U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

For the quarterly period ended: September 30, 2003

|_|   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 small business issuer 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)

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

(Former name, former address and former fiscal year, if changed since last
report.)

      Check whether the issuer: (1) filed all reports required to be filed by
      Section 13 or 15(d) of the Exchange Act 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
      preceding 90 days.

      Yes |X| No |_|

                      APPLICABLE ONLY TO CORPORATE ISSUERS

      State the number of shares outstanding of each of the issuer's classes of
      common equity, as of the latest practicable date: 1,801,413 shares of
      Common Stock, par value $.01 per share, were outstanding at October 29,
      2003.

      Transitional Small Business Disclosure Format (check one):

      Yes |_| No |X|

<PAGE>

                     FIRST LITCHFIELD FINANCIAL CORPORATION

                                   FORM 10-QSB

                                      INDEX

                                                                            Page
                                                                            ----

Part I - Financial Information

        Item 1 - Financial Statements

              Consolidated Balance Sheets - September 30, 2003 (unaudited)
                  and December 31, 2002......................................  2

              Consolidated Statements of Income - Three months and nine
                  months ended September 30, 2003 and 2002 (unaudited).......  3

              Consolidated Statements of Comprehensive Income - Three
                  months and nine months ended September 30, 2003 and
                  2002 (unaudited)...........................................  4

              Consolidated Statements of Cash Flows - Nine months
                 ended September 30, 2003 and 2002 (unaudited)...............  5

              Notes to Consolidated Financial Statements.....................  6

        Item 2 - Management's Discussion and Analysis or Plan of Operation... 10

        Item 3 - Controls and Procedures..................................... 22

Part II - Other Information

        1. Legal Proceedings................................................. 23

        2. Changes in Securities and Use of Proceeds......................... 23

        3. Defaults Upon Senior Securities................................... 23

        4. Submission of Matters to a Vote of Security Holders............... 23

        5. Other Information................................................. 23

        6. Exhibits and Reports on Form 8-K.................................. 23

Signatures................................................................... 33


                                       1
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                          September 30,        December 31,
                                                                                              2003                 2002
                                                                                          -------------       -------------
                                                                                           (Unaudited)
<S>                                                                                       <C>                 <C>
ASSETS
   Cash and due from banks                                                                $  13,990,488       $   8,763,736
   Federal Funds Sold                                                                                --          15,000,000
                                                                                          -------------       -------------
                                              CASH AND CASH EQUIVALENTS                      13,990,488          23,763,736
                                                                                          -------------       -------------
   Securities:
     Available for sale securities:
       US Treasury and government agency securities (amortized cost $51,761,062-2003         50,547,131           5,233,594
            and $5,004,622-2002)
       State and municipal securities (amortized cost $16,342,544-2003
        and $16,359,152-2002)                                                                17,026,036          16,754,344
       Mortgage-backed securities (amortized cost $99,242,144-2003
        and $55,723,087-2002)                                                                98,570,640          56,553,896
       Corporate and other bonds (amortized cost $3,017,621-2003)                             2,981,261                  --
     Held to maturity securities:
       Mortgage-backed securities (market value $134,768-2003
        and $279,790-2002)                                                                      131,188             203,012
                                                                                          -------------       -------------
                                                       TOTAL SECURITIES                     169,256,256          78,744,846
                                                                                          -------------       -------------

   Federal Home Loan Bank stock, at cost                                                      2,389,800           2,389,800
   Federal Reserve Bank stock, at cost                                                          225,850              81,850
   Other restricted stock, at cost                                                               50,000                  --
   Loans held for sale                                                                          230,583             385,000
   Loans Receivable, Net of Allowance for loan losses of
                 $1,104,268 -2003, $1,011,052-2002
                                                              NET LOANS                     185,359,890         188,363,103

   Bank premises and equipment, net                                                           2,801,754           2,580,616
   Foreclosed real estate                                                                       300,000             300,000
   Accrued interest receivable                                                                2,111,160           1,507,335
   Deferred income taxes                                                                        585,908                  --
   Cash surrender value of insurance                                                          7,525,009           7,239,262
   Other assets                                                                               2,717,162           1,447,483
                                                                                          -------------       -------------

                                                           TOTAL ASSETS                   $ 387,543,860       $ 306,803,031
                                                                                          =============       =============
LIABILITIES
   Deposits:
     Noninterest bearing:
        Demand                                                                            $  47,284,837       $  42,738,112
     Interest bearing:
        Savings                                                                              55,075,812          46,663,585
        Money market                                                                        102,476,299          70,048,999
        Time certificates of deposit in denominations of $100,000 or more                    28,181,090          32,913,440
        Other time certificates of deposit                                                   69,176,799          76,317,807
                                                                                          -------------       -------------
                                                         TOTAL DEPOSITS                     302,194,837         268,681,943
                                                                                          -------------       -------------

   Federal Home Loan Bank advances                                                           39,000,000           8,000,000
   Securities sold under agreements to repurchase                                            17,000,000           7,000,000
   Trust preferred securities                                                                 6,800,000                  --
   Deferred income taxes                                                                             --             329,807
   Accrued expenses and other liabilities                                                     1,516,268           1,792,065
                                                                                          -------------       -------------
                                                      TOTAL LIABILITIES                     366,511,105         285,803,815
                                                                                          -------------       -------------
   Commitments and Contingencies                                                                     --                  --

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
     2003 - Issued - 1,896,821 shares, outstanding - 1,801,413 shares
     2002 - Issued - 1,872,738 shares, outstanding - 1,777,330 shares                            18,968              18,727
   Capital surplus                                                                           14,802,418          14,532,101
   Retained earnings                                                                          7,729,710           6,189,166
   Less: Treasury stock at cost - 95,408 shares                                                (701,061)           (701,061)
   Accumulated other comprehensive income-net unrealized (loss) gain
     on available for sale securities (net of taxes)                                           (817,280)            960,283
                                                                                          -------------       -------------
                                             TOTAL SHAREHOLDERS' EQUITY                      21,032,755          20,999,216
                                                                                          -------------       -------------
                             TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 387,543,860       $ 306,803,031
                                                                                          =============       =============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       2
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended              Nine Months Ended
                                                                   September 30,                   September 30,
                                                               2003            2002            2003             2002
                                                            ----------      ----------      -----------      -----------
<S>                                                         <C>             <C>             <C>              <C>
INTEREST AND DIVIDEND INCOME
   Interest and fees on loans                               $2,693,087      $3,143,469      $ 8,387,770      $ 9,506,148

   Interest and dividends on securities:
      Mortgage-backed                                          828,075         723,918        2,043,540        1,957,555
      US Treasury and other                                    612,359          97,876        1,032,824          439,108
      State & municipal securities                             199,726         169,566          595,628          444,053
      Corporate & other bonds                                   33,608              --           83,667           51,928
   Other interest income                                        11,617          58,990           67,937          103,918
                                                            ----------      ----------      -----------      -----------
                          TOTAL INTEREST INCOME              4,378,472       4,193,819       12,211,366       12,502,710
                                                            ----------      ----------      -----------      -----------

