In
1975, the Bank was granted Trust powers by the OCC. The Bank's Trust  Department
provides trust and fiduciary  services to individuals,  nonprofit  organizations
and  commercial  customers.  Additionally,  the Bank  offers  nondeposit  retail
investment  products such as mutual funds,  annuities and insurance  through its
relationship with Infinex Investments, Inc.

During the second quarter of 2003, the Company formed a statutory  trust,  First
Litchfield Statutory Trust I. The Company owns 100% of the Trust's common stock.
The Trust  has no  independent  assets or  operations  and  exists  for the sole
purpose of issuing trust  securities and investing the proceeds in  subordinated
debentures  issued by the  Company.  On June 26, 2003 the Trust issued its first
series of trust preferred securities.

As of September 30, 2005,  the Company had total assets of  $454,686,948,  which
was an increase of approximately  $30.4 million or 7.2% from year-end 2004 total
assets of $424,304,747. The increase in assets resulted mainly from increases in
the loan portfolio.  The growth was funded  primarily  through Federal Home Loan
Bank advances and borrowings under repurchase agreements.

The following  discussion and analysis of the Company's  consolidated  financial
condition  and  results of  operations  should be read in  conjunction  with the
consolidated financial statements and notes to the financial statements.

<PAGE>
                                                                              15


FINANCIAL CONDITION

Total  assets  as of  September  30,  2005 were  $454,686,948,  an  increase  of
$30,382,201 or 7.2% from year-end 2004 total assets of $424,304,747.

During the first nine  months of 2005,  the  increase  in assets was in the loan
portfolio,  which  increased by $28,206,906  or 13.0% from year-end 2004.  Total
loans,  net of the  allowance  for loan losses,  as of  September  30, 2005 were
$245,235,657 as compared to the year-end 2004 level of $217,028,751.  Growth was
in real estate  secured  lending with the greatest  increase  experienced in the
construction mortgage portfolio. Construction mortgages increased by $18,014,390
or 155.3%  since the  beginning  of the  year.  This  growth  was  primarily  in
construction loans for residential property.  The residential mortgage portfolio
totaled $155,539,189,  which was an increase of $6,877,375 or 4.6% from year-end
2004.  Although  this growth slowed  during the third  quarter,  growth in these
mortgage  products continue to be primarily in fixed rate, 15 and 30 year loans.
Commercial  mortgages  totaled  $37,792,455,  which is a 12.3% increase from the
year-end balance. The increase in the commercial mortgage portfolio is primarily
in the  ten  year  fixed  rate  mortgage  product  due to the  continuance  of a
relatively low rate  environment for mortgage  products,  as well as the results
from a focus in commercial calling effort. The commercial loan portfolio totaled
$18,976,935  which was an increase of  $1,065,982 or 6.0% from the year-end 2004
balance.  Again,  this growth is attributed to sales  development  and expansion
into growing market areas.

As of September 30, 2005, the securities portfolio totaled  $168,621,069,  which
is a $5,243,632 or 3.0% decrease from the year-end 2004 balance. The decrease in
the  portfolio   resulted   primarily  from  principal   payments   received  on
mortgage-backed securities, as well as calls and sales of agency bonds. The cash
flows from the  securities  portfolio  have been  mostly  utilized  to fund loan
growth.  Additionally,  during the third quarter of 2005, purchases of primarily
municipal  securities  were  made to  improve  the  tax-effective  yield  on the
portfolio.

Cash  and  cash  equivalents  totaled  $16,612,139,  which  is  an  increase  of
$4,389,426  or  35.9%  from  year-end  2004.  The  increase  in  cash  and  cash
equivalents primarily relates to daily cash letter fluctuations.

Total  liabilities were  $429,000,308 as of September 30, 2005 compared to total
liabilities of  $399,759,074  as of year-end 2004. At September 30, 2005,  total
deposits were  $285,754,551,  which was a decrease of  $15,092,828  or 5.0% from
deposits  at December  31,  2004.  The  decrease  has been in  interest  bearing
deposits such as savings,  money market,  and time certificates of deposit under
$100,000 in denomination.  As of September 30, 2005,  interest-bearing  deposits
totaled $221,966,208,  which is a $20,471,486 or 8.4% decrease from the December
31, 2004 balance.  The largest  decrease has been in money market deposits which
have declined by  $17,497,983  of 17.7% since the beginning of the year.  Market
competition  offering  high  promotional  deposit  rates  is the  cause  of this
decline. Additionally,  consumer reluctance for nonliquid deposits, coupled with
uncertainties in the long term interest rate environment,  continue to cause the
decline in savings and time certificates of deposits.  As of September 30, 2005,
demand  deposits  totaled  $63,788,343,  which  was an  increase  of 9.2%  since
December 31, 2004. This growth has come from commercial accounts,  especially as
they  relate to the Bank's  cash  management  product  and  commercial  lending.
Offsetting  some of the decrease in time deposits were  certificates of deposits
above $100,000 in denomination. These deposits increased slightly, by $3,997,464
or 15.5% due to deposits from local municipalities.

<PAGE>
                                                                              16


Earning asset growth has been funded  primarily  through  Federal Home Loan Bank
advances and  borrowings  under  repurchase  agreements.  Federal Home Loan Bank
advances  have  increased  $19,000,000  or  64.4%.  Borrowings  have  been on an
overnight  basis as well as on both longer and shorter  contractual  terms.  The
terms of the  borrowings  are  determined  based on  considerations  of interest
levels,  yield  curve and the  Company's  current  and future  liquidity  needs.
Additionally  funding asset growth was borrowings  through the use of repurchase
agreements.  This  funding,  which  is  primarily  in  the  form  of  repurchase
agreements associated with commercial cash management accounts, has increased by
31.5% or $18,913,534 over the first nine months of 2005.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THREE MONTHS
ENDED SEPTEMBER 30, 2004

Summary

Net interest income is the single largest source of the Company's net income.
Net interest income is determined by several factors and is defined as the
difference between interest and dividend income from earning assets, primarily
loans and investment securities, and interest expense on deposits and borrowed
money. Although there are certain factors that can be controlled by Management's
policies and actions, certain other factors exist, such as the general level of
credit demand, Federal Reserve Board monetary policy, and changes in tax law
that are beyond the control of Management.

Net income for the third calendar quarter of 2005 totaled $928,301, which is a
decrease of $136,741 or 12.8% from third quarter 2004 earnings of $1,065,042.
Quarterly basic and diluted net income per share for 2005 were $.46 and $.45 per
share, respectively, compared to $.53 per basic and $.52 per diluted share for
the same period in 2004.

Net Interest Income

Net interest income is comprised of the following for the three months ended
September 30,

                                                    2005              2004
                                                -----------       -----------

Interest and dividend income                    $ 5,468,170       $ 5,086,128
Tax-equivalent adjustments                          103,595            88,839
Interest expense                                 (1,938,663)       (1,502,853)
                                                -----------       -----------

Net interest income (tax equivalent basis)      $ 3,633,102       $ 3,672,114
                                                ===========       ===========

The following table presents the Company's average balance sheets (computed on a
daily basis), net interest income, and interest rates for the three months ended
September 30, 2005 and 2004. Average loans outstanding include nonaccruing
loans. Interest income is presented on a tax-equivalent basis which reflects a
federal tax rate of 34% for all periods presented.

