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

                                    FORM 10-Q

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

                  For the Quarterly period ended: June 30, 2005
                                                 --------------

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

           For the transition period from ___________ to ___________.

                         Commission File Number: 0-28815

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

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

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

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

Indicate  by check  mark  whether  the  Registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the past 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

           Yes [X]         No  [ ]

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common equity,  as of the latest  practicable  date:  2,028,387 shares of Common
Stock, par value $.01 per share, were outstanding at July 28, 2005.


                                       1
<PAGE>

                     FIRST LITCHFIELD FINANCIAL CORPORATION
                                    FORM 10-Q
                                      INDEX

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

Item 1 - Financial Statements

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

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

         Consolidated Statements of Comprehensive Income -  Six months ended
          June 30, 2005 and 2004 (unaudited) ................................    5

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

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

         Item 2 - Management's Discussion and Analysis of Financial Condition
          and Results of Operations .........................................   13

         Item 3 - Quantitative and Qualitative Disclosures about Market Risk.   24

         Item 4 - Controls and Procedures ...................................   24

Part II - Other Information

         Item 1 - Legal Proceedings .........................................   25

         Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds   25

         Item 3 - Defaults Upon Senior Securities ...........................   25

         Item 4 - Submission of Matters to a Vote of Security Holders .......   25

         Item 5 - Other Information .........................................   26

         Item 6 - Exhibits ..................................................   26

Signatures ..................................................................   33
</TABLE>


                                       2
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                           June 30,        December 31,
                                                                                             2005              2004
                                                                                         -------------     -------------
                                                                                          (Unaudited)
<S>                                                                                      <C>               <C>
ASSETS
   Cash and due from banks                                                               $  16,074,575     $  12,222,713
                                                                                         -------------     -------------
                                                          CASH AND CASH EQUIVALENTS         16,074,575        12,222,713
                                                                                         -------------     -------------
   Securities:
      Available for sale securities, at fair value                                         160,309,575       173,793,755
      Held to maturity securities (fair value $53,477-2005 and $70,196-2004)                    54,666            70,946
                                                                                         -------------     -------------
                                                                   TOTAL SECURITIES        160,364,241       173,864,701
                                                                                         -------------     -------------

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

   Loans Receivable, net of allowance for loan losses of
                 $1,588,749 -2005, $1,389,947-2004
                                                                          NET LOANS        239,909,049       217,028,751

   Premises and equipment, net                                                               3,659,040         2,769,827
   Deferred income taxes                                                                       887,752           908,023
   Accrued interest receivable                                                               2,132,448         2,005,064
   Cash surrender value of insurance                                                         9,092,575         8,906,407
   Other assets                                                                              3,462,627         3,140,511
                                                                                         -------------     -------------

                                                                       TOTAL ASSETS      $ 439,769,857     $ 424,304,747
                                                                                         =============     =============

LIABILITIES
   Deposits:
      Noninterest bearing                                                                $  62,722,967     $  58,409,685
      Interest bearing                                                                     219,389,923       242,437,694
                                                                                         -------------     -------------
                                                                     TOTAL DEPOSITS        282,112,890       300,847,379
                                                                                         -------------     -------------

   Federal Home Loan Bank advances                                                          55,903,000        29,500,000
   Repurchase agreements with financial institutions                                        62,200,000        59,900,000
   Repurchase agreements with customers                                                      3,669,983           209,588
   Subordinated debt                                                                         7,011,000         7,011,000
   Accrued expenses and other liabilities                                                    2,870,643         2,291,107
                                                                                         -------------     -------------

                                                                  TOTAL LIABILITIES        413,767,516       399,759,074
                                                                                         -------------     -------------

SHAREHOLDERS' EQUITY
   Preferred stock $.00001 par value;  1,000,000  shares  authorized,  no shares
   outstanding Common stock $.01 par value
      Authorized - 5,000,000 shares
      2005 - Issued - 2,133,573 shares, outstanding - 2,028,387 shares
      2004 - Issued - 2,130,843 shares, outstanding - 2,025,657 shares                          21,336            21,308
   Capital surplus                                                                          19,934,803        19,892,870
   Retained earnings                                                                         7,930,449         6,555,092
   Less: Treasury stock at cost- 105,186 shares                                               (701,061)         (701,061)
   Accumulated other comprehensive loss-net unrealized loss
     on available for sale securities (net of taxes)                                        (1,183,186)       (1,222,536)
                                                                                         -------------     -------------
                                                         TOTAL SHAREHOLDERS' EQUITY         26,002,341        24,545,673
                                                                                         -------------     -------------

                                         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $ 439,769,857     $ 424,304,747
                                                                                         =============     =============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       3
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended June 30,      Six Months Ended June 30,
                                                                   2005            2004           2005            2004
                                                               ------------    ------------   ------------    ------------
<S>                                                            <C>             <C>            <C>             <C>
INTEREST AND DIVIDEND INCOME
   Interest and fees on loans                                  $  3,473,840    $  2,691,723   $  6,759,452    $  5,373,315

   Interest and dividends on securities:
       Mortgage-backed                                              956,404       1,320,880      1,991,697       2,470,857
       US Treasury and other                                        599,089         640,879      1,190,717       1,232,264
       State & municipal securities                                 197,072         178,152        392,741         339,947
       Corporate bonds & other securities                            51,515          33,233        100,929          66,467
   Other interest income                                              1,678           4,071          9,103          10,578
                                                               ------------    ------------   ------------    ------------
                                 TOTAL INTEREST INCOME            5,279,598       4,868,938     10,444,639       9,493,428
                                                               ------------    ------------   ------------    ------------