INTEREST EXPENSE
   Interest on deposits:
      Savings                                                   81,395         128,842          274,029          372,889
      Money market                                             358,770         379,142          935,180        1,130,660
      Time certificates of deposit in denominations
          $100,000 or more                                     189,791         293,189          622,796          813,604
      Other time certificates of deposit                       533,186         874,349        1,731,982        2,597,537
                                                            ----------      ----------      -----------      -----------
                     TOTAL INTEREST ON DEPOSITS              1,163,142       1,675,522        3,563,987        4,914,690
   Interest on Federal Home Loan Bank advances                 171,880          98,678          295,093          341,578
   Interest on repurchase agreements                           126,906          75,755          272,051          193,394
   Interest on trust preferred debt                             72,291              --           75,532               --
                                                            ----------      ----------      -----------      -----------
                         TOTAL INTEREST EXPENSE              1,534,219       1,849,955        4,206,663        5,449,662
                                                            ----------      ----------      -----------      -----------
                            NET INTEREST INCOME              2,844,253       2,343,864        8,004,703        7,053,048
PROVISION FOR LOAN LOSSES                                       75,000          60,000          225,000          180,000
                                                            ----------      ----------      -----------      -----------
                      NET INTEREST INCOME AFTER
                      PROVISION FOR LOAN LOSSES              2,769,253       2,283,864        7,779,703        6,873,048
                                                            ----------      ----------      -----------      -----------
NONINTEREST INCOME
   Banking service charges and fees                            228,510         203,449          614,740          564,661
   Trust                                                       222,910         175,238          757,910          660,238
   Gains on the sales of available for sale securities          46,965         134,985          242,995          134,985
   Other                                                       135,038          94,290          349,678          433,802
                                                            ----------      ----------      -----------      -----------
                       TOTAL NONINTEREST INCOME                633,423         607,962        1,965,323        1,793,686
                                                            ----------      ----------      -----------      -----------
NONINTEREST EXPENSE
   Salaries                                                    990,576         845,369        2,884,083        2,936,940
   Employee benefits                                           274,761         252,202          827,611          831,051
   Net occupancy                                               166,667         121,853          555,388          361,217
   Equipment                                                    99,170          79,467          298,338          244,372
   Legal fees                                                   44,523          40,424          115,324          143,201
   Directors fees                                               31,725          38,914           96,850          122,242
   Computer services                                           195,088         191,386          530,018          591,742
   Supplies                                                     49,709          35,670          159,186          128,621
   Commissions, services and fees                               69,906          34,090          197,239          184,032
   Postage                                                      31,974          26,547          111,732           85,439
   Advertising                                                  82,410          56,375          281,982          154,080
   OREO & non-performing loan expenses-net                       4,006          18,896            9,403           27,426
   Other                                                       314,657         258,803          944,168          776,012
                                                            ----------      ----------      -----------      -----------
                     TOTAL NONINTEREST EXPENSES              2,355,172       1,999,996        7,011,322        6,586,375
                                                            ----------      ----------      -----------      -----------
                     INCOME BEFORE INCOME TAXES              1,047,504         891,830        2,733,704        2,080,359
PROVISION FOR INCOME TAXES                                     278,490         218,606          654,945          474,035
                                                            ----------      ----------      -----------      -----------
                                     NET INCOME             $  769,014      $  673,224      $ 2,078,759      $ 1,606,324
                                                            ==========      ==========      ===========      ===========
INCOME PER SHARE
                     BASIC NET INCOME PER SHARE             $     0.43      $     0.38      $      1.16      $      0.92
                                                            ==========      ==========      ===========      ===========
                   DILUTED NET INCOME PER SHARE             $     0.42      $     0.37      $      1.14      $      0.89
                                                            ==========      ==========      ===========      ===========

   Dividends Per Share                                      $     0.10      $     0.10      $      0.30      $      0.30
                                                            ==========      ==========      ===========      ===========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       3
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

<TABLE>
<CAPTION>
Three months ended September 30,                                                          2003             2002
                                                                                      -----------       ----------
<S>                                                                                   <C>               <C>
Net income                                                                            $   769,014       $  673,224
Unrealized holding (losses) gains on securities:
       Unrealized holding (losses) gains arising during the period, net of taxes       (2,674,245)         169,609
                                                                                      -----------       ----------

Comprehensive income                                                                  $(1,905,231)      $  842,833
                                                                                      ===========       ==========

<CAPTION>

Nine months ended September 30,                                                           2003             2002
                                                                                      -----------       ----------

<S>                                                                                   <C>               <C>
Net income                                                                            $ 2,078,759       $1,606,324
Unrealized holding (losses) gains on securities:
       Unrealized holding (losses) gains arising during the period, net of taxes       (1,777,563)         880,124
                                                                                      -----------       ----------

Comprehensive income                                                                  $   301,196       $2,486,448
                                                                                      ===========       ==========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                               Nine Months Ended September 30,
                                                                                                   2003               2002
                                                                                               ------------       ------------
<S>                                                                                            <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                     $  2,078,759       $  1,606,324
Adjustments to reconcile net income to net cash provided by operating activities:
       Amortization and accretion of premiums and discounts on investment securities, net           152,961            420,346
       Provision for loan losses                                                                    225,000            180,000
       Depreciation and amortization                                                                226,894            191,723
       Gains on sale of available for sale securities                                              (242,995)          (134,985)
       Loans originated for sale                                                                 (8,856,483)                --
       Proceeds from sales of loans held for sale                                                 9,010,900                 --
       Loss on the sale of repossessed assets                                                           400              3,400
       Loss on disposals of bank premises and equipment                                                 334                354
       Increase in accrued interest receivable                                                     (603,825)          (240,933)
       Increase in other assets                                                                  (1,056,019)           (70,046)
       Increase in cash surrender value of insurance                                               (248,497)          (668,635)
       Decrease in deferred loan origination costs                                                  251,586            287,986
       (Decrease) increase in accrued expenses and other liabilities                               (278,205)            90,268
                                                                                               ------------       ------------

           Net cash  provided by operating activities                                               660,810          1,665,802
                                                                                               ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Available for sale mortgage-backed securities:
       Proceeds from maturities and principal payments                                           22,647,562          8,319,782
       Purchases                                                                                (83,176,868)       (30,758,483)
       Proceeds from sales                                                                       17,040,065                 --
Available for sale US Treasury and government agency securities:
       Proceeds from maturity                                                                    10,973,809                 --
       Purchases                                                                                (57,648,652)        (7,219,063)
       Proceeds from sales                                                                               --         10,409,250

Available for sale State & municipal and other bonds
       Purchases                                                                                 (3,022,500)        (5,038,985)
Proceeds from maturity                                                                                               2,008,000
Held to maturity mortgage-backed securities:
       Proceeds from maturities and principal payments                                               71,931             84,359
Purchase of Other Restricted Stock                                                                  (50,000)                --
Purchase of Federal Reserve Bank Stock                                                             (144,000)                --
Net decrease (increase) in loans                                                                  2,493,567         (6,136,932)
Proceeds from the sale of repossessed assets                                                         23,000             86,450
Purchase of bank premises and equipment                                                            (448,567)           (86,061)
Proceeds from sale of bank premises and equipment                                                       201             15,550
Purchase of life insurance policies                                                                 (37,250)                --
                                                                                               ------------       ------------