<PAGE>
                                                                              17


DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                          Three months ended September 30, 2005      Three months ended September 30, 2004
                                         --------------------------------------    -----------------------------------------
                                                            Interest                                   Interest
                                            Average          Earned/     Yield/       Average           Earned/       Yield/
                                            Balance           Paid        Rate        Balance            Paid          Rate
                                         -------------     ---------     ------    -------------      ----------      ------
<S>                                      <C>               <C>            <C>      <C>                <C>              <C>
Assets
Interest Earning Assets:
Loans                                    $ 242,011,000     3,782,989      6.25%    $ 206,086,000      $2,951,286       5.73%
Investment Securities                      165,396,000     1,780,722      4.31%      200,253,000       2,223,532       4.44%
Other interest earning assets                1,367,000         8,054      2.36%          160,000             149        .37%
                                         -------------    ----------               -------------      ----------

Total interest earning assets              408,774,000     5,571,765      5.45%      406,499,000       5,174,967       5.09%
                                                          ----------      ----                        ----------       ----

Allowance for loan losses                   (1,631,000)                               (1,336,000)
Cash and due from banks                     16,444,000                                14,077,000
Bank premises and equipment                  3,807,000                                 2,840,000
Net unrealized gain/loss on
 securities                                 (2,427,000)                               (3,371,000)
Other assets                                15,387,000                                14,777,000
                                         -------------                             -------------

Total Average Assets                     $ 440,354,000                             $ 433,486,000
                                         =============                             =============

Liabilities and Shareholders' Equity
Interest Bearing Liabilities:
Savings deposits                         $  54,984,000        28,240      0.21%    $  57,833,000          33,743       0.23%
Money Market deposits                       82,990,000       233,156      1.12%      105,526,000         275,443       1.04%
Time deposits                               83,003,000       598,441      2.88%       87,640,000         523,211       2.39%
Borrowed funds                             126,574,000     1,078,826      3.41%      101,306,000         670,456       2.65%
                                         -------------    ----------               -------------      ----------

Total interest bearing liabilities         347,551,000     1,938,663      2.23%      352,305,000       1,502,853       1.71%
                                                          ----------      ----                        ----------       ----

Demand deposits                             64,792,000                                57,911,000
Other liabilities                            2,048,000                                 1,252,000
Shareholders' Equity                        25,963,000                                22,018,000
                                         -------------                             -------------
Total liabilities and equity             $ 440,354,000                             $ 433,486,000
                                         =============                             =============

Net interest income                                       $3,633,102                                  $3,672,114
                                                          ==========                                  ==========
Net interest spread                                                       3.22%                                        3.38%
Net interest margin                                                       3.56%                                        3.61%
</TABLE>

RATE/VOLUME ANALYSIS
<TABLE>
<CAPTION>
                                                                              Three months ended
                                                                         9/30/05 Compared to 9/30/04
                                                                          Increase (Decrease) Due to
                                                           -----------------------------------------------------
                                                             Volume                   Rate               Total
                                                           ---------                ---------          ---------
<S>                                                        <C>                      <C>                <C>
Interest earned on:
Loans                                                      $ 545,347                $ 286,356          $ 831,703
Investment securities                                       (377,031)                 (65,779)          (442,810)
Other interest income                                          4,633                    3,272              7,905
                                                           ---------                ---------          ---------
Total interest earning assets                                172,949                  223,849            396,798
                                                           ---------                ---------          ---------

Interest paid on:

Deposits                                                    (106,609)                 134,049             27,440
Borrowed money                                               189,574                  218,796            408,370
                                                           ---------                ---------          ---------
Total interest bearing liabilities                            82,965                  352,845            435,810
                                                           ---------                ---------          ---------

Increase (decrease) in net interest income                 $  89,984                $(128,996)         $ (39,012)
                                                           =========                =========          =========
</TABLE>

Tax-equivalent net interest income for the third quarter of 2005 decreased
$39,012, or 1.1%, from the third quarter of 2004. The decrease in the net
interest margin resulted in a $128,996 decline in tax-equivalent net interest
income. This decrease was offset by increased income of $89,984 resulting from
the increase in earning assets, particularly loan volume.

<PAGE>
                                                                              18


Average earning assets for the third quarter of 2005 totaled $409 million, which
is an increase of $2 million from the third quarter of 2004. Average loans,
however, increased by $36 million and accordingly changed the mix of earning
assets which resulted in additional tax equivalent interest income of $172,949.
Similarly, the composition of funding liabilities also changed. Decreases in
time deposits, were replaced by increases in borrowed money and in demand
deposits. Overall this change in the funding mix increased interest expense by
$82,965.

The tax-equivalent net interest margin for the third quarter of 2005 was 3.56%,
which was a decrease of 5 basis points from the third quarter of 2004. The
change in the net interest margin is generally due to increased funding costs
which have risen at a quicker rate than earning asset yields. The total yield on
earning assets was 5.45% which was a 36 basis point increase from the third
quarter 2004 yield on earning assets. Loan yields increased from 5.73% to 6.25%
over last year. Funding costs, however, have increased by 52 basis points, from
1.71% to 2.23%. This increase is due to the change in funding composition
between deposits and borrowings as well as to overall increases in short term
funding costs. For the third quarter of 2005 the cost of time certificates of
deposits was 2.88%, which was up 49 basis points from the third quarter 2004
cost. Whereas borrowed money provided funding for lower deposit levels, it also
resulted in increased funding costs. Generally, borrowed money is a more
expensive source of funds and therefore, a higher percentage of borrowed funds
to deposits will result in higher funding costs. Additionally, short term
borrowing rates have increased over the last twelve months. The cost of borrowed
money for the third quarter of 2005 was 3.41% which was an increase of 76 basis
points from the third quarter 2004 costs.

Provisions for Loan Losses

The provision for loan losses for the third quarter of 2005 totaled $109,371,
which is an increase of $19,371 over the provision for the third quarter of
2004. The provision for loan losses is determined quarterly and assessed along
with the adequacy of the loan loss reserve. The growth of the loan portfolio,
the entrance into new markets and, cautious expectations of the economy and
housing market, were the reasons for the increase in the provision.

During the third quarter of 2005, the Company recorded net charge-offs of $6,567
compared to net recoveries of $28,019 for the same period in 2004. For the third
quarter of 2005, total charge-offs were $24,854 and total recoveries were
$18,287. Recovery and charge-off activity continues to be associated primarily
with consumer debt, particularly, installment loans and overdrafts.

Noninterest Income

Noninterest income for the third quarter of 2005 totaled $755,696, an increase
of $245,096 or 48.0% from third quarter 2004 noninterest income of $510,600.
Banking service charges and fees for the third quarter of 2005 totaled $277,617,
which was an increase of $49,404 or 21.6% from the third quarter of 2004. This
increase was due to increased service charges resulting from overdraft, cash
management and debit card interchange fees. Trust fees totaled $230,154, which
was $16,296 or 7.6% above third quarter 2004 fees of $213,858. This increase is
due to a higher level of assets under management. Other noninterest income
totaled $247,925, increasing $126,530 or 104.2% from the third quarter of 2004.
This increase is mostly attributed to $118,514 in income related to recording
mortgage servicing assets during the third quarter of 2005. Additionally,
increased income from the cash surrender value of bank owned life insurance as
well as safe deposit rental income contributed to the increase in other
noninterest income. Finally, contributing to the increase of noninterest income
between the third quarters of 2005 and 2004 is the loss on the sale of available
for sales securities.