INTEREST EXPENSE
   Interest on deposits:
       Savings                                                       29,957          32,333         59,522          84,664
       Money market                                                 236,472         326,148        476,330         710,287
       Time certificates of deposit in denominations
            $100,000 or more                                        188,021         165,178        351,667         342,259
       Other time certificates of deposit                           347,322         435,615        689,176         904,706
                                                               ------------    ------------   ------------    ------------
                            TOTAL INTEREST ON DEPOSITS              801,772         959,274      1,576,695       2,041,916
   Interest on Federal Home Loan Bank advances                      393,013         222,945        641,524         430,023
   Interest on repurchase agreements                                487,621         333,478        916,896         571,346
   Interest on subordinated debt                                    106,399          73,793        202,424         147,122
                                                               ------------    ------------   ------------    ------------
                                TOTAL INTEREST EXPENSE            1,788,805       1,589,490      3,337,539       3,190,407
                                                               ------------    ------------   ------------    ------------
                                   NET INTEREST INCOME            3,490,793       3,279,448      7,107,100       6,303,021
PROVISION FOR LOAN LOSSES                                           100,623          90,000        201,246         180,000
                                                               ------------    ------------   ------------    ------------
                            NET INTEREST INCOME AFTER
                             PROVISION FOR LOAN LOSSES            3,390,170       3,189,448      6,905,854       6,123,021
                                                               ------------    ------------   ------------    ------------
NONINTEREST INCOME
   Banking service charges and fees                                 245,997         242,827        468,161         474,442
   Trust                                                            246,813         261,701        475,486         449,921
   Losses on the sales of available for sale securities             (44,076)             --        (44,076)             --
   Other                                                            149,194         129,930        312,160         279,761
                                                               ------------    ------------   ------------    ------------
                              TOTAL NONINTEREST INCOME              597,928         634,458      1,211,731       1,204,124
                                                               ------------    ------------   ------------    ------------
NONINTEREST EXPENSE
   Salaries                                                       1,137,359       1,040,098      2,265,833       2,115,197
   Employee benefits                                                331,844         322,898        712,961         688,593
   Net occupancy                                                    168,729         161,614        354,220         341,124
   Equipment                                                        105,778          90,962        207,238         185,259
   Legal fees                                                        58,681          45,972         94,988          97,251
   Directors fees                                                    36,695          31,895         73,765          71,455
   Computer services                                                220,412         204,301        424,121         417,569
   Supplies                                                          39,451          42,951         83,260          86,863
   Commissions, services and fees                                    61,189          52,697        128,600         121,810
   Postage                                                           33,392          34,315         64,893          73,249
   Advertising                                                      112,947          78,307        177,257         177,522
   OREO & non-performing loan expenses-net                               --             357             --           6,618
   Other                                                            472,179         380,070        855,662         731,370
                                                               ------------    ------------   ------------    ------------
                            TOTAL NONINTEREST EXPENSES            2,778,656       2,486,437      5,442,798       5,113,880
                                                               ------------    ------------   ------------    ------------
                            INCOME BEFORE INCOME TAXES            1,209,442       1,337,469      2,674,787       2,213,265
PROVISION FOR INCOME TAXES                                          323,685         374,626        731,395         597,367
                                                               ------------    ------------   ------------    ------------
                                            NET INCOME         $    885,757    $    962,843   $  1,943,392    $  1,615,898
                                                               ============    ============   ============    ============
INCOME PER SHARE
                            BASIC NET INCOME PER SHARE         $       0.44    $       0.48   $       0.96    $       0.80
                                                               ============    ============   ============    ============
                          DILUTED NET INCOME PER SHARE         $       0.43    $       0.47   $       0.95    $       0.79
                                                               ============    ============   ============    ============

   Dividends Per Share                                         $       0.14    $       0.12   $       0.28    $       0.24
                                                               ============    ============   ============    ============
</TABLE>


                                       4
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

<TABLE>
<CAPTION>
Three months ended June 30,                                                            2005          2004
                                                                                    ----------   -----------
<S>                                                                                 <C>          <C>
Net income                                                                          $  885,757   $   962,843
Unrealized holding gains (losses) on securities:
        Unrealized holding gains (losses) arising during the period, net of taxes    1,557,205    (3,268,788)
                                                                                    ----------   -----------

Comprehensive income (loss)                                                         $2,442,962   $(2,305,945)
                                                                                    ==========   ===========

Six months ended June 30,                                                                 2005          2004
                                                                                    ----------   -----------

Net income                                                                          $1,943,392   $ 1,615,898
Unrealized holding gains (losses) on securities:
        Unrealized holding gains (losses) arising during the period, net of taxes       39,350    (2,970,731)
                                                                                    ----------   -----------

Comprehensive income (loss)                                                         $1,982,742   $(1,354,833)
                                                                                    ==========   ===========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                   Six Months Ended June 30,
                                                                      2005            2004
                                                                 ------------    ------------
<S>                                                              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                       $  1,943,392    $  1,615,898
Adjustments to reconcile net income to net cash
  provided by operating activities:
        Amortization and accretion of premiums and discounts
           on investment securities, net                              178,340         109,657
        Provision for loan losses                                     201,246         180,000
        Depreciation and amortization                                 197,654         177,170
        Losses on sale of available for sale securities                44,076              --
        Gain on disposals of bank premises and equipment                   --             817
        Gain from the sale of foreclosed real estate                       --         (45,138)
        Increase in accrued interest receivable                      (127,384)       (158,518)
        Increase in other assets                                     (302,595)     (1,527,266)
        Increase in cash surrender value of insurance                (186,168)       (158,886)
        (Increase) decrease in deferred loan origination costs        (61,332)        137,544
        Increase in accrued expenses and other liabilities            579,154       1,809,630
                                                                 ------------    ------------

            Net cash  provided by operating activities              2,466,383       2,140,908
                                                                 ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Available for sale securities:
        Proceeds from maturities and principal payments            10,771,636      25,679,933
        Purchases                                                  (8,998,005)    (59,066,220)
        Proceeds from sales                                        11,547,754              --
Held to maturity mortgage-backed securities:
        Proceeds from maturities and principal payments                16,280          20,867
Purchase of Federal Home Loan Bank stock                             (728,800)       (630,900)
Net increase in loans                                             (23,020,212)     (8,365,435)
Purchase of bank premises and equipment                            (1,086,867)       (263,390)
Proceeds from sale of foreclosed real estate                               --         345,138
Proceeds from sale of bank premises and equipment                          --             100
                                                                 ------------    ------------