       Net cash used in investing activities                                                    (91,277,702)       (28,316,133)
                                                                                               ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in savings, money market and demand deposits                                        45,386,252         20,568,384
Net (decrease) increase in certificates of deposit                                              (11,873,358)        11,259,638
Net decrease in borrowings under Federal Home Loan Bank advances                                 31,000,000          1,000,000
Issuance of trust preferred securities                                                            6,800,000                 --
Debt issuance costs                                                                                (204,000)                --
Net increase in other borrowings                                                                 10,000,000          7,000,000
Proceeds from the exercise of stock options                                                         270,557                 --
Dividends paid on common stock                                                                     (535,807)          (500,928)
                                                                                               ------------       ------------

       Net cash provided by financing activities                                                 80,843,644         39,327,094
                                                                                               ------------       ------------

       Net (decrease) increase in cash and cash equivalents                                      (9,773,248)        12,676,763

CASH AND CASH EQUIVALENTS, at beginning of period                                                23,763,736          8,103,221
                                                                                               ------------       ------------

CASH AND CASH EQUIVALENTS, at end of period                                                    $ 13,990,488       $ 20,779,984
                                                                                               ============       ============
SUPPLEMENTAL INFORMATION
       Cash paid during the period for:
       Interest on deposits and borrowings                                                     $  4,245,716       $  5,550,786
                                                                                               ============       ============
       Income taxes                                                                            $  1,302,916       $    581,165
                                                                                               ============       ============
Non-cash investing and financing activities:
       Transfer of loans to repossessed assets                                                 $     32,660       $     78,100
                                                                                               ============       ============
       Accrued dividends declared                                                              $    538,215       $    500,928
                                                                                               ============       ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       5
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    The consolidated balance sheet at December 31, 2002 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, 2002.

      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 its operations and its cash flows for the periods presented.
      The results of operations for the three and nine months ended September
      30, 2003 are not necessarily indicative of the results of operations that
      may be expected for all of 2003.

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, 2003 and 2002.
      The 2002 information has been restated to give retroactive effect to all
      stock dividends for the periods presented.

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                         September 30, 2003
                                                          -----------------------------------------------------
                                                             Net                                      Per Share
                                                           Income               Shares                  Amount
                                                           ------               ------                  ------
<S>                                                       <C>                  <C>                     <C>
    Basic Net Income Per Share
      Income available to common shareholders             $769,014             1,800,830               $   .43
                                                                                                       =======
    Effect of Dilutive Securities
      Options Outstanding                                       --                30,436

    Diluted Net Income Per Share
      Income available to common shareholders             --------             ---------
      plus assumed conversions                            $769,014             1,831,266               $   .42
                                                          ========             =========               =======
</TABLE>


                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                                         September 30, 2002
                                                          ---------------------------------------------------
                                                             Net                                    Per Share
                                                           Income                Shares               Amount
                                                           ------                ------               ------
<S>                                                       <C>                  <C>                    <C>
    Basic Net Income Per Share
      Income available to common shareholders             $673,224             1,753,246              $   .38
                                                                                                      =======
    Effect of Dilutive Securities
      Options Outstanding                                       --                44,205

    Diluted Net Income Per Share
      Income available to common shareholders             --------             ---------
      plus assumed conversions                            $673,224             1,797,451              $   .37
                                                          ========             =========              =======

<CAPTION>
                                                                           Nine Months Ended
                                                                           September 30, 2003
                                                        ------------------------------------------------------
                                                             Net                                    Per Share
                                                           Income                Shares               Amount
                                                           ------                ------               ------
<S>                                                     <C>                    <C>                    <C>
    Basic Net Income Per Share
      Income available to common shareholders           $2,078,759             1,790,691              $  1.16
                                                                                                      =======

    Effect of Dilutive Securities
      Options Outstanding                                       --                30,473

    Diluted Net Income Per Share
      Income available to common shareholders           ----------             ---------
      plus assumed conversions                          $2,078,759             1,821,164              $  1.14
                                                        ==========             =========              =======

<CAPTION>
                                                                             September 2002
                                                        ------------------------------------------------------
                                                             Net                                    Per Share
                                                           Income                Shares               Amount
                                                           ------                ------               ------
<S>                                                     <C>                    <C>                    <C>
    Basic Net Income Per Share
      Income available to common shareholders           $1,606,324             1,753,246              $   .92
                                                                                                      =======

    Effect of Dilutive Securities
      Options Outstanding                                       --                42,658

    Diluted Net Income Per Share
      Income available to common shareholders           ----------             ---------
      plus assumed conversions                          $1,606,324             1,795,904              $   .89
                                                        ==========             =========              =======
</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, 2003
                                                                            ----------------------------------------------
                                                                            Before-Tax                        Net-of-Tax
                                                                              Amount            Taxes           Amount
                                                                            -----------       ----------      -----------
<S>                                                                         <C>               <C>             <C>
Unrealized holding losses arising during the period                         $(4,004,921)      $1,361,673      $(2,643,248)
Less: reclassification adjustment for amounts recognized in net income          (46,965)          15,968          (30,997)
                                                                            -----------       ----------      -----------

Unrealized holding loss on available for sale securities, net of taxes      $(4,051,886)      $1,377,641      $(2,674,245)
                                                                            ===========       ==========      ===========

<CAPTION>
                                                                                     September 30, 2002
                                                                           ------------------------------------------
                                                                           Before-Tax                      Net-of-Tax
                                                                              Amount          Taxes           Amount
                                                                           ----------       ---------      ----------
<S>                                                                         <C>             <C>             <C>
Unrealized holding gains arising during the period                          $ 391,968       $(133,269)      $ 258,699
Less: reclassification adjustment for amounts recognized in net income       (134,985)         45,895         (89,090)
                                                                            ---------       ---------       ---------

Unrealized holding gain on available for sale securities, net of taxes      $ 256,983       $ (87,374)      $ 169,609
                                                                            =========       =========       =========
</TABLE>


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                                        September 30, 2003
                                                                            -------------------------------------------
                                                                             Before-Tax                     Net-of-Tax
                                                                               Amount           Taxes          Amount
                                                                            -----------       --------      -----------
<S>                                                                         <C>               <C>           <C>
Unrealized holding losses arising during the period                         $(2,450,283)      $833,097      $(1,617,186)
Less: reclassification adjustment for amounts recognized in net income         (242,995)        82,618         (160,377)
                                                                            -----------       --------      -----------

Unrealized holding loss on available for sale securities, net of taxes      $(2,693,278)      $915,715      $(1,777,563)
                                                                            ===========       ========      ===========

<CAPTION>
                                                                                         September 30, 2002
                                                                            -------------------------------------------
                                                                             Before-Tax                      Net-of-Tax
                                                                               Amount           Taxes           Amount
                                                                            -----------       ---------      ----------
<S>                                                                         <C>               <C>             <C>
Unrealized holding gains arising during the period                          $ 1,468,506       $(499,292)      $ 969,214
Less: reclassification adjustment for amounts recognized in net income         (134,985)         45,895         (89,090)
                                                                            -----------       ---------       ---------
Unrealized holding gain on available for sale securities, net of taxes      $ 1,333,521       $(453,397)      $ 880,124
                                                                            ===========       =========       =========
</TABLE>

5.    At the end of the second quarter of 2003, the Company formed a statutory
      trust, First Litchfield Statutory Trust I, and owns 100% of the Trust's
      capital stock. The Trust has no independent assets or operations and
      exists for the sole purpose of issuing trust securities and investing the
      proceeds thereof in an equivalent amount of junior subordinated debentures
      issued by the Company. On June 26, 2003, the Trust issued $6.8 million in
      preferred securities to investors at an initial rate of 4.16%, which rate
      may adjust quarterly based on changes to LIBOR. The duration of the trust
      is 30 years with early redemption at par at the Company's option after
      five years, or earlier in the event of certain regulatory or tax changes.
      $4.8 million of the proceeds from the issuance of the preferred securities
      were used to increase the capital of the Bank. The Bank will use these
      proceeds to fund general operations and to increase its earning assets.
      The remaining $2 million of the issue will be used by the Company for
      various corporate purposes including potentially to buy back stock or to
      react to other opportunities. The securities can qualify for up to 25% of
      the Company's Tier 1 Capital with the remainder qualifying as Tier 2
      Capital. The entire proceeds of the securities qualify as Tier 1 Capital
      for the Company.