<PAGE>
                                                                              19


During the third quarter of 2004 securities were sold at a loss of $52,886.
There were no similar sales during the same quarter of 2005.

Noninterest Expense

For the three months ended September 30, 2005, noninterest expense totaled
$2,912,877, which was an increase of $398,789 or 15.9% from the same quarter in
2004. Salary and benefits costs totaled $1,545,382, which was an increase of
$103,153 or 7.2% over the third quarter of 2004. This increase was due to
additional staff positions created over the last year in anticipation of the
opening of the Bank's Canton office.

Third quarter 2005 occupancy and equipment expense totaled $286,752, which was
an increase of $33,225 or 13.1% from the third quarter of 2004. This increase
was due to higher costs related to maintenance and repairs on bank properties,
equipment depreciation, and utilities expense. Additional processing costs for
new electronic banking products and related services resulted in the 15.2 %
increase in computer services expense. Advertising expense totaled $180,289,
which was an increase of $107,880 from third quarter 2004 costs. Third quarter
costs for product promotion, corporate visibility and market awareness were the
reason for the increase. Commissions, services and fees expenses increased by
$32,775 or 65.9% from the third quarter of 2004 due mostly to costs incurred for
benefits and balance sheet consulting. Other noninterest expense totaled
$446,406 for the quarter, which was $108,398 or 32.1% above 2004 costs. These
increases resulted from costs incurred for officer recruitment, outsourcing of
the Company's internal audit function, computer software, contributions,
correspondent bank fees and franchise taxes.

Income Taxes

For the three month period ended September 30, 2005, the provision for income
taxes totaled $334,654, which is a decrease of 21.2% from the same period in
2004. This decrease is due mainly to the decrease of pretax income which was
down by 15.2% from the third quarter of 2004. Additionally, the effective tax
rate for the third quarter of 2005 was 27%, a decrease from the third quarter
2004 effective tax rate of 29%. This decrease is due to a higher ratio of
tax-exempt income to pretax income in 2005, which resulted from higher levels of
interest from municipal securities and income from increases in the cash
surrender value of bank owned life insurance.

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 2004

Summary

Net income for the Company for the nine months ended September 30, 2005 totaled
$2,871,693, increasing $190,753 or 7.1% from 2004 earnings of $2,680,940. Basic
and diluted net income per share for the 2005 nine month period were $1.42 and
$1.40, per share, respectively. These results are 6.8% and 6.9% above 2004
levels of $1.33 and $1.31 respectively, for basic and diluted net income per
share.

<PAGE>
                                                                              20


Net Interest Income

Net interest income is comprised of the following for the nine months ended
September 30,

<TABLE>
<CAPTION>
                                                         2005              2004
                                                     ------------      ------------
<S>                                                  <C>               <C>
      Interest and dividend income                   $ 15,912,809      $ 14,579,556
      Tax-equivalent adjustments                          293,410           254,048
      Interest expense                                 (5,276,202)       (4,693,260)
                                                     ------------      ------------

      Net interest income (tax equivalent basis)     $ 10,930,017      $ 10,140,344
                                                     ============      ============
</TABLE>

The following table presents the Company's average balance sheets (computed on a
daily basis), net interest income, and interest rates for the nine months ended
September 30, 2005 and 2004. Average loans outstanding include nonaccruing
loans. Interest income is presented on a tax-equivalent basis which reflects a
federal tax rate of 34% for all periods presented.

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                            Nine months ended September 30, 2005           Nine months ended September 30, 2004
                                         -----------------------------------------------------------------------------------------
                                                            Interest                                        Interest
                                            Average          Earned/        Yield/        Average            Earned/        Yield/
                                             Balance          Paid           Rate         Balance             Paid           Rate
                                         -------------     -----------      ------     -------------      -----------       ------
<S>                                      <C>               <C>               <C>       <C>                <C>                <C>
Assets
Interest Earning Assets:
Loans                                    $ 233,447,000     $10,543,314       6.02%     $ 198,228,000      $ 8,325,636        5.60%
Investment Securities                      171,960,000       5,645,748       4.38%       194,871,000        6,497,241        4.45%
Other interest earning assets                1,583,000          17,157       1.45%         1,466,000           10,727        0.98%
                                         -------------     -----------                 -------------      -----------

Total interest earning assets              406,990,000      16,206,219       5.31%       394,565,000       14,833,604        5.01%
                                                           -----------     ------                         -----------     -------

Allowance for loan losses                   (1,529,000)                                   (1,244,000)
Cash and due from banks                     15,042,000                                    12,761,000
Bank premises and equipment                  3,435,000                                     2,836,000
Net unrealized loss on
  securities                                (2,403,000)                                   (1,935,000)
Foreclosed real estate                              --                                        92,000
Other assets                                15,129,000                                    13,931,000
                                         -------------                                 -------------

Total Average Assets                     $ 436,664,000                                 $ 421,006,000
                                         =============                                 =============

Liabilities and Shareholders' Equity
Interest Bearing Liabilities:
Savings deposits                         $  56,642,000          87,762       0.21%     $  56,427,000          118,407        0.28%
Money Market deposits                       90,654,000         709,486       1.04%       107,630,000          985,730        1.22%
Time deposits                               84,269,000       1,639,284       2.59%        91,176,000        1,770,176        2.59%
Borrowed funds                             117,198,000       2,839,670       3.23%        89,460,000        1,818,947        2.71%
                                         -------------     -----------                 -------------      -----------

Total interest bearing liabilities         348,763,000       5,276,202       2.02%       344,693,000        4,693,260        1.82%
                                                           -----------     ------                         -----------     -------

Demand deposits                             60,664,000                                    53,005,000
Other liabilities                            1,896,000                                     1,178,000
Shareholders' Equity                        25,341,000                                    22,130,000
                                         -------------                                 -------------

Total liabilities and equity             $ 436,664,000                                 $ 421,006,000
                                         =============                                 =============

Net interest income                                        $10,930,017                                    $10,140,344
                                                           ===========                                    ===========
Net interest spread                                                          3.29%                                           3.19%
Net interest margin                                                          3.58%                                           3.43%
</TABLE>


<PAGE>
                                                                              21

RATE/VOLUME ANALYSIS

<TABLE>
<CAPTION>
                                                    Nine months ended
                                                9/30/05 Compared to 9/30/04
                                                 Increase (Decrease) Due to
                                       ---------------------------------------------
                                         Volume            Rate             Total
                                       -----------      -----------      -----------
<S>                                    <C>              <C>              <C>
Interest earned on:
Loans                                  $ 1,557,450      $   660,228      $ 2,217,678
Investment securities                     (753,551)         (97,942)        (851,493)
Other interest income                          914            5,516            6,430
                                       -----------      -----------      -----------
Total interest earning assets              804,813          567,802        1,372,615
                                       -----------      -----------      -----------

Interest paid on:
Deposits                                  (256,291)        (181,490)        (437,781)
Borrowed money                             630,787          389,936        1,020,723
                                       -----------      -----------      -----------
Total interest bearing liabilities         374,496          208,446          582,942
                                       -----------      -----------      -----------

Increase in net interest income        $   430,317      $   359,356      $   789,673
                                       ===========      ===========      ===========
</TABLE>

Tax equivalent net interest income for the first nine months of 2005 totaled
$10,930,017, which was an increase of $789,673 or 7.8% from the same period in
2004. The $789,673 increase in the net interest income reflects increased income
of $430,317 resulting from the increase in the volume of average earning assets
and liabilities. Furthermore, increased yields on earning assets, net of
increased rates on interest-bearing liabilities, contributed to the additional
$359,356 in net interest income.