        Net cash used in investing activities                     (11,498,214)    (42,279,907)
                                                                 ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in savings, money market and
  demand deposits                                                 (14,495,792)     14,406,518
Net decrease in certificates of deposit                            (4,238,697)     (5,118,546)
Net increase in short term Federal Home Loan Bank advances         11,403,000       3,748,000
Repayments on Federal Home Loan Bank advances                      (9,000,000)             --
Proceeds from Federal Home Loan Bank advances                      24,000,000              --
Net increase in securities sold under agreements to repurchase      2,300,000      28,900,000
Net increase in repurchase agreements with customers                3,460,395              --
Proceeds from the exercise of stock options                            22,440         353,030
Dividends paid on common stock                                       (567,653)       (457,658)
                                                                 ------------    ------------

        Net cash provided by financing activities                  12,883,693      41,831,344
                                                                 ------------    ------------

        Net increase in cash and cash equivalents                   3,851,862       1,692,345

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

CASH AND CASH EQUIVALENTS, at end of period                      $ 16,074,575    $ 14,394,653
                                                                 ============    ============
SUPPLEMENTAL INFORMATION Cash paid during the period for:
        Interest on deposits and borrowings                      $  3,163,429    $  3,094,669
                                                                 ============    ============
        Income taxes                                             $    850,500    $    300,900
                                                                 ============    ============
Non-cash investing and financing activities:
        Accrued dividends declared                               $    283,974    $    230,958
                                                                 ============    ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       6
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                               June 30, 2005
                                                   ------------------------------------
                                                      Net                    Per Share
                                                     Income       Shares       Amount
                                                     ------       ------       ------
<S>                                                <C>           <C>         <C>
      Basic Net Income Per Share
         Income available to common shareholders   $  885,757    2,027,726   $      .44
                                                                             ==========

      Effect of Dilutive Securities
         Options Outstanding                               --       21,948

      Diluted Net Income Per Share
         Income available to common shareholders
                                                   ----------   ----------
         plus assumed conversions                  $  885,757    2,049,674   $      .43
                                                   ==========   ==========   ==========

<CAPTION>

                                                             Three Months Ended
                                                                June 30, 2004
                                                   ------------------------------------
                                                      Net                    Per Share
                                                     Income       Shares       Amount
                                                     ------       ------       ------
<S>                                                <C>           <C>         <C>
      Basic Net Income Per Share
         Income available to common shareholders   $  962,843    2,015,501   $      .48
                                                                             ==========

      Effect of Dilutive Securities
         Options Outstanding                               --       25,872

      Diluted Net Income Per Share
         Income available to common shareholders
                                                   ----------   ----------
         plus assumed conversions                  $  962,843    2,041,373   $      .47
                                                   ==========   ==========   ==========
</TABLE>


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                              June 30, 2005
                                                   ------------------------------------
                                                       Net                   Per Share
                                                     Income       Shares       Amount
                                                     ------       ------       ------
<S>                                                <C>           <C>         <C>
      Basic Net Income Per Share
         Income available to common shareholders   $ 1,943,392   2,027,492   $      .96
                                                                             ==========

      Effect of Dilutive Securities
         Options Outstanding                                --      22,388

      Diluted Net Income Per Share
         Income available to common shareholders
                                                   ----------   ----------
         plus assumed conversions                  $ 1,943,392   2,049,880   $      .95
                                                   ===========  ==========   ==========

<CAPTION>

                                                            Six Months Ended
                                                              June 30, 2004
                                                   ------------------------------------
                                                       Net                   Per Share
                                                     Income       Shares       Amount
                                                     ------       ------       ------
<S>                                                <C>           <C>         <C>
      Basic Net Income Per Share
         Income available to common shareholders   $ 1,615,898   2,009,540   $      .80
                                                                             ==========

      Effect of Dilutive Securities
         Options Outstanding                                --     29,072

      Diluted Net Income Per Share
         Income available to common shareholders
                                                   ----------   ----------
         plus assumed conversions                  $ 1,615,898   2,038,612   $      .79
                                                   ===========  ==========   ==========
</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
                                                                                           June 30, 2005
                                                                               -------------------------------------
                                                                               Before-Tax                 Net-of-Tax
                                                                                 Amount       Taxes         Amount
                                                                                 ------       -----         ------
<S>                                                                            <C>          <C>           <C>
      Unrealized holding gains arising during the period                       $2,315,325   $ (787,210)   $1,528,115
      Add: reclassification adjustment for amounts recognized in net income        44,076      (14,986)       29,090
                                                                               ----------   ----------    ----------

      Unrealized holding gain on available for sale securities, net of taxes   $2,359,401   $ (802,196)   $1,557,205
                                                                               ==========   ==========    ==========
<CAPTION>

                                                                                          Three Months Ended
                                                                                             June 30, 2004
                                                                               --------------------------------------
                                                                               Before-Tax                  Net-of-Tax
                                                                                 Amount        Taxes         Amount
                                                                                 ------        -----         ------
<S>                                                                            <C>           <C>           <C>
      Unrealized holding losses arising during the period                      $(4,952,709)  $1,683,921    $(3,268,788)
      Less: reclassification adjustment for amounts recognized in net income            --           --             --
                                                                               -----------   ----------    -----------

      Unrealized holding loss on available for sale securities, net of taxes   $(4,952,709)  $1,683,921    $(3,268,788)
                                                                               ===========   ==========    ===========
</TABLE>


                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                                                       Six Months Ended
                                                                                         June 30, 2005
                                                                               -------------------------------------
                                                                               Before-Tax                 Net-of-Tax
                                                                                 Amount       Taxes         Amount
                                                                                 ------       -----         ------
<S>                                                                            <C>          <C>           <C>
      Unrealized holding gains arising during the period                       $   15,545   $   (5,285)   $   10,260
      Add: reclassification adjustment for amounts recognized in net income        44,076      (14,986)       29,090
                                                                               ----------   ----------    ----------