      The junior subordinated debentures are unsecured obligations of the
      Company and are subordinate and junior in right of payment to all present
      and future senior indebtedness of the Company. The Company has entered
      into a guarantee, which together with its obligations under the junior
      subordinated debentures and the declaration of trust governing the Trust,
      including its obligations to pay costs, expenses, debts and liabilities,
      other than trust securities, provides a full and unconditional guarantee
      of amounts on the capital securities.

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, 2003 are
      as follows:


                                       8
<PAGE>

                        due overnight    $  8,500,000 @ 1.0625%
                        due 10/23/03        5,000,000 @ 3.23%
                        due 12/8/03         2,000,000 @ 3.47%
                        due 8/29/05         2,500,000 @ 2.40%
                        due 8/29/05         2,500,000 @ 2.48%
                        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%
                                         ------------
                          Total          $ 39,000,000
                                         ============

      As of September 30, 2003, the Bank had borrowings under repurchase
      agreements totaling $17,000,000. This amount includes $3,000,000 at a rate
      of 3.57% due January 2004. $4,000,000 at a rate of 4.5% due January 2005
      and $10,000,000 at a rate of 3.26% due in July 2008.

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,
                                                                  2003                       2002
                                                          -------------------        -------------------
<S>                                                       <C>              <C>       <C>              <C>
Provision for income taxes at statutory Federal rate      $ 356,151        34%       $ 303,222        34%
Increase (decrease) resulting from:
   Tax exempt income                                        (82,116)      (11)         (90,125)      (11)
   Nondeductible interest expense                             4,455         1            5,743         1
   Other                                                          0        --             (234)       --
                                                          -------------------        -------------------
Provision for income taxes                                $ 278,490        24%       $ 218,606        24%
                                                          ===================        ===================

<CAPTION>
                                                              For the nine months ended September 30,
                                                                 2003                        2002
                                                          -------------------        -------------------
<S>                                                       <C>              <C>       <C>              <C>
Provision for income taxes at statutory Federal rate      $ 929,459        34%       $ 707,322        34%
Increase (decrease) resulting from:
   Tax exempt income                                       (288,532)      (14)        (248,651)      (14)
   Nondeductible interest expense                            14,017         1           15,364         1
   Other                                                         1         --               --        --
                                                          -------------------        -------------------
Provision for income taxes                                $ 654,945        21%       $ 474,035        21%
                                                          ===================        ===================
</TABLE>

8.    A summary of the Bank's loan portfolio at September 30, 2003 and December
      31, 2002 is as follows:


                                       9
<PAGE>

                                                   2003                2002
                                              -------------       -------------
      Real estate--residential mortgage       $ 121,763,514       $ 123,393,205
      Real estate--commercial mortgage           28,198,438          30,535,812
      Real estate--construction                   8,871,741           9,993,398
      Commercial                                 16,700,117          10,531,171
      Installment                                10,530,022          14,271,763
      Other                                          54,414              51,308
                                              -------------       -------------
                       TOTAL LOANS              186,118,246         188,776,657
      Net deferred loan origination costs           345,912             597,498
      Allowance for loan losses                  (1,104,268)         (1,011,052)
                                              -------------       -------------
                       NET LOANS              $ 185,359,890       $ 188,363,103
                                              =============       =============

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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, CT. 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 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. and Infinex Insurance Agency, 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 capital
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 first series of trust
preferred securities were issued.

As of September 30, 2003 the Company had total assets of $387,543,860 which was
an increase of nearly $81 million or 26.3% from year-end 2002 total assets of
$306,803,031. Higher levels


                                       10
<PAGE>

of earning assets resulting from investments in the securities portfolio offset
decreases in the loan portfolio and cash and due from banks. This growth was
funded by increased core deposits and borrowed funds, as well as proceeds from
an offering of trust preferred securities.

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
contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2002.

FINANCIAL CONDITION

Total assets as of September 30, 2003 were $387,543,860, an increase of 26.3% or
$80,740,829 from year-end 2002 assets of $306,803,031. Increased levels of
earning assets were deployed into the securities portfolio with the goal of
attaining the efficient utilization of deposit, borrowing, and capital growth.
Securities totaled $169,256,256, an increase of $90,511,410 or 114.9% from the
2002 year end balance of $78,744,846. Net loans totaled $185,359,890 which was a
decrease of $3,003,213, or 1.6% due to refinancings in the residential mortgage
portfolio as well as the continued runoff of loans in the installment loan
portfolio.

As of September 30, 2003, cash and cash equivalents totaled $13,990,488, which
is a decrease of $9,773,248 from the December 31, 2002 balance. This decline is
the result of overnight Federal Funds Sold being invested in the securities
portfolio.

During the first three quarters of 2003, the earning asset growth was focused on
purchases in the securities portfolio. The increase in securities totaled $90.5
million from purchases comprised of United States Government agency bonds and
mortgage-backed securities. While a more balanced growth between loans and
investments is preferable, management believes that in light of decreased loan
growth, these purchases utilize the earning asset capacity of the Company and
are within liquidity, asset/liability and credit risk goals. During the nine
months and the third quarter ended September 30, 2003, unrealized losses on
available for sale securities portfolio totaled $2,693,278 and $4,051,886,
respectively. These losses were the result of volatility in market rates and
yield curve changes and impacted the market prices in government agency bonds,
state and municipal investments and mortgage-backed securities. Management does
not believe these losses are other than temporary, and the Company has the
ability to hold these securities to maturity if necessary. As a result,
management believes that these unrealized losses will not have a negative impact
on future earnings and capital.

Net loans totaled $185,359,890 as of September 30, 2003, which was a decrease of
$3.0 million or 1.6% from the year-end 2002 balance. Total residential,
commercial and construction mortgage loans, decreased by $5,088,722 or 3.1%.
Historically low interest rates, especially those for fixed rate loans, have
resulted in an extremely competitive refinancing and purchased mortgage market.
Although the Bank offers competitively priced mortgage products, many of these
were sold in the secondary market and therefore did not contribute to the growth
of the portfolio. The installment loan portfolio decreased by $3,741,741 or 26%
since year-end because of management's decision to discontinue the indirect
dealer financing portfolio, causing principal amortizations, as well as loan
payoffs, not being replaced by new loan volume. Growth was experienced in the
commercial loan portfolio, which increased by $6,168,946 during the first nine
months of 2003. Growth in the commercial loan portfolio is attributed to the
Bank's


                                       11
<PAGE>

expanded presence in the Torrington market due to the new branch as well as to
an emphasis on a commercial calling program by loan officers.