Average earning assets for the first three quarters of 2005 increased by $12.4
million or 3.1 % from the same period in 2004. Growth in average earning assets
was in the loan portfolio, specifically in real estate loans, which increased by
over $35 million in the twelve month period. In contrast to the loan portfolio,
the investment portfolio has decreased by $23 million. During 2005, it has been
Management's goal to shift the mix of earning assets from lower yielding
securities to higher yielding loans. The net increase in earning assets
contributed an additional $804,813 to interest income for the first nine months
of 2005. This growth was funded by demand deposit and borrowed money and
resulted in increased funding costs of $374,496.

The tax-equivalent net interest margin (net interest income divided by average
earning assets) was 3.58% for the nine-month period ended September 30, 2005.
The net interest margin increased 15 basis points from the margin of 3.43% for
the nine months ended September 30, 2004. The tax-equivalent yield on earning
assets through September 30, 2005 was 5.31%, 30 basis points above the yield
earned during the first nine months of 2004. The increase in the yield is
attributable mostly to the improvement in loan portfolio yield which increased
by 42 basis points due to increases in the overall interest rate environment.
Additionally, the aforementioned shift in earning asset mix from investments to
loans had a beneficial effect on the net interest margin.

For the first nine months of 2005, funding costs were at 2.02%, which were up 20
basis points from the previous year's level of 1.82%. The increase in funding
costs occurred despite the fact that the year to date costs of deposits as of
September 30, 2005 were either equal to or less than those for the first nine
months of 2004. Specifically, the year-to-date rate paid on money market
deposits as of September 30, 2005 was 1.04% as compared to the 1.22% cost as of
September 30, 2004. For the first nine months of 2005, the average rate paid on
time deposits remained at the previous year's level of 2.59%. Although demand
deposit growth has provided a funding source, lower levels of interest-bearing
deposits have necessitated the Company's funding mix to rely more heavily
towards borrowed money. Increases in interest rates associated with borrowed
money, both in the form of short-term Federal Home Loan advances, borrowings
through customer repurchase agreements and the libor-based subordinated debt
have driven the increases in funding costs for the first nine months of 2005.

<PAGE>
                                                                              22


Provisions for Loan Losses

The provision for loan losses for the first nine months of 2005 totaled
$310,617, which was an increase of $40,617 or 15.0% from the provision of
$270,000 for the first nine months of 2004. The provision for loan losses is
determined quarterly and assessed along with the adequacy of the allowance for
loan losses. Management's rationale for the increased provision include loan
portfolio growth, especially with an increased emphasis on construction and
commercial lending, expansion into new markets and anticipation of a slower
economic environment.

During the first nine months of 2005, the Company recorded net charge-offs of
$9,011 compared to net charge-offs of $16,918 for the first nine months of 2004.
Charge-offs continue to relate to losses in consumer installment loans and in
overdrafts.

Noninterest Income

Year to date noninterest income as of September 30, 2005 totaled $1,967,427, up
$252,703 or 14.7%, above noninterest income from the same period in 2004. Trust
fee income totaled $705,640 which is an increase of $41,861 from the first nine
months of 2004. Increased assets under management, as well as nonrecurring
estate settlement fees contributed to this variance. Additionally impacting the
year-to year increase was the nonrecurring rebate of trust fees during the first
quarter of 2004. Banking service charges and fees totaled $745,778 which is an
increase of 6.1% or $43,123 from fees earned for the first nine months of 2004.
Increases in these fees are due to increased overdraft, cash management and
debit card interchange fees. Other noninterest income totaled $560,085,
increasing 39.6% from the first three quarters of 2004. The majority of this
increase relates to mortgage servicing assets totaling $118,514, which the Bank
recorded during the third quarter of 2005. Additionally contributing to the
increase was growth in fees from the Bank's retail investment product, increased
income from the cash surrender value of bank owned life insurance as well as
increased income from safe deposit box rentals. These increases offset the
$45,138 gain recorded from the sale of OREO property during the first quarter of
2004. Through September 30, 2005, losses on the sales of available for sale
securities totaled $44,076 compared to losses of $52,866 for the similar period
in 2004. In both years, these sales were made with the purpose of addressing
issues of volatility, interest rate exposure, yield and liquidity within the
investment portfolio.

Noninterest Expense

For the nine months ended September 30, 2005, noninterest expense totaled
$8,355,675, which was an increase of 9.5% or $727,707 from the same period of
2004. Corporate goals for continued growth through an ongoing commitment to
product development, marketing and personal service, as well as costs for
regulatory compliance have caused the increase in noninterest expense. Salary
and benefits expense for the first nine months of 2005 totaled $4,524,176,
increasing $278,156 or 6.6% from the first nine months of 2004. Costs related to
new staffing in sales and business development, lending and operations increased
salary expense. Also contributing to this increase was staff hired in
anticipation of the opening of the Canton, Connecticut branch. Year to date
occupancy and equipment expenses totaled $848,210, increasing $68,300 or 8.8%
from the previous year. Costs related to property maintenance and repair
projects throughout the Company have increased this expense. Additionally,
overall higher fuel costs coupled with first quarter weather and higher levels
of depreciation expense due to new equipment purchases contributed to the
increase. Expenses for legal, director fees, postage and supplies continue to
remain close to their 2004 levels. Advertising costs totaled $357,546 for the
first nine months of 2005. These costs have increased by $107,615 or 43.1% due
to branding studies,

<PAGE>
                                                                              23


product promotion and new market awareness. Commissions and fees expenses
increased by $39,565 as a result of costs incurred for benefits and balance
sheet consulting.

Other noninterest expenses totaled $1,302,068 which was an increase of $232,691,
or 21.8% from the first nine months of 2004. Costs for officer recruitment,
outsourcing of the Company's internal audit function, computer software,
contributions, executive relocation expenses and insurance fees comprised this
increase. These increases generally relate to the Company's growth in various
areas over the last year as well as to the regulatory environment.

Income Taxes

The provision for income taxes for the first nine months of 2005 totaled
$1,066,049, which was an increase of $43,937 from the first nine months of 2004.
The increase in income tax expense is due to higher taxable income levels offset
by a slightly lower tax rate. The effective tax rate for the first nine months
of 2005 was 27% compared to 28% for the similar period in 2004.