      Unrealized holding gain on available for sale securities, net of taxes   $   59,621   $  (20,271)   $   39,350
                                                                               ==========   ==========    ==========

<CAPTION>

                                                                                           Six Months Ended
                                                                                             June 30, 2004
                                                                               ---------------------------------------
                                                                               Before-Tax                   Net-of-Tax
                                                                                 Amount         Taxes         Amount
                                                                                 ------         -----         ------
<S>                                                                            <C>          <C>           <C>
      Unrealized holding losses arising during the period                      $(4,501,107)   $1,530,376   $(2,970,731)
      Less: reclassification adjustment for amounts recognized in net income            --            --            --
                                                                               -----------    ----------   -----------

      Unrealized holding loss on available for sale securities, net of taxes   $(4,501,107)   $1,530,376   $(2,970,731)
                                                                               ===========    ==========   ===========
</TABLE>

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

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

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

Components of net periodic benefit cost for the six months ended June 30:

                                           2005        2004
                                        ---------   ---------
      Service cost                      $      --   $ 129,778
      Interest cost                       105,032      96,100
      Expected return on plan assets     (116,620)   (113,146)
      Amortization of unrealized loss      26,444      22,018
                                        ---------   ---------
      Net periodic benefit cost         $  14,856   $ 134,750
                                        =========   =========


                                       9
<PAGE>

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 June 30, 2005 are as follows:

                    due 7/1/05         11,403,000 @ 3.4375%
                    due 7/27/05         6,000,000 @ 2.91%
                    due 8/29/05         2,500,000 @ 2.40%
                    due 8/29/05         2,500,000 @ 2.48%
                    due 12/8/05         2,000,000 @ 2.36%
                    due 2/10/06         3,000,000 @ 3.39%
                    due 7/18/06         4,500,000 @ 2.33%
                    due 7/16/07         4,500,000 @ 2.59%
                    due 8/27/07         5,000,000 @ 3.76%
                    due 7/18/08         4,500,000 @ 3.27%
                    due 6/24/10         5,000,000 @ 4.15%
                    due 5/29/12         5,000,000 @ 4.32%
                                     ------------

                     Total           $ 55,903,000
                                     ============

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

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

                      Total           $ 62,200,000
                                      ============

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 June 30,
                                                               2005                   2004
                                                        ------------------     ------------------
<S>                                                     <C>            <C>     <C>            <C>
Provision for income taxes at statutory Federal rate    $ 411,210      34%     $ 454,739      34%
Increase (decrease) resulting from:
   Tax exempt income                                      (98,981)     (8)       (87,915)     (7)
   Nondeductible interest expense                           4,777      --          3,747      --
   Other                                                    6,679       1          4,055       1
                                                        ------------------     ------------------
Provision for income taxes                              $ 323,685      27%     $ 374,626      28%
                                                        ==================     ==================
</TABLE>


                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                            For the six months ended June 30,
                                                               2005                   2004
                                                        ------------------     ------------------
<S>                                                     <C>            <C>     <C>            <C>
Provision for income taxes at statutory Federal rate    $ 909,428      34%     $ 752,510      34%
Increase (decrease) resulting from:
   Tax exempt income                                     (197,525)     (7)      (170,411)     (8)
   Nondeductible interest expense                           8,951      --          7,351      --
   Other                                                   10,541      --          7,917       1
                                                        ------------------     ------------------
Provision for income taxes                              $ 731,395      27%     $ 597,367      27%
                                                        ==================     ==================
</TABLE>

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

<TABLE>
<CAPTION>
AVAILABLE FOR SALE                                                June 30, 2005
                                         ------------------------------------------------------------------
                                                              Gross             Gross
                                           Amortized       Unrealized        Unrealized           Fair
                                             Cost             Gains            Losses             Value
                                         -------------    -------------     -------------     -------------
<S>                                      <C>              <C>               <C>               <C>
Debt Securities:
   U.S. Treasury securities              $   5,291,684    $       4,907     $     (45,729)    $   5,250,862
   U.S. Government Agency securities        47,984,700               --          (495,895)       47,488,805
   State and Municipal Obligations          18,058,196          661,383            (5,593)       18,713,986
   Corporate and Other Bonds                 3,003,949               --           (18,949)        2,985,000
                                         -------------    -------------     -------------     -------------
                                            74,338,529          666,290          (566,166)       74,438,653
                                         -------------    -------------     -------------     -------------

Mortgage-Backed Securities:
   GNMA                                      6,136,014            3,828          (121,783)        6,018,059
   FNMA                                     57,644,627            2,897        (1,329,248)       56,318,276
   FHLMC                                    21,983,112           21,554          (470,079)       21,534,587
                                         -------------    -------------     -------------     -------------
                                            85,763,753           28,279        (1,921,110)       83,870,922
                                         -------------    -------------     -------------     -------------

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

Total available for sale securities      $ 162,102,282    $     694,569     $  (2,487,276)    $ 160,309,575
                                         =============    =============     =============     =============

<CAPTION>

                                                                  December 31, 2004
                                         ------------------------------------------------------------------
                                                              Gross             Gross
                                           Amortized       Unrealized        Unrealized           Fair
                                             Cost             Gains            Losses             Value
                                         -------------    -------------     -------------     -------------
<S>                                      <C>              <C>               <C>               <C>
Debt Securities:
   U.S. Treasury securities              $   5,292,694    $      15,742     $     (30,915)    $   5,277,521
   U.S. Government Agency securities        43,962,574           44,262          (828,456)       43,178,380
   State and Municipal Obligations          18,078,583          573,799           (13,259)       18,639,123
   Corporate and Other Bonds                 3,007,856               --           (13,856)        2,994,000
                                         -------------    -------------     -------------     -------------
                                            70,341,707          633,803          (886,486)       70,089,024
                                         -------------    -------------     -------------     -------------