Bank-owned life insurance totaled $7,525,009 as of September 30, 2003. Increases
in the cash surrender value of the policies have resulted in an increase of
$285,747 from the 2002 year-end balance. These policies were purchased during
previous years in conjunction with funding employee benefits plans. The increase
in accrued interest receivable totaling $603,825 is reflective of the
significantly higher securities portfolio.

Other assets totaled $2,717,162, which was an increase of $1,269,679 from the
year-end 2002 balance. The major reason for this increase is due to a higher
level of prepaid income taxes due to estimated payments for the current year
liability. Additionally, the increase in other assets is due to higher levels of
accrued trust fee income, as well as debenture issuance costs associated with
the trust preferred issuance.

Total liabilities were $366,511,105 as of September 30, 2003, which is an
increase of $80,707,290 or 28.2% from December 31, 2002. Deposits totaled
$302,194,837, which is an increase of $33,512,894 or 12.5% from year-end 2002.
Demand deposits increased by $4,546,725 or 10.6%. Much of this growth was from
the new Torrington branch, with the remainder being the result of moderate
growth throughout the Bank. Growth in money market deposits were primarily due
to the special money market product promotion at the time of the new branch
opening. Since December 31, 2002, money market deposits have increased by
$32,427,300 or 46.3%. Also contributing to that growth, as well as to the 18.0%
growth in savings deposits, is the effect of the continued uncertain economy and
stock market. Consumers have continued to seek liquidity and safety of principal
in their deposit decisions. Time certificates of deposit decreased by
$11,873,358 or 10.9% from the year-end 2002 balance. Customer preference towards
more liquid savings and money market deposits has resulted in a shift away from
time certificates of deposit.

During the second quarter of 2003, the Company's Statutory Trust issued trust
preferred securities totaling $6,800,000. In turn, the proceeds thereof were
invested in an equivalent amount of junior subordinated debentures issued by the
Company. The purpose of obtaining this funding was to increase the Company's
capital level to enable organic growth through branching or leverage strategies
as well as to have the ability to react to other corporate opportunities such as
stock repurchases. As part of the initial leverage strategy associated with the
additional capital, during the third quarter, the Company borrowed an additional
$41 million through repurchase agreements and Federal Home Loan Bank borrowings.
These funds were utilized in the strategy to increase the level of earning
assets through investment purchases in the securities portfolio. The strategy
incorporates the creation of fixed term liabilities with maturities similar to
the related investments.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2002

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


                                       12
<PAGE>

dividend income from earning assets, primarily loans and investment securities,
and interest expense due on deposits and borrowed money. Although there are
certain factors which 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, which are beyond the
control of management.

Net income for the third calendar quarter of 2003 totaled $769,014, which is an
increase of $95,790 or 14.2% from third quarter 2002 earnings of $673,224.
Quarterly basic and diluted net income per share for 2003 were $.43 and $.42 per
share, respectively, compared to $.38 per basic and $.37 per diluted share for
the same period in 2002.

Net Interest Income

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

                                                      2003              2002
                                                  -----------       -----------

Interest and dividend income                      $ 4,378,472       $ 4,193,819
Tax-equivalent adjustments                             78,098            88,421
Interest expense                                   (1,534,219)       (1,849,955)
                                                  -----------       -----------

Net interest income (tax equivalent basis)        $ 2,922,351       $ 2,432,285
                                                  ===========       ===========

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, 2003 and 2002. 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.


                                       13
<PAGE>

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

<TABLE>
<CAPTION>
                                          Three months ended September 30, 2003         Three months ended September 30, 2002
                                       ---------------------------------------------------------------------------------------
                                                           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                                  $ 183,513,000    $   2,693,537        5.87%   $ 192,030,000    $   3,144,173       6.55%
Investment Securities                    153,921,000        1,751,416        4.55%      85,677,000        1,079,090       5.04%
Other interest earning assets              5,123,000           11,617         .91%      14,102,000           58,977       1.67%
                                       -------------    -------------                -------------    -------------

Total interest earning assets            342,557,000        4,456,570        5.20%     291,809,000        4,282,240       5.87%
                                                        -------------   ---------                     -------------   --------

Allowance for loan losses                 (1,056,000)                                     (992,000)
Cash and due from banks                   11,882,000                                     8,701,000
Bank premises and equipment                2,797,000                                     2,539,000
Net unrealized gain/loss on
  securities                                (995,000)                                    1,375,000
Foreclosed real estate                       300,000                                       300,000
Other assets                              10,687,000                                     8,857,000
                                       -------------                                 -------------

Total Average Assets                   $ 366,172,000                                 $ 312,589,000
                                       =============                                 =============

Liabilities and Shareholders' Equity
Interest Bearing Liabilities:
Savings deposits                       $  55,257,000           81,395        0.59%   $  44,373,000          128,842       1.16%
Money Market deposits                    100,644,000          358,770        1.43%      72,430,000          379,142       2.09%
Time deposits                             97,605,000          722,977        2.96%     112,659,000        1,167,538       4.15%
Borrowed funds                            44,296,000          371,077        3.35%      20,829,000          174,433       3.35%
                                       -------------    -------------                -------------    -------------

Total interest bearing liabilities       297,802,000        1,534,219        2.06%     250,291,000        1,849,955       2.96%
                                                        -------------   ---------                     -------------   --------

Demand deposits                           48,135,000                                    40,939,000
Other liabilities                           (829,000)                                    1,409,000
Shareholders' Equity                      21,064,000                                    19,950,000
                                       -------------                                 -------------

Total liabilities and equity           $ 366,172,000                                 $ 312,589,000
                                       =============                                 =============

Net interest income                                     $   2,922,351                                 $   2,432,285
                                                        =============                                 =============
Net interest spread                                                          3.14%                                        2.91%
Net interest margin                                                          3.41%                                        3.33%
</TABLE>

RATE/VOLUME ANALYSIS

<TABLE>
<CAPTION>
                                                         Three months ended
                                                     9/30/03 Compared to 9/30/02
                                                     Increase (Decrease) Due to
                                                -----------------------------------------
                                                 Volume           Rate            Total
                                                ---------       ---------       ---------
<S>                                             <C>             <C>             <C>
Interest earned on:
Loans                                           ($135,121)      ($315,515)      ($450,636)
Investment securities                             785,500        (113,174)        672,326
Other interest income                             (27,551)        (19,809)        (47,360)
                                                ---------       ---------       ---------
Total interest earning assets                     622,828        (448,498)        174,330
                                                ---------       ---------       ---------

Interest paid on:
Deposits                                          161,218        (673,598)       (512,380)
Borrowed money                                    196,588              56         196,644
                                                ---------       ---------       ---------
Total interest bearing liabilities                357,806        (673,542)       (315,736)
                                                ---------       ---------       ---------

Increase (decrease) in net interest income      $ 265,022       $ 225,044       $ 490,066
                                                =========       =========       =========
</TABLE>

Net interest income increased $490,066 for the three months ended September 30,
2003 compared with the comparable period in 2002. Of such increase, $265,022
resulted primarily from income attributable to the higher volume of earning
assets. In addition, $225,044 was attributable to changes in interest rates. In
this regard, the prolonged decrease in interest rates caused the cost of
interest bearing liabilities to decline more than the decrease in the yield of
average earning assets.