LIQUIDITY

Management's objective is to ensure continuous ability to meet cash needs as
they arise. Such needs may occur from time to time as a result of fluctuations
in loan demand and the level of total deposits. Accordingly, the Bank has a
liquidity policy that provides flexibility to meet cash needs. The liquidity
objective is achieved through the maintenance of readily marketable investment
securities as well as a balanced flow of asset maturities and prudent pricing on
loan and deposit products.

The Bank is a member of the Federal Home Loan Bank system which provides credit
to its member banks. This enhances the liquidity position of the Bank by
providing a source of available overnight as well as short-term borrowings.
Additionally, federal funds, borrowings through the use of repurchase agreements
and the sale of mortgage loans in the secondary market are available to fund
short term cash needs.

As of September 30, 2005, the Company had $78,897,002 in loan commitments and
credit lines outstanding. Since some commitments are expected to expire without
being drawn upon, the total commitment amount therefore does not necessarily
represent all future cash requirements. The funding of these commitments are
anticipated to be through deposits, loan and security amortizations and
maturities. Management believes liquidity is adequate to meet its present and
foreseeable needs.

CAPITAL

At September 30, 2005, total shareholders' equity was $25,686,640 compared to
$24,545,673 at December 31, 2004. From a regulatory perspective, the capital
ratios of the Company and the Bank place each entity in the "well-capitalized"
categories under applicable regulations. The various capital ratios of the
Company and the Bank are as follows as of September 30, 2005:

<PAGE>
                                                                              24


                                              Minimum
                                           Regulatory
                                       Capital Levels   The Company    The Bank
                                       --------------   -----------    --------
TIER 1:
  Leverage capital ratio                           4%         7.87%       7.19%

  Risk-based capital ratio                         4%        13.51%      12.35%

  Total risk-based capital ratio                   8%        14.17%      13.01%

ALLOWANCE FOR LOAN LOSSES AND CRITICAL ACCOUNTING POLICIES

In the ordinary course of business,  the Bank has made a number of estimates and
assumptions  relating  to the  reporting  results of  operations  and  financial
condition in preparing its financial  statements in conformity  with  accounting
principles  generally  accepted in the United States of America.  Actual results
could differ significantly from those estimates under different  assumptions and
conditions.  The Company believes the following  discussion addresses the Bank's
only critical  accounting policy,  which is the policy that is most important to
the portrayal of the Bank's  financial  results and requires  management's  most
difficult,  subjective and complex  judgments,  often as a result of the need to
make estimates about the effect of matters that are inherently uncertain.

The Bank makes  provisions for loan losses on a quarterly basis as determined by
a continuing  assessment of the adequacy of the  allowance for loan losses.  The
Bank performs an ongoing review of loans in accordance  with an individual  loan
rating system to determine  the required  allowance for loan losses at any given
date. The review of loans is performed to estimate potential exposure to losses.
Management's judgment in determining the adequacy of the allowance is inherently
subjective  and is  based  on an  evaluation  of the  known  and  inherent  risk
characteristics  and size of the loan  portfolios,  the  assessment  of  current
economic and real estate  market  conditions,  estimates of the current value of
underlying collateral, past loan loss experience, review of regulatory authority
examination  reports and  evaluations  of  impaired  loans,  and other  relevant
factors.  Loans, including impaired loans, are charged against the allowance for
loan losses when management  believes that the  uncollectibility of principal is
confirmed.  Any  subsequent  recoveries  are credited to the  allowance for loan
losses when received.  In connection with the determination of the allowance for
loan losses and the  valuation of  foreclosed  real estate,  management  obtains
independent appraisals for significant properties, when considered necessary.

The allowance  consists of specific,  general and  unallocated  components.  The
specific  component  relates to loans that are  classified  as either  doubtful,
substandard  or special  mention.  For such loans  that are also  classified  as
impaired,  an  allowance  is  established  when the  discounted  cash  flows (or
collateral value or observable  market price) of the impaired loan is lower than
the carrying value of that loan.  The general  component  covers  non-classified
loans  and is based on  historical  loss  experience  adjusted  for  qualitative
factors.  An  unallocated  component is maintained to cover  uncertainties  that
could affect management's estimate or probable losses. The unallocated component
of the allowance  reflects the margin of imprecision  inherent in the underlying
assumptions.

There were no material changes in loan  concentration or loan quality that had a
significant effect on the allowance for loan losses calculation at September 30,
2005. In addition,  there were no material changes in the estimation methods and
assumptions  used in the Company's  allowance for loan losses

<PAGE>
                                                                              25


calculation,  and there were no material  reallocations  of the allowance  among
different parts of the loan portfolio.

At September 30, 2005,  the allowance for loan losses was  equivalent to 515% of
total non-performing  assets as compared with 85% of total non-performing assets
at  December  31,  2004.  This ratio was  favorably  impacted  due to  favorable
disposition of nonperforming  mortgages that were removed from nonaccrual during
the first nine  months of 2005.  The ratio of the  allowance  for loan losses to
total  loans at  September  30, 2005 was .69% as compared to .64% as of December
31,  2004.  Despite  reduced  levels  of  non-performing  loans,  the  increased
provisions and allowance  levels are appropriate in light of the increased focus
on  commercial  lending  and the growth of the  portfolio  and  outlook  for the
economy and housing market.

Changes in the  allowance  for loan losses for the periods  ended  September 30,
2005 and 2004 are as shown below:

                                                Nine months ended September 30,
                                                     2005             2004
                                                 -----------      -----------

Balance at beginning of the year                 $ 1,389,947      $ 1,149,454
Provision for loan losses                            310,617          270,000
Loans charged off                                    (43,444)         (75,896)
Recoveries of loans previously charged off            34,433           58,978
                                                 -----------      -----------

Balance at end of period                         $ 1,691,553      $ 1,402,536
                                                 ===========      ===========

The following table  summarizes the Bank's OREO, past due and nonaccrual  loans,
and nonperforming assets as of September 30, 2005 and December 31, 2004.

                                           September 30, 2005  December 31, 2004
                                           ------------------  -----------------

Nonaccrual loans                               $  328,495         $1,634,999

Other real estate owned                                --                 --
                                               ----------         ----------

Total nonperforming assets                     $  328,495         $1,634,999
                                               ==========         ==========

Loans past due in excess of 90 days and
  accruing interest                            $    2,613         $       --
                                               ==========         ==========

Potential Problem Loans

As of September 30, 2005, there were no potential problem loans not disclosed
above which cause management to have serious doubts as to the ability of such
borrowers to comply with their present loan repayment terms.

Impact of Inflation and Changing Prices

The financial statements and related financial data presented in this report
have been prepared in accordance with accepted accounting principles generally
accepted in the United States of America, which require the measurement of
financial position and operating results in terms of historical dollars without
considering the change in the relative purchasing power of money over time due
to inflation. The primary impact of inflation on our operations is reflected in
increased operating costs. Unlike most industrial companies, virtually all the
assets and liabilities of a financial institution are monetary in nature. As a
result, interest rates generally have a more significant impact on a financial
institution's

<PAGE>
                                                                              26


performance than do general levels of inflation. Interest rates do
not necessarily move in the same direction or to the same extent as the prices
of goods and services.