Mortgage-Backed Securities:
   GNMA                                      6,999,501           35,965           (12,548)        7,022,918
   FNMA                                     63,486,399            6,439        (1,250,920)       62,241,918
   FHLMC                                    32,818,476           48,630          (427,211)       32,439,895
                                         -------------    -------------     -------------     -------------
                                           103,304,376           91,034        (1,690,679)      101,704,731
                                         -------------    -------------     -------------     -------------

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

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

<CAPTION>

HELD TO MATURITY                                                   June 30, 2005
                                         ------------------------------------------------------------------
                                                              Gross             Gross
                                           Amortized       Unrealized        Unrealized           Fair
                                             Cost             Gains            Losses             Value
                                         -------------    -------------     -------------     -------------
<S>                                      <C>              <C>               <C>               <C>
Mortgage-Backed Securities:
   GNMA                                  $      51,892    $          --     $      (1,189)    $      50,703
   FHLMC                                         2,774               --                --             2,774
                                         -------------    -------------     -------------     -------------
Total held to maturity securities        $      54,666    $          --     $      (1,189)    $      53,477
                                         =============    =============     =============     =============
</TABLE>


                                       11
<PAGE>

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

At June 30, 2005, gross unrealized holding losses on available for sale and held
to maturity  securities  totaled  $2,488,465.  Of the securities with unrealized
losses,  there  were  twenty-eight  securities  that have  been in a  continuous
unrealized  loss position for a period of twelve months or more.  The unrealized
losses on these securities totaled $1,630,003 at June 30, 2005.  Management does
not believe that any of the  unrealized  losses are other than temporary as they
relate to debt and  mortgage-backed  securities issued by U.S. Government and U.
S. Government  sponsored  agencies,  and are due to changes in the interest rate
environment.  The  Company  has both the  intent  and the  ability to hold these
securities  until maturity or until the fair value fully recovers.  In addition,
management  considers the issuers of the securities to be financially  sound and
the Company will receive all contractual principal and interest related to these
investments.  As a result, management believes that these unrealized losses will
not have a negative impact on future earnings or a permanent  effect on capital.
However,  Management  periodically evaluates investment alternatives to properly
manage the overall balance sheet. The timing of sales and reinvestments is based
on various factors, including management's evaluation of interest rate risks and
liquidity needs.

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

                                                  2005              2004
                                             -------------------------------
      Real estate--residential mortgage      $ 155,167,983     $ 148,661,814
      Real estate--commercial mortgage          37,017,604        33,655,103
      Real estate--construction                 24,508,595        11,596,972
      Commercial                                19,047,293        17,910,953
      Installment                                5,453,789         6,315,197
      Other                                         42,661            80,118
                                             -------------     -------------
                          TOTAL LOANS          241,237,925       218,220,157
      Net deferred loan origination costs          259,873           198,541
      Allowance for loan losses                 (1,588,749)       (1,389,947)
                                             -------------     -------------
                          NET LOANS          $ 239,909,049     $ 217,028,751
                                             =============     =============

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

                                                      2005            2004
                                                  ----------------------------
      Noninterest bearing:
          Demand                                  $ 62,722,967    $ 58,409,685
                                                  ------------    ------------
      Interest bearing:
          Savings                                   54,793,380      57,934,199
          Money market                              82,917,514      98,585,769
          Time certificates of deposit in
            denominations of $100,000 or more       26,298,204      25,823,673
          Other time certificates of deposit        55,380,825      60,094,053
                                                  ------------    ------------
               Total Interest bearing deposits     219,389,923     242,437,694
                                                  ------------    ------------
                           TOTAL DEPOSITS         $282,112,890    $300,847,379
                                                  ============    ============

Included in deposits as of June 30, 2005 and December 31, 2004 are approximately
$3,599,000  $4,318,000,  respectively,  of brokered  deposits which have varying
maturities through May 2007 and September 2006, respectively.


                                       12
<PAGE>

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

GENERAL

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

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

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

As of June 30, 2005, the Company had total assets of $439,769,857,  which was an
increase of approximately  $15.5 million or 3.6% from year-end 2004 total assets
of  $424,304,747.  The increase in assets  resulted mainly from increases in the
loan portfolio.  The growth was funded primarily  through Federal Home Loan Bank
advances.

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.


                                       13
<PAGE>

FINANCIAL CONDITION

Total assets as of June 30, 2005 were  $439,769,857,  an increase of $15,465,110
or 3.6% from year-end 2004 total assets of $424,304,747.

During the first six months of 2005, the increase in assets was primarily in the
loan  portfolio,  which  increased by  $22,880,298  or 10.5% from year-end 2004.
Total loans as of June 30, 2005 were  $239,909,049  as compared to the  year-end
2004  level  of  $217,028,751.   The  residential   mortgage  portfolio  totaled
$155,167,983,  which was an increase of $6,506,169  or 4.4% from year-end  2004.
Growth in these  mortgage  products was  primarily in fixed rate, 15 and 30 year
loans. Commercial mortgages totaled $37,017,604, increasing by over 10% from the
year-end  balance.  The increase in the construction  mortgage  portfolio was in
both  residential  and commercial  real estate loans for the first six months of
2005.  Growth in  construction  mortgages  totaled  113.4%  during the first six
months of 2005,  was due to the  popularity  of the  construction  to  permanent
mortgage product as well a focus in commercial  calling efforts.  The commercial
loan portfolio  totaled  $19,047,293 which was an increase of $1,136,340 or 6.3%
from the  year-end  2004  balance.  Again,  this growth is  attributed  to sales
development and expansion into growing market areas.

As of June 30, 2005, the securities portfolio totaled  $160,364,241,  which is a
7.8%  decrease  from the year-end  2004  balance.  The decrease in the portfolio
resulted   primarily  from  principal   payments  received  on   mortgage-backed
securities,  as well as calls and sales of agency bonds. The cash flows from the
securities portfolio funded loan growth.