                                       14
<PAGE>

Tax-equivalent net interest income for the third quarter of 2003 increased
$490,066 or 20.1% from the third quarter of 2002. The increase in net interest
income is due both to higher levels of earning assets as well as to the
improvement in the net interest margin. Average earning assets for the third
quarter of 2003 totaled $343 million, an increase of $51 million from the third
quarter of 2002. The additional interest income resulting from the higher level
of earning assets totaled $622,828, and resulted entirely from growth in the
securities portfolio. The additional interest expense related to liability
volume incurred to fund this growth totaled $357,806. Funding was through
increased savings, demand and money market deposits as well as borrowed funds.
The net interest margin for the third quarter of 2003 was 3.41%, an increase of
8 basis points from the third quarter of 2002. The improvement in the net
interest margin, is due both to the Bank's ability to decrease its cost of
funding by lowering the rate paid on core deposits, as well as its ability to
fund much of the growth in earning assets with lower rate core deposits. While
the Bank has been able to decrease its funding costs consistent with the lower
interest rate environment, decreases in yields, as earning assets reprice or new
assets are purchased, have partially negated the improvement in margins caused
by lower funding costs.

Provision for Loan Losses

The provision for loan losses for the third quarter of 2003 totaled $75,000,
which is an increase of $15,000 over the provision for the third quarter of
2002. The provision for loan losses is determined quarterly and assessed along
with the adequacy of the loan loss reserve. An increase in commercial lending
and, the analysis of non-performing loans and their collateral values were the
reasons for the increase in the provision.

During the third quarter of 2003, the Company recorded net charge-offs of
$10,026 compared to net charge-offs of $40,861 for the same period in 2002.
Charge-offs in the third quarter of 2003 were decreased by recoveries of
previous losses from loans in the discontinued indirect dealer loan program.
During the third quarter of 2003, the Bank recorded net recoveries of these
loans totaling $20,857.

Non-interest Income

Non-interest income for the third quarter of 2003 totaled $633,423, an increase
of $25,461 from third quarter 2002 earnings of $607,962. Trust fees increased by
$47,672 or 27.2% resulting from fee schedule increases as well as an increased
level of assets under management. Banking service charges and fees increased by
$25,061 due to new fee income on savings accounts as well as increases in
overdraft charges. Gains on the sales of available for sale securities during
the third quarter of 2003 totaled $46,965 compared to gains of $134,985 during
the same period in 2002. In both instances, investments in mortgage-backed
securities which were prepaying at high speeds, were sold and reinvested for
expected sustainable yield. Other non-interest income totaled $135,038, which
was an increase of $40,748 from the third quarter of 2002. This improvement is
primarily attributed to higher income from the sale of retail investment
products earned for the quarter.


                                       15
<PAGE>

Non-interest Expense

Non-interest expense for the third quarter of 2003 totaled $2,355,172, an
increase of $355,176 or 17.8% from the third quarter of 2002. Salary and
benefits costs increased by $167,766 due in part to staffing costs of the new
branch. Also, additions to staff and salary adjustments over the prior year
contributed to this increase.

Occupancy and equipment expense for the quarter totaled $265,837, increasing
$64,517 from the third quarter of 2002. This increase is due primarily to the
additional branch as well as to assorted repairs made to other bank building
facilities. Commissions and consulting expense increased by $35,816 due to costs
incurred for consultants in the fields of loan analysis, information technology,
compensation and other corporate matters. Other non-interest expense totaled
$314,657 for the quarter, which increased 21.6% from 2002 expenses. Contributing
to the increase in other non-interest expense are costs for computer software,
contributions, travel, telephone and temporary personnel expenses. The majority
of this increase relates to the costs incurred in establishing the Bank's new
branch and costs associated with the Bank's recent core processor conversion.

Income Taxes

The provision for income taxes for the three-month period ended September 30,
2003 totaled $278,490, which is an increase of 27.4% from the same period in
2002. This increase is due primarily to the increase in pretax income. Also
contributing to the increase was a higher effective tax rate during the third
quarter of 2003. This was due to a slightly lower proportion of tax-exempt
income.

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 2002

Summary

Net income for the Company for the nine months ended September 30, 2003 totaled
$2,078,759, increasing $472,435 or 29.4% from 2002 earnings of $1,606,324. Basic
and diluted net income per share for the nine month period, were $1.16 and
$1.14, per share, respectively. These results are 26.1% and 28.1% above 2002
levels of $.92 and $.89 for basic and diluted net income per share,
respectively.

Net Interest Income

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

                                                        2003            2002
                                                   ------------    ------------

      Interest and dividend income                 $ 12,211,366    $ 12,502,710
      Tax-equivalent adjustments                        287,919         235,172
      Interest expense                               (4,206,663)     (5,449,662)
                                                   ------------    ------------

      Net interest income (tax equivalent basis)   $  8,292,622    $  7,288,220
                                                   ============    ============


                                       16
<PAGE>

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, 2003 and 2002. 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, 2003          Nine months ended September 30, 2002
                                       ---------------------------------------------------------------------------------------
                                                          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                                  $ 183,573,000    $  8,389,786        6.09%   $ 190,746,000    $   9,509,205        6.65%
Investment Securities                    116,243,000       4,041,563        4.64%      81,035,000        3,124,782        5.14%
Other interest earning assets              8,113,000          67,936        1.12%       8,238,000          103,895        1.68%
                                       -------------    ------------                -------------    -------------

Total interest earning assets            307,929,000      12,499,285        5.41%     280,019,000       12,737,882        6.07%
                                                        ------------   ---------                     -------------   ---------

Allowance for loan losses                 (1,030,000)                                    (970,000)
Cash and due from banks                   10,502,000                                    8,255,000
Bank premises and equipment                2,759,000                                    2,563,000
Net unrealized gain/loss on
  securities                               1,057,000                                      665,000
Foreclosed real estate                       300,000                                      300,000
Other assets                               9,647,000                                    8,917,000
                                       -------------                                -------------

Total Average Assets                   $ 331,164,000                                $ 299,749,000
                                       =============                                =============

Liabilities and Shareholders' Equity
Interest Bearing Liabilities:
Savings deposits                       $  49,965,000         274,029        0.73%   $  41,997,000          372,889        1.18%
Money Market deposits                     89,508,000         935,180        1.39%      67,324,000        1,130,660        2.24%
Time deposits                            100,351,000       2,354,778        3.13%     106,363,000        3,411,141        4.28%
Borrowed funds                            24,716,000         642,676        3.47%      23,225,000          534,972        3.07%
                                       -------------    ------------                -------------    -------------

Total interest bearing liabilities       264,540,000       4,206,663        2.12%     238,909,000        5,449,662        3.04%
                                                        ------------   ---------                     -------------   ---------

Demand deposits                           44,975,000                                   40,207,000
Other liabilities                            103,000                                    1,519,000
Shareholders' Equity                      21,546,000                                   19,114,000
                                       -------------                                -------------

Total liabilities and equity           $ 331,164,000                                $ 299,749,000
                                       =============                                =============

Net interest income                                     $  8,292,622                                 $   7,288,220
                                                        ============                                 =============
Net interest spread                                                         3.29%                                         3.03%
Net interest margin                                                         3.59%                                         3.47%
</TABLE>