OFF BALANCE SHEET ARRANGEMENTS

The Company is a party to financial  instruments with off-balance  sheet risk in
the normal course of business to meet the financing  needs of its customers such
as letters of credit.  In the opinion of  management,  these  off-balance  sheet
arrangements are not likely to have a material effect on the Company's financial
condition, results of operation, or liquidity.

At September 30, 2005,  there have been no significant  changes in the Company's
off-balance sheet arrangements from December 31, 2004.

FORWARD-LOOKING STATEMENTS

This Quarterly Report and future filings made by the Company with the Securities
and Exchange  Commission,  as well as other filings,  reports and press releases
made or  issued  by the  Company  and the  Bank,  and  oral  statements  made by
executive  officers  of  the  Company  and  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  Company  and  the  Bank  do  business,  and (b)
expectations  for  increased  revenues  and  earnings  for the  Company and Bank
through growth resulting from acquisitions,  attractions of new deposit and loan
customers   and  the   introduction   of  new   products  and   services.   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  Company  claims the  protection  of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.

The Company  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 operations,  performance,  development and
results of the Company'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 Company and
Bank through increased operating expenses;  (c) increased competition from other
financial  and  nonfinancial  institutions;  (d)  the  impact  of  technological
advances;  and (e)  other  risks  detailed  from  time to time in the  Company's
filings with the Securities and Exchange  Commission.  Such  developments  could
have an adverse  impact on the Company  and the Bank's  financial  position  and
results of operation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The main components of market risk for the Company are equity price risk, credit
risk,  interest rate risk and  liquidity  risk.  The  Company's  common stock is
traded on the Over the Counter  ("OTC")  Bulletin Board under the symbol "FLFL".
As a result,  the value of its common  stock may  fluctuate  or respond to price
movements relating to the banking industry or other indicia of investment.

<PAGE>
                                                                              27


The  Company  manages  interest  rate risk and  liquidity  risk  through an ALCO
Committee  comprised of senior  management  and other  officers.  The  committee
monitors  compliance  with the  Bank's  Asset/Liability  Policy  which  provides
guidelines to analyze and manage gap, which is the difference between the amount
of assets and the amounts of liabilities which mature or reprice during specific
time frames. The Company manages its interest-rate risk sensitivity  through the
use of a simulation  model that projects the impact of rate shocks,  rate cycles
and rate forecast estimates on net interest income.  These simulations take into
consideration factors such as maturities, reinvestment rates, prepayment speeds,
repricing  limits  and other  factors.  The  results  of these  simulations  are
compared to earnings  tolerance  limits set forth in the Bank's  Asset/Liability
Policy.

ITEM 4. CONTROLS AND PROCEDURES

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that information  required to be disclosed in the Company's  Exchange Act
report 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 Company's  Management,  including its Chief  Executive
Officer and Chief Financial Officer,  as appropriate,  to allow timely decisions
regarding  required  disclosure based 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  of possible
controls and procedures.

As of the end of the period covered by this report,  the Company  carried out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  including the Company's Chief  Executive  Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  disclosure  controls and procedures.  Based on such  evaluation,  the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective.

There were no changes in the Company's internal control over financial reporting
that  occurred  during the Company's  third quarter of 2005 that has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor the Bank (or any of their properties) are the subject of
any material  pending legal  proceedings  other than routine  litigation that is
incidental  to their  business  with the  possible  exception  of the  following
matter.

On September  9, 2003,  the Bank  commenced an action in Superior  Court for the
Judicial  District of Litchfield,  Connecticut in a matter  captioned "The First
National   Bank  of   Litchfield   v.  Theresa   Sullivan  and  John   Sullivan:
CV-03-0091476-S"  in an effort to collect principal and past due interest due on
two (2) loans,  which the Bank extended several years earlier and upon which the
Borrowers had defaulted.  The aggregate principal balance outstanding on the two
(2) loans was approximately  $135,000. The Borrowers  counterclaimed against the
Bank alleging that the Bank,  through current and former

<PAGE>
                                                                              28


employees,  engaged in conduct in  violation of covenants of good faith and fair
dealing  pursuant to both common law and Connecticut  statutes,  that the Bank's
conduct  constitutes a violation of the Connecticut Uniform Trade Practices Act.
The Borrowers seek a variety of  unspecified  damages  including  money damages,
interest,  punitive  damages,  and "such other and  further  relief as the Court
deems fair and just."

The Bank is conducting  discovery  with respect to the merits of the  underlying
action and counterclaim.  While the outcome of such litigation is unresolved, it
is not  expected  to  have  any  material  adverse  effect  upon  the  financial
statements of the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - Not
        applicable

Item 3. Defaults Upon Senior Securities - Not applicable

Item 4. Submission of Matters to a Vote of Security Holders - None

Item 5. Other Information - Not applicable

Item 6. Exhibits

      A.    Exhibits

                                  EXHIBIT INDEX

Exhibit
   No.      Exhibit
-------     -------

3.1         Certificate  of   Incorporation   of  First   Litchfield   Financial
            Corporation,  as amended.  Exhibit is  incorporated  by reference to
            Exhibit 3.1 set forth in the  Company's  Registration  Statement  on
            Form 10-SB as filed with the Securities  and Exchange  Commission on
            January 7, 2000.

3.2         Bylaws  of  First  Litchfield  Financial  Corporation,  as  amended.
            Exhibit is incorporated by reference to Exhibit 3.2 set forth in the
            Company's  Registration  Statement  on Form  10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

4.          Specimen  Common  Stock  Certificate.  Exhibit  is  incorporated  by
            reference  to  Exhibit  4. set forth in the  Company's  Registration
            Statement  on Form 10-SB as filed with the  Securities  and Exchange
            Commission on January 7, 2000.

10.1        1990 Stock Option Plan for Company's  President and Chief  Executive
            Officer, as amended. Exhibit is incorporated by reference to Exhibit
            10.1 set forth in the Company's Registration Statement on Form 10-SB
            as filed with the Securities  and Exchange  Commission on January 7,
            2000.

10.2        1994 Stock Option Plan for Officers and Outside  Directors.  Exhibit
            is  incorporated  by  reference  to  Exhibit  10.2 set  forth in the
            Company's  Registration  Statement  on Form  10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

<PAGE>
                                                                              29


10.3        Supplemental  Executive  Retirement  Agreement  between  Company and
            Jerome J. Whalen.  Exhibit is  incorporated  by reference to Exhibit
            10.3 set forth in the Company's Registration Statement on Form 10-SB
            as filed with the Securities  and Exchange  Commission on January 7,
            2000.