Cash  and  cash  equivalents  totaled  $16,074,575,  which  is  an  increase  of
$3,851,862  or  31.5%  from  year-end  2004.  The  increase  in  cash  and  cash
equivalents primarily relates to daily cash letter fluctuations.

Total  liabilities  were  $413,767,516  as of June 30,  2005  compared  to total
liabilities  of  $399,759,074  as  of  year-end  2004.  Overall,  deposits  have
decreased   $18,734,489   or  6.3%  since  year  end.  As  of  June  30,   2005,
interest-bearing  deposits totaled $219,389,923,  which is a $23,047,771 or 9.5%
decrease  from  the  December  31,  2004  balance.  Consumer  hesitancy  towards
investing in nonliquid  deposits,  coupled with  uncertainties  in the long term
interest  rate  environment,  continues to cause the decline in these  deposits.
Demand  deposits,  however have  increased by $4,313,282 or 7.4%,  due to higher
commercial accounts, especially as they relate to the introduction of the Bank's
cash management product. Certificates of deposits above $100,000 in denomination
increased  slightly,  by $474,531 or 1.8% due to short term  deposits from local
municipalities.

During the first half of 2005, earning asset growth was funded primarily through
Federal Home Loan Bank  advances.  These  borrowings  increased  $26,403,000  or
89.5%.  Borrowing  occurred on an overnight  basis as well as on both longer and
shorter  contractual terms.  Considerations of interest levels,  yield curve and
the  Company's  current  and  future  liquidity  needs  determined  the  funding
structures utilized by the Bank during the first six (6) months of 2005.

RESULTS OF OPERATIONS

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

Summary

Net interest  income is the single  largest  source of the Company's net income.
Net  interest  income is  determined  by several  factors  and is defined as the
difference  between interest and dividend income from earning assets,  primarily
loans and investment securities, and interest expense on deposits and


                                       14
<PAGE>

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 that are beyond the control of management.

Net income for the second calendar quarter of 2005 totaled $885,757,  which is a
decrease  of $77,086 or 8.0% from second  quarter  2004  earnings  of  $962,843.
Quarterly basic and diluted net income per share for 2005 were $.44 and $.43 per
share,  respectively,  compared to $.48 per basic and $.47 per diluted share for
the same period in 2004.

Net Interest Income

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

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

Interest and dividend income                  $ 5,279,598     $ 4,868,938
Tax-equivalent adjustments                         94,783          86,602
Interest expense                               (1,788,805)     (1,589,490)
                                              -----------     -----------

Net interest income (tax equivalent basis)    $ 3,585,576     $ 3,366,050
                                              ===========     ===========

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
June 30, 2005 and 2004.  Average loans outstanding  include  nonaccruing  loans.
Interest income is presented on a tax-equivalent  basis which reflects a federal
tax rate of 34% for all periods presented.

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

<TABLE>
<CAPTION>
                                           Three months ended June 30, 2005            Three months ended June 30, 2004
                                        ---------------------------------------    ----------------------------------------
                                                          Interest                                    Interest
                                          Average          Earned/       Yield/       Average          Earned/       Yield/
                                          Balance           Paid          Rate        Balance           Paid          Rate
                                        ------------     ------------    -------   -------------     -----------    -------
<S>                                     <C>              <C>              <C>      <C>               <C>              <C>
Assets
Interest Earning Assets:
Loans                                   $234,785,000     $  3,474,303     5.92%    $ 196,759,000     $ 2,692,197      5.47%
Investment Securities                    172,877,000        1,898,400     4.39%      204,001,000       2,259,272      4.43%
Other interest earning assets                507,000            1,678     1.32%        1,358,000           4,071      1.20%
                                        ------------     ------------              -------------     -----------

Total interest earning assets            408,169,000        5,374,381     5.27%      402,118,000       4,955,540      4.93%
                                                         ------------     ----                       -----------      ----

Allowance for loan losses                 (1,530,000)                                 (1,232,000)
Cash and due from banks                   14,410,000                                  12,500,000
Bank premises and equipment                3,672,000                                   2,841,000
Net unrealized gain/loss on
  securities                              (2,582,000)                                 (2,525,000)
Other assets                              15,296,000                                  14,217,000
                                        ------------                               -------------

Total Average Assets                    $437,435,000                               $ 427,919,000
                                        ============                               =============

Liabilities and Shareholders' Equity
Interest Bearing Liabilities:
Savings deposits                        $ 56,978,000           29,957     0.21%    $  57,403,000          32,333      0.23%
Money Market deposits                     88,647,000          236,472     1.07%      106,207,000         326,148      1.23%
Time deposits                             83,186,000          535,343     2.57%       92,057,000         600,793      2.61%
Borrowed funds                           121,497,000          987,033     3.25%       95,018,000         630,216      2.65%
                                        ------------     ------------              -------------     -----------

Total interest bearing liabilities       350,308,000        1,788,805     2.04%      350,685,000       1,589,490      1.81%
                                                         ------------     ----                       -----------      ----

Demand deposits                           60,043,000                                  54,103,000
Other liabilities                          1,827,000                                   1,482,000
Shareholders' Equity                      25,257,000                                  21,649,000
                                        ------------                               -------------

Total liabilities and equity            $437,435,000                               $ 427,919,000
                                        ============                               =============

Net interest income                                      $  3,585,576                                $ 3,366,050
                                                         ============                                ===========
Net interest spread                                                       3.23%                                       3.12%
Net interest margin                                                       3.51%                                       3.35%
</TABLE>


                                       15
<PAGE>

RATE/VOLUME ANALYSIS

<TABLE>
<CAPTION>
                                                        Three months ended
                                                   6/30/05 Compared to 6/30/04
                                                   Increase (Decrease) Due to
                                              -------------------------------------