RATE/VOLUME ANALYSIS

<TABLE>
<CAPTION>
                                                      Nine months ended
                                                 9/30/03 Compared to 9/30/02
                                                 Increase (Decrease) Due to
                                        -----------------------------------------------
                                           Volume            Rate              Total
                                        -----------       -----------       -----------
<S>                                     <C>               <C>               <C>
Interest earned on:
Loans                                     ($348,331)        ($771,088)      ($1,119,419)
Investment securities                     1,248,768          (331,987)          916,781
Other interest income                        (1,554)          (34,405)          (35,959)
                                        -----------       -----------       -----------
Total interest earning assets               898,883        (1,137,480)         (238,597)
                                        -----------       -----------       -----------

Interest paid on:
Deposits                                    503,489        (1,854,192)       (1,350,703)
Borrowed money                               35,816            71,888           107,704
                                        -----------       -----------       -----------
Total interest bearing liabilities          539,305        (1,782,304)       (1,242,999)
                                        -----------       -----------       -----------

Increase in net interest income         $   359,578       $   644,824       $ 1,004,402
                                        ===========       ===========       ===========
</TABLE>


                                       17
<PAGE>

The $1,004,402 increase in the net interest income reflects increased income of
$644,824 resulting from lower interest rate decreases in interest earning assets
than in interest bearing liabilities, and an increase of $359,578 attributed to
greater growth in the volume of interest earning assets than in interest bearing
liabilities.

Tax equivalent net interest income for the first nine months of 2003 increased
$1,004,402 or 13.8% from the same period in 2002. Average earning assets through
September 30, 2003 totaled nearly $308 million, up 10% from average earning
assets from the previous year. Investment purchases in government agency and
mortgage-backed securities created this increase. Additionally, these higher
levels of investments offset the $7 million decline in the loan portfolio. The
increase in earning assets was funded primarily by money market, savings and
demand deposits. Money market deposits increased $22 million reflecting both
customers' preference for liquid deposits as well as new deposits coming from
the promotional money market account associated with the Bank's new Torrington
branch. The growth in savings and demand deposits is a result of customers'
preference for liquidity and reluctance to invest in the stock market.

The net interest margin (net interest income divided by average earning assets)
was 3.59% for the nine-month period ended September 30, 2003. The net interest
margin increased 12 basis points from the margin of 3.47% for the nine months
ended September 30, 2002. Although the tax-equivalent yield on earning assets
decreased from 6.07% for the first three quarters of 2002 to 5.41% for the same
period in 2003, the unfavorable effect was offset by the larger decline in the
cost of funds. From September 2002 to September 2003, the year to date cost of
interest bearing liabilities declined 92 basis points, from 3.04% to 2.12%. The
historically low interest rate environment, especially its effect on the yields
received on new earning assets, as well as its effect on repricing assets, led
to the decline in yield on earning assets. Also impacting the decline in earning
asset yield is the continued shift of earning assets away from higher yielding
loans and into lower yielding investments. The shift from loans to investments
is due to the decline in the loan portfolio described previously.

Funding costs decreased by 92 basis points from 3.04% to 2.12%. This decline is
attributed to both the overall decrease in interest rates, as well as to a
change in the mix of funding liabilities. As of September 30, 2003, 60% of
average funding had been through core deposits (money market, savings and demand
deposits) which are at lower interest rates. This compares to the average
September 2002 mix of funding liabilities, where 54% of the funding liabilities
were core deposits. Finally, the historically low interest rate environment has
allowed management to continue to lower rates paid on all deposits.

Provision for Loan Losses

The provision for loan losses for the first nine months of the year totaled
$225,000, which was an increase of $45,000 from the provision of $180,000 for
the first nine months of 2002. The provision for loan losses is determined
quarterly and assessed along with the adequacy of the allowance for loan losses.
An increased emphasis in commercial lending, as well as the analysis of
non-performing loans, their collateral, and the expectations for a cautious
economic recovery in the local market, were the motivation for the increased
provision.


                                       18
<PAGE>

During the first nine months of 2003, the Company recorded net charge-offs of
$131,784 compared to net charge-offs of $139,543 for the first nine months of
2002. As experienced in 2002, the majority of all charge-offs remains the result
of losses in the discontinued dealer loan program. Although the portfolio has
declined in total outstanding loans, management attributes the increase in these
charge-offs to be a result of weakened collateral values for these loans.

Noninterest Income

Year to date noninterest income as of September 30, 2003 totaled $1,965,323, an
increase of $171,637 or 9.6% from the same period in 2002. One cause of this
increase is gains on the sales of available for sale securities totaling
$242,995, an increase of $108,010 from gains recorded during the first nine
months of 2002. During the second and third quarters of 2003, certain
fast-paying mortgage-backed securities in the Bank's investment portfolio were
sold and reinvested for expected sustainable yield on the portfolio. Also
contributing to the increase in noninterest income is trust fees, which are up
by $97,672 from 2002 due to increased fee schedules, as well as more accounts
under management. Income from banking service charges increased $50,079,
reflecting competitive changes in deposit fee schedules. Other noninterest
income totaled $349,678, a decrease of $84,124 from the similar period 2002.
This decrease in other noninterest income was due to income of $103,000 in 2002
resulting from the sale of stock received as a result of the demutualization of
Anthem Inc., the Bank's group insurance provider. Mitigating this variance was
increased income resulting from the increases in the cash surrender value of
bank owned life insurance.

Noninterest Expense

As of September 30, 2003, nine-month noninterest expense totaled $7,011,322, an
increase of 6.5% or $424,947 from the same period in 2002. This increase was due
to second and third quarter costs incurred with the addition of the Bank's new
Torrington branch. Through September 30, 2003, these costs totaled $419,997.
Included in this increase are costs for staffing, advertising, net occupancy,
equipment, office supplies and courier costs. Also, increased staffing levels in
other areas of the Bank contributed to this increase. Other non-interest
expenses totaled $944,168, up $168,156 over 2002 levels. This was also due to
increases in travel, software, telephone, education, and contribution expenses.
While much of this increase is due also to the new branch, some is also the
result of costs incurred in the training of employees and implementation of
software and equipment related to the Bank's core processing systems. Offsetting
the unfavorable variance in this comparison were 2002 costs related to the Early
Retirement Agreement for the President of the Company which totaled $347,790.

Computer services expenses for the nine months of 2003 totaled $530,018,which is
a decrease of $61,724 from 2002 as a result of vendor credits received from the
Bank's core processor.

Income Taxes

The provision for income taxes for the first nine months of 2003 totaled
$654,945, an increase of $180,910 from the same period in 2002. The increase in
income tax expense is due to higher taxable income levels. The effective tax
rate was 23% for both years as a result of tax-exempt income from bank-owned
life insurance and state and municipal investments.


                                       19
<PAGE>

LIQUIDITY

Management's objective is to ensure the 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, lines available under repurchase agreements and the
sale of mortgage loans in the secondary market are available to fund short term
cash needs.

As of September 30, 2003, the Company had $47,778,329 in loan commitments and
credit lines outstanding. Because some commitments are expected to expire
without being drawn upon, the total commitment amount does not necessarily
represent all future cash requirements. The funding of these commitments are
anticipated to be met through deposits, loan and security amortizations and
maturities. Management is confident that the Company has sufficient liquidity to
meet its present and foreseeable needs.