10.4        Change in Control  Agreement  between  Jerome J. Whalen and Company.
            Exhibit is  incorporated  by  reference to Exhibit 10.4 set forth in
            the Company's Registration Statement on Form 10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

10.5        Change in Control Agreement between Philip G. Samponaro and Company.
            Exhibit is  incorporated  by  reference to Exhibit 10.5 set forth in
            the Company's Registration Statement on Form 10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

10.6        Change in Control  Agreement between Carroll A. Pereira and Company.
            Exhibit is  incorporated  by  reference to Exhibit 10.6 set forth in
            the Company's Registration Statement on Form 10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

10.7        Change in Control  Agreement  between  John S.  Newton and  Company.
            Exhibit is  incorporated  by  reference to Exhibit 10.7 set forth in
            the Company's Registration Statement on Form 10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

10.8        Change in Control  Agreement  between  Revere H. Ferris and Company.
            Exhibit is  incorporated  by  reference to Exhibit 10.8 set forth in
            the Company's Registration Statement on Form 10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

10.9        Supplemental  Employee Retirement  Agreement between the Company and
            Walter Hunt.  Exhibit is  incorporated  by reference to Exhibit 10.9
            set forth in the Company's  Registration  Statement on Form 10-SB as
            filed with the  Securities  and  Exchange  Commission  on January 7,
            2000.

10.10       Deferred  Directors' Fee Plan.  Exhibit is incorporated by reference
            to Exhibit 10.10 set forth in the Company's  Registration  Statement
            on Form 10-SB as filed with the Securities  and Exchange  Commission
            on January 7, 2000.

10.11       Form  of   Employee   Change  in  Control   Agreement.   Exhibit  is
            incorporated  by  reference  to  Exhibit  10.11  set  forth  in  the
            Company's  Registration  Statement  on Form  10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.

10.12       Executive  Supplemental  Compensation  Agreement  dated November 21,
            2000  between  the  Company  and  Jerome  J.   Whalen.   Exhibit  is
            incorporated  by  reference  to  Exhibit  10.12  set  forth  in  the
            Company's  Annual  Report in Form  10-KSB for the fiscal  year ended
            December  31,  2000  as  filed  with  the  Securities  and  Exchange
            Commission on April 2, 2001.

<PAGE>
                                                                              30


10.13       Split Dollar Agreement with Salisbury Bank as Trustee dated November
            21, 2000.  Exhibit is incorporated by reference to Exhibit 10.13 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.14       The Rabbi  Trust  Agreement  with  Salisbury  Bank as Trustee  dated
            November 21, 2000.  Exhibit is  incorporated by reference to Exhibit
            10.14 set forth in the  Company's  Annual  Report in Form 10-KSB for
            the fiscal year ended December 31, 2000 as filed with the Securities
            and Exchange Commission on April 2, 2001.

10.15       The First National Bank of Litchfield Executive Incentive Retirement
            Agreement  between  Jerome J. Whalen and the Bank dated December 28,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.15 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.16       The First National Bank of Litchfield Executive Incentive Retirement
            Agreement between Carroll A. Pereira and the Bank dated November 30,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.16 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.17       The First National Bank of Litchfield Executive Incentive Retirement
            Agreement  between  Philip G.  Samponaro and the Bank dated December
            19, 2000.  Exhibit is incorporated by reference to Exhibit 10.17 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.18       The First National Bank of Litchfield Executive Incentive Retirement
            Agreement  between  Revere H. Ferris and the Bank dated November 30,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.18 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.19       The First National Bank of Litchfield Executive Incentive Retirement
            Agreement  between  John S. Newton and the Bank dated  December  21,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.19 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.20       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between  Charles E. Orr and the Bank dated  November  29,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.20 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.21       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement between Patricia D. Werner and the Bank dated November 30,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.21 set
            forth in the  Company's  Annual Report in Form 10-KSB for

<PAGE>
                                                                              31


            the fiscal year ended December 31, 2000 as filed with the Securities
            and Exchange Commission on April 2, 2001.

10.22       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between  Clayton L. Blick and the Bank dated  December 4,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.22 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.23       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between  George M. Madsen and the Bank dated  December 7,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.23 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.24       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between  William J. Sweetman and the Bank dated  December
            20, 2000.  Exhibit is incorporated by reference to Exhibit 10.24 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.25       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between H. Ray Underwood and the Bank dated  December 20,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.25 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.26       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between Bernice D. Fuessenich and the Bank dated December
            21, 2000.  Exhibit is incorporated by reference to Exhibit 10.26 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.27       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between Thomas A. Kendall and the Bank dated December 26,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.27 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.28       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between  Ernest W. Clock and the Bank dated  December 26,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.28 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2000 as filed  with the  Securities  and
            Exchange Commission on April 2, 2001.

10.29       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between  Perley H. Grimes and the Bank dated December 27,
            2000.  Exhibit is  incorporated  by reference  to Exhibit  10.29 set
            forth in the  Company's  Annual Report in Form 10-KSB for

<PAGE>
                                                                              32


            the fiscal year ended December 31, 2000 as filed with the Securities
            and Exchange Commission on April 2, 2001.

10.30       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement between John H. Field and the Bank dated December 4, 2000.
            Exhibit is  incorporated  by reference to Exhibit 10.30 set forth in
            the Company's Annual Report in Form 10-KSB for the fiscal year ended
            December  31,  2000  as  filed  with  the  Securities  and  Exchange
            Commission on April 2, 2001.

10.31       Early  Retirement  Agreement  between Jerome J. Whalen and The First
            National  Bank  of  Litchfield  dated  April  2,  2002.  Exhibit  is
            incorporated  by  reference  to  Exhibit  10.31  set  forth  in  the
            Company's  10-QSB for the quarter ended March 31, 2002 as filed with
            the Securities and Exchange Commission on May 14, 2002.

10.32       Executive  Change in Control  Agreement  between Joseph J. Greco and
            the Company and the Bank.  Exhibit is  incorporated  by reference to
            Exhibit  10.32 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2002 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2002.

10.33       Executive Change in Control Agreement between Carroll A. Pereira and
            the Company and the Bank.  Exhibit is  incorporated  by reference to
            Exhibit  10.33 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2002 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2002.

10.34       Executive  Change in Control  Agreement  between Philip G. Samponaro
            and the Company and the Bank.  Exhibit is  incorporated by reference
            to Exhibit 10.34 set forth in the  Company's  10-QSB for the quarter
            ended  June 30,  2002 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2002.

10.35       Executive Change in Control Agreement between John S. Newton and the
            Company  and the Bank.  Exhibit  is  incorporated  by  reference  to
            Exhibit  10.35 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2002 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2002.

10.36       Executive Change in Control  Agreement  between Revere H. Ferris and
            the Company and the Bank.  Exhibit is  incorporated  by reference to
            Exhibit  10.36 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2002 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2002.

10.37       Form  of   Employee   Change  in  Control   Agreement.   Exhibit  is
            incorporated  by  reference  to  Exhibit  10.37  set  forth  in  the
            Company's  10-QSB for the quarter  ended June 30, 2002 as filed with
            the Securities and Exchange Commission on August 13, 2002.

10.37.1     The First National Bank of Litchfield Director Incentive  Retirement
            Agreement  between  Alan B. Magary and the Bank dated  December  19,
            2002.  Exhibit is  incorporated  by reference  to Exhibit  10.38 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2002 as filed  with the  Securities  and
            Exchange Commission on March 31, 2003.

<PAGE>
                                                                              33


10.38       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement between Gregory S. Oneglia and the Bank dated December 19,
            2002.  Exhibit is  incorporated  by reference  to Exhibit  10.39 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2002 as filed  with the  Securities  and
            Exchange Commission on March 31, 2003.

10.39       The First National Bank of Litchfield Executive Incentive Retirement
            Agreement  between  Joseph J. Greco and the Bank dated  December 19,
            2002.  Exhibit is  incorporated  by reference  to Exhibit  10.40 set
            forth in the  Company's  Annual Report in Form 10-KSB for the fiscal
            year  ended  December  31,  2002 as filed  with the  Securities  and
            Exchange Commission on March 31, 2003.

10.41       Executive  Change in Control  Agreement  between Joseph J. Greco and
            the Company and the Bank.  Exhibit is  incorporated  by reference to
            Exhibit  10.41 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2003 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2003.

10.42       Executive Change in Control Agreement between Carroll A. Pereira and
            the Company and the Bank.  Exhibit is  incorporated  by reference to
            Exhibit  10.42 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2003 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2003.

10.43       Executive Change in Control  Agreement  between Revere H. Ferris and
            the Company and the Bank.  Exhibit is  incorporated  by reference to
            Exhibit  10.43 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2003 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2003.

10.44       Executive Change in Control Agreement between John S. Newton and the
            Company  and the Bank.  Exhibit  is  incorporated  by  reference  to
            Exhibit  10.44 set forth in the  Company's  10-QSB  for the  quarter
            ended  June 30,  2003 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2003.

10.45       Executive  Change in Control  Agreement  between Philip G. Samponaro
            and the Company and the Bank.  Exhibit is  incorporated by reference
            to Exhibit 10.45 set forth in the  Company's  10-QSB for the quarter
            ended  June 30,  2003 as  filed  with the  Securities  and  Exchange
            Commission on August 13, 2003.

10.46       Form  of   Employee   Change  in  Control   Agreement.   Exhibit  is
            incorporated  by  reference  to  Exhibit  10.46  set  forth  in  the
            Company's  10-QSB for the quarter  ended June 30, 2003 as filed with
            the Securities and Exchange Commission on August 13, 2003.

10.47       Split  dollar  life  agreement  between  Joelene  E.  Smith  and the
            Company.  Exhibit is  incorporated by reference to Exhibit 10.47 set
            forth in the Company's 10-QSB for the quarter ended June 30, 2003 as
            filed with the  Securities  and  Exchange  Commission  on August 13,
            2003.

10.48       Split  dollar  life  agreement  between  Laura  R.  Szablak  and the
            Company.  Exhibit is  incorporated by reference to Exhibit 10.48 set
            forth in the Company's 10-QSB for the

<PAGE>
                                                                              34


            quarter  ended  June 30,  2003 as  filed  with  the  Securities  and
            Exchange Commission on August 13, 2003.

10.49       Split  dollar life  agreement  between  Patricia A.  Carlson and the
            Company.  Exhibit is  incorporated by reference to Exhibit 10.49 set
            forth in the Company's 10-QSB for the quarter ended June 30, 2003 as
            filed with the  Securities  and  Exchange  Commission  on August 13,
            2003.

10.50       Split  dollar  life  agreement  between  Kathleen  McGarry  and  the
            Company.  Exhibit is  incorporated by reference to Exhibit 10.50 set
            forth in the Company's 10-QSB for the quarter ended June 30, 2003 as
            filed with the  Securities  and  Exchange  Commission  on August 13,
            2003.

10.51       Split  dollar  life  agreement  between  Cynthia  Showalter  and the
            Company.  Exhibit is  incorporated by reference to Exhibit 10.51 set
            forth in the Company's 10-QSB for the quarter ended June 30, 2003 as
            filed with the  Securities  and  Exchange  Commission  on August 13,
            2003.

10.52       Amended  and  Restated  Declaration  of Trust  of  First  Litchfield
            Statutory  Trust I. Exhibit is  incorporated by reference to Exhibit
            10.52 set forth in the  Company's  10-QSB for the quarter ended June
            30, 2003 as filed with the  Securities  and Exchange  Commission  on
            August 13, 2003.

10.53       Indenture  for  the  Company's  Floating  Rate  Junior  Subordinated
            Deferrable  Interest Debentures due 2033. Exhibit is incorporated by
            reference to Exhibit 10.53 set forth in the Company's 10-QSB for the
            quarter  ended  June 30,  2003 as  filed  with  the  Securities  and
            Exchange Commission on August 13, 2003.

10.54       The First National Bank of Litchfield Executive Incentive Retirement
            Agreement  between  Joelene E. Smith and the Bank dated December 22,
            2003.  Exhibit is  incorporated  by reference  to Exhibit  10.54 set
            forth in the Company's  10-KSB for the year ended  December 31, 2003
            as filed with the  Securities  and Exchange  Commission on March 30,
            2004.

10.55       Early Retirement Agreement between Philip G. Samponaro and The First
            National  Bank of  Litchfield  dated  January 26,  2004.  Exhibit is
            incorporated  by  reference  to  Exhibit  10.55  set  forth  in  the
            Company's  10-KSB for the year ended December 31, 2003 as filed with
            the Securities and Exchange Commission on March 30, 2004.

10.56       The First National Bank of Litchfield Director Incentive  Retirement
            Agreement between Kathleen A. Kelley and the Bank dated September 1,
            2004.  Exhibit is  incorporated  by reference  to Exhibit  10.56 set
            forth in the Company's  10-QSB for the quarter  ended  September 30,
            2004 as  filed  with  the  Securities  and  Exchange  Commission  on
            November 14, 2004.

10.57       Amendment  to  The  First  National  Bank  of  Litchfield   Director
            Incentive  Retirement  Agreement between Alan B. Magary and the Bank
            dated  August 26,  2004.  Exhibit is  incorporated  by  reference to
            Exhibit  10.57 set forth in the  Company's  10-QSB  for the  quarter
            ended  September 30, 2004 as filed with the  Securities and Exchange
            Commission on November 14, 2004.

<PAGE>
                                                                              35


10.58       Executive Change in Control Agreement between Robert E.Teittinen and
            the Company and the Bank.

21.         List of  Subsidiaries  of First  Litchfield  Financial  Corporation.
            Exhibit is  incorporated by reference to Exhibit 21 set forth in the
            Company's  10-K for the year ended  December  31, 2004 as filed with
            the Securities and Exchange Commission on March 31, 2005.

31.1        Certification of the Chief Executive Officer of the Company.

31.2        Certification of the Chief Financial Officer of the Company.

32.0        Certification of the Chief Executive Officer and the Chief Financial
            Officer of the Company,  pursuant to 18 U.S.C.  ss.1350,  as adopted
            pursuant to section 906 of the Sarbanes-Oxley Act of 2003.

<PAGE>
                                                                              36


                                   SIGNATURES

Pursuant to the 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.

                                             FIRST LITCHFIELD FINANCIAL
                                             CORPORATION


Dated: November 14, 2005                     By:   /s/ Joseph J. Greco
                                                --------------------------------
                                                 Joseph J. Greco, President and
                                                 Chief Executive Officer


Dated: November 14, 2005                     By: /s/ Carroll A. Pereira
                                                --------------------------------
                                                 Carroll A. Pereira
                                                 Principal Accounting Officer