                                               Volume         Rate          Total
                                              ---------     ---------     ---------
<S>                                           <C>           <C>           <C>
Interest earned on:
Loans                                         $ 550,124     $ 231,982     $ 782,106
Investment securities                          (341,932)      (18,940)     (360,872)
Other interest income                            (2,780)          387        (2,393)
                                              ---------     ---------     ---------
Total interest earning assets                   205,412       213,429       418,841
                                              ---------     ---------     ---------

Interest paid on:

Deposits                                        (96,677)      (60,825)     (157,502)
Borrowed money                                  197,480       159,337       356,817
                                              ---------     ---------     ---------
Total interest bearing liabilities              100,803        98,512       199,315
                                              ---------     ---------     ---------

Increase (decrease) in net interest income    $ 104,609     $ 114,917     $ 219,526
                                              =========     =========     =========
</TABLE>

Tax-equivalent  net  interest  income for the second  quarter of 2005  increased
$219,526 or 6.5% from the second  quarter of 2004.  Of the $219,526  increase in
the net interest  income,  $104,609  resulted  from income  attributable  to the
higher volume of earning assets and interest bearing liabilities.  Higher yields
on average  earning  assets were  greater than  increases  on funding  costs and
resulted in increased net interest income of $114,917 for the second quarter.

Average  earning assets for the second quarter of 2005 totaled $408 million,  an
overall  increase of $6 million from the second quarter of 2004. Loans increased
by $38  million or 19%.  The  increase  and change in the mix of earning  assets
resulted in additional tax equivalent  interest income of $205,412.  The funding
of this growth was through  borrowed  money and demand  deposits.  This funding,
which also offset  decreases in time  deposits,  increased  interest  expense by
$100,803.

The net interest margin for the second quarter of 2005 was 3.51%, an increase of
16 basis  points  from the  second  quarter  of 2004.  The  increase  in the net
interest margin is mostly attributable to the shift in the mix of earning assets
as the higher  proportion of loans to earning assets resulted in a higher yield.
The second quarter yield on earning assets was 5.27%,  34 basis points above the
yield of 4.93%  earned  the  second  quarter  of  2004.  Offsetting  some of the
increase in net interest  margin is the change in the funding  composition.  For
the second quarter of 2005, deposits funded 65% of total assets, compared to the
second  quarter of 2004 where they funded 73% of total  assets.  Borrowed  money
compensated for the lower proportion of deposit funding and resulted in slightly
higher funding costs.

Provisions for Loan Losses

The provision for loan losses for the second  quarter of 2005 totaled  $100,623,
which is an increase of $10,623  over the  provision  for the second  quarter of
2004.  The provision for loan losses is determined  quarterly and assessed along
with the adequacy of the loan loss  reserve.  An increased  focus and  resulting
growth in commercial  lending,  growth  within the overall  portfolio and in new
contiguous markets and, the expectations for a cautious economic recovery,  were
the reasons for the increase in the provision.

During the second  quarter of 2005,  the Company  recorded  net  charge-offs  of
$1,959  compared to net  recoveries of $94 for the same period in 2004.  For the
second quarter of 2005, total charge-offs were


                                       16
<PAGE>

$11,583 and total  recoveries  were  $9,624.  Recovery and  charge-off  activity
continues to be associated with consumer lending especially as it relates to the
discontinued indirect dealer loan program.

Noninterest Income

Noninterest  income for the second quarter of 2005 totaled $597,928,  a decrease
of $36,530  or 5.8% from the  $634,458  earned  for the second  quarter of 2004.
Losses on the sales of available  for sale  securities  totaling  $44,076 in the
second quarter of 2005 was the primary cause of this decrease.  These sales were
effected in order to  decrease  the  volatility  and  interest  rate risk in the
portfolio There were no similar sales during the second quarter of 2004.  Second
quarter 2005 banking service  charges and fees totaled  $245,997 and were within
1.3% of the fees  earned for the  second  quarter  of 2004.  Trust fees  totaled
$246,813,  which was $14,888 or 5.7% below the second  quarter 2004 level.  This
decline is due mostly to estate settlement fees earned during the second quarter
of 2004. Other noninterest  income totaled  $149,194,  increasing 14.8% from the
second  quarter  of 2004.  This  increase  is  attributed  to  increased  retail
investment fees and increased  income from a slightly higher  investment in bank
owned life insurance.

Noninterest Expense

For  the  three  months  ended  June  30,  2005,   noninterest  expense  totaled
$2,778,656,  an increase  of $292,219 or 11.8% from the similar  period in 2004.
Salary and benefits  costs  increased by $106,207  due to  additional  positions
created over the last year as well as to increases in benefits  costs.  Included
in the  additional  positions  are those created in  anticipation  of the Bank's
Canton  office  which is  scheduled to open this fall.  The Bank  curtailed  its
defined benefit pension plan effective April 30, 2005. Although this action will
have no impact in 2005 earnings,  Management  anticipates  that this action will
mitigate future cost increases.

Second quarter 2005 occupancy and equipment expense totaled $274,507, increasing
$21,931 or 8.7% from the second quarter of 2004. Higher costs of maintenance and
repairs on equipment and bank properties,  equipment depreciation, and utilities
expense are the primary causes of the increase.  Expenses for external  computer
services increased by $16,111 from the second quarter of 2004, due to additional
processing  costs  for new  electronic  banking  products.  Advertising  expense
totaled 112,947,  up $34,640 from second quarter 2004 costs.  Costs incurred for
market  awareness  and  branding  studies  were  the  reason  for the  increase.
Commissions,  services and fees  expenses  increased by $8,492 or 16.1% from the
second quarter of 2004 due to costs incurred for benefits consulting relating to
the pension,  401(k) plan and other benefit packages.  Other noninterest expense
totaled  $472,179 for the quarter,  which was $92,109 or 24.2% above 2004 costs.
Officer  relocation  expense and computer software were causes of this increase.
Costs for exam and audit fees due  mainly to the  outsourcing  of the  Company's
internal audit function also contributed to the increase.

Income Taxes

For the three month period ended June 30, 2005,  the  provision for income taxes
totaled  $323,685,  which is a decrease  of 13.6% from the same  period in 2004.
This  decrease is due mainly to the decrease of pretax  income which was down by
9.6% from the second  quarter  of 2004.  The  effective  tax rate for the second
quarter of 2005 was 27%, a decrease from the second  quarter 2004  effective tax
rate of 28%.  This  decrease is due to a higher  ratio of  tax-exempt  to pretax
income in 2005.


                                       17
<PAGE>

RESULTS OF  OPERATIONS - SIX MONTHS  ENDED JUNE 30, 2005  COMPARED TO SIX MONTHS
ENDED JUNE 30, 2004

Summary

Net  income for the  Company  for the six months  ended  June 30,  2005  totaled
$1,943,392, increasing $327,494 or 20.3% from 2004 earnings of $1,615,898. Basic
and  diluted  net income per share for the six month  period were $.96 and $.95,
per share, respectively.  These results are 20.0% and 20.3% above 2004 levels of
$.80 and $.79 for basic and diluted net income per share, respectively.

Net Interest Income

Net interest  income is comprised of the following for the six months ended June
30,

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

  Interest and dividend income                  $ 10,444,639     $ 9,493,428
  Tax-equivalent adjustments                         189,815         165,209
  Interest expense                                (3,337,539)     (3,190,407)
                                                ------------     -----------

  Net interest income (tax equivalent basis)    $  7,296,915     $ 6,468,230
                                                ============     ===========

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

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

<TABLE>
<CAPTION>
                                            Six months ended June 30, 2005              Six months ended June 30, 2004
                                        --------------------------------------     ----------------------------------------
                                                           Interest                                   Interest
                                           Average         Earned/      Yield/        Average         Earned/      Yield/
                                           Balance           Paid        Rate         Balance           Paid        Rate
                                        -------------     ----------    -------    -------------     ----------    --------
<S>                                     <C>               <C>             <C>      <C>               <C>             <C>
Assets
Interest Earning Assets:
Loans                                   $ 229,165,000     $6,760,325      5.90%    $ 194,299,000     $5,374,350      5.53%
Investment Securities                     175,242,000      3,865,026      4.41%      192,180,000      4,273,709      4.45%
Other interest earning assets               1,691,000          9,103      1.08%        2,119,000         10,578      1.00%
                                        -------------     ----------               -------------     ----------

Total interest earning assets             406,098,000     10,634,454      5.24%      388,598,000      9,658,637      4.97%
                                                          ----------      -----                      ----------      -----

Allowance for loan losses                  (1,478,000)                                (1,198,000)
Cash and due from banks                    14,341,000                                 12,103,000
Bank premises and equipment                 3,249,000                                  2,834,000
Net unrealized gain/loss on
  securities                               (2,391,000)                                (1,217,000)
Foreclosed real estate                             --                                    138,000
Other assets                               15,000,000                                 13,508,000
                                        -------------                              -------------

Total Average Assets                    $ 434,819,000                              $ 414,766,000
                                        =============                              =============

Liabilities and Shareholders' Equity
Interest Bearing Liabilities:
Savings deposits                        $  57,471,000         59,522      0.21%    $  55,724,000         84,664      0.30%
Money Market deposits                      94,486,000        476,330      1.01%      108,682,000        710,287      1.31%
Time deposits                              84,902,000      1,040,843      2.45%       92,944,000      1,246,965      2.68%
Borrowed funds                            112,510,000      1,760,844      3.13%       83,537,000      1,148,491      2.75%
                                        -------------     ----------               -------------     ----------

Total interest bearing liabilities        349,369,000      3,337,539      1.91%      340,887,000      3,190,407      1.87%
                                                          ----------      ----                       ----------      ----

Demand deposits                            58,600,000                                 50,552,000
Other liabilities                           1,820,000                                  1,141,000
Shareholders' Equity                       25,030,000                                 22,186,000
                                        -------------                              -------------

Total liabilities and equity            $ 434,819,000                              $ 414,766,000
                                        =============                              =============

Net interest income                                       $7,296,915               $   6,468,230
                                                          ==========               =============
Net interest spread                                                       3.33%                                      3.10%
Net interest margin                                                       3.59%                                      3.33%
</TABLE>


                                       18
<PAGE>

RATE/VOLUME ANALYSIS

                                                   Six months ended
                                              6/30/05 Compared to 6/30/04
                                               Increase (Decrease) Due to
                                      -----------------------------------------

                                         Volume          Rate           Total
                                      -----------     ---------     -----------

Interest earned on:
Loans                                 $ 1,011,197     $ 374,778     $ 1,385,975
Investment securities                    (373,838)      (34,845)       (408,683)
Other interest income                      (2,258)          783          (1,475)
                                      -----------     ---------     -----------
Total interest earning assets             635,101       340,716         975,817
                                      -----------     ---------     -----------

Interest paid on:
Deposits                                 (153,921)     (311,300)       (465,221)
Borrowed money                            437,726       174,627         612,353
                                      -----------     ---------     -----------
Total interest bearing liabilities        283,805      (136,673)        147,132
                                      -----------     ---------     -----------

Increase in net interest income       $   351,296     $ 477,389     $   828,685
                                      ===========     =========     ===========

The $828,685  increase in the net interest income reflects  increased  income of
$351,296  resulting from the increase in the volume of average  earning  assets.
Furthermore,  increased  yields on earning assets  contributed to the additional
$477,389 in net interest income.

Tax  equivalent  net  interest  income for the first six months of 2005  totaled
$7,296,915,  which was an  increase of $828,685 or 12.8% from the same period in
2004.  Average  earning  assets  for the first six months of 2005  increased  by
nearly $18  million or 4.5%.  The earning  asset  increase  was due  entirely to
loans,  which have on average  increased  by $34.9  million  over the last year.
Increases in the loan  portfolio  have been in the real estate,  commercial