CAPITAL

At September 30, 2003, total shareholders' equity was $21,032,755 compared to
$20,999,216 at December 31, 2002. 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, 2003.

<TABLE>
<CAPTION>
                                                   Minimum
                                      Well        Regulatory
                                  Capitalized   Capital Levels  The Company     The Bank
                                  -----------   --------------  -----------     --------
<S>                                    <C>            <C>          <C>            <C>
TIER 1:
  Leverage capital ratio                5%            4%            7.82%          7.10%

  Risk-based capital ratio              6%            4%           14.61%         13.29%

  Total risk-based capital ratio       10%            8%           15.18%         13.86%
</TABLE>

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 reported 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.


                                       20
<PAGE>

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.

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,
2003. In addition, there were no material changes in the estimation methods and
assumptions used in the Company's allowance for loan losses calculation, and
there were no material reallocations of the allowance among different parts of
the loan portfolio.

At September 30, 2003, the allowance for loan losses was equivalent to 71% of
total non-performing assets as compared with 57% of total non-performing assets
at December 31, 2002. The underlying collateral values of the past due loans
support these levels of reserves. The ratio of the allowance for loan losses to
total loans at September 30, 2003 was .59%, which was slightly above the .54% as
of December 31, 2002.

Changes in the allowance for loan losses for the periods ended September 30,
2003 and 2002 are shown below:

                                               Nine months ended September 30,
                                                    2003             2002
                                                -----------       ---------

Balance at beginning of the year                $ 1,011,052       $ 957,731
Provision for loan losses                           225,000         180,000
Loans charged off                                  (247,486)       (172,325)
Recoveries of loans previously charged off          115,702          32,782
                                                -----------       ---------

Balance at end of period                        $ 1,104,268       $ 998,188
                                                ===========       =========

The following table summarizes the Bank's OREO, past due and nonaccrual loans,
and nonperforming assets as of September 30, 2003 and December 31, 2002.

<TABLE>
<CAPTION>
                                            September 30, 2003    December 31, 2002
                                            ------------------    -----------------
<S>                                             <C>                   <C>
Nonaccrual loans                                $1,262,245            $1,487,475

Other real estate owned  (OREO)                    300,000               300,000
                                                ----------            ----------

Total nonperforming assets                      $1,562,245            $1,787,475
                                                ==========            ==========

Loans past due in excess of 90 days and
  accruing interest                             $       --            $   56,729
                                                ==========            ==========
</TABLE>


                                       21
<PAGE>

Potential Problem Loans

As of September 30, 2003, 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.

FORWARD-LOOKING STATEMENTS

This Quarterly Report and future filings made by the Company with the Securities
and Exchange Commission (the "SEC"), 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 revenues and earnings for the Company and Bank 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 SEC. Such developments could have an adverse impact on the
Company and the Bank's financial position and results of operation.

ITEM 3. 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 reports
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")
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 its Treasurer and Principal Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure based closely on the
definition of "disclosure controls and procedures" in Rule 13a-15(e) of the
Exchange Act. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.


                                       22
<PAGE>

As of the September 30, 2003, the Company conducted an evaluation, under the
supervision and with the participation of the principal executive officer and
principal financial officer, of the Company's disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on
this evaluation, the principal executive officer and principal financial officer
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in SEC rules and forms. There was
no change in the Company's internal control over financial reporting during the
Company's most recently completed fiscal quarter 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 is involved in any pending material legal
proceedings other than routine legal proceedings occurring in the ordinary
course of business. Such routine legal proceedings, in the aggregate, are
believed by management to be immaterial to the Company's financial condition or
results of operations.

Item 2. Changes in 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 and Reports on Form 8-K

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.


                                       23
<PAGE>

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.

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.


                                       24
<PAGE>

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.

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.


                                       25
<PAGE>

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 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.


                                       26
<PAGE>

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 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.

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


                                       27
<PAGE>

            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.

10.38       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.

10.39       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.

10.40       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 Quarterly Report in Form
            10-QSB for the quarter ended June 30, 2003 as filed with the
            Securities and Exchange Commission on August 14, 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 Quarterly Report in Form
            10-QSB for the quarter ended June 30, 2003 as filed with the
            Securities and Exchange Commission on August 14, 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 Quarterly Report in Form
            10-QSB for the quarter ended June 30, 2003 as filed with the
            Securities and Exchange Commission on August 14, 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 Quarterly Report in Form
            10-QSB for the quarter ended June 30, 2003 as filed with the
            Securities and Exchange Commission on August 14, 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


                                       28
<PAGE>

            forth in the Company's Quarterly Report in Form 10-QSB for the
            quarter ended June 30, 2003 as filed with the Securities and
            Exchange Commission on August 14, 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 Quarterly Report in Form 10-QSB for the quarter ended June
            30, 2003 as filed with the Securities and Exchange Commission on
            August 14, 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 Quarterly Report in Form 10-QSB for the
            quarter ended June 30, 2003 as filed with the Securities and
            Exchange Commission on August 14, 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 Quarterly Report in Form 10-QSB for the
            quarter ended June 30, 2003 as filed with the Securities and
            Exchange Commission on August 14, 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 Quarterly Report in Form 10-QSB for the
            quarter ended June 30, 2003 as filed with the Securities and
            Exchange Commission on August 14, 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 Quarterly Report in Form 10-QSB for the
            quarter ended June 30, 2003 as filed with the Securities and
            Exchange Commission on August 14, 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 Quarterly Report in Form 10-QSB for the
            quarter ended June 30, 2003 as filed with the Securities and
            Exchange Commission on August 14, 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 Quarterly Report in Form 10-QSB for
            the quarter ended June 30, 2003 as filed with the Securities and
            Exchange Commission on August 14, 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 Quarterly
            Report in Form 10-QSB for the quarter ended June 30, 2003 as filed
            with the Securities and Exchange Commission on August 14, 2003.

21.         List of Subsidiaries of First Litchfield Financial Corporation.
            Exhibit is incorporated by reference to Exhibit 21 set forth in the
            Company's Registration Statement on Form 10-SB as filed with the
            Securities and Exchange Commission on January 7, 2000.


                                       29
<PAGE>

31.1        Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of
            the Company.

31.2        Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of
            the Company.

32.0        Section 1350 Certifications.

B.    Reports on Form 8-K

      1.    The Company filed a Form 8-K on July 2, 2003, to report that the
            Company completed the issuance of $6.8 million trust preferred
            securities through a newly formed trust, First Litchfield Statutory
            Trust I in a private, pooled transaction.

      2.    The Company filed a Form 8-K on August 14, 2003 to report its
            financial results for the quarter ended June 30, 2003.

      3.    The Company filed a Form 8-K on August 27, 2003 to report that the
            Company's Board of Directors declared a quarterly cash dividend of $
            .10 per share to be paid on October 27, 2003 to shareholders of
            record as of September 8, 2003.


                                       30
<PAGE>

                                   SIGNATURES

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

                                  FIRST LITCHFIELD FINANCIAL CORPORATION


  Dated: November 13, 2003         By:
                                       ---------------------------------
                                       Joseph J. Greco, President and
                                       Chief Executive Officer


  Dated: November 13, 2003         By:
                                       ---------------------------------
                                       Carroll A. Pereira, Treasurer
                                       (Principal Financial Officer)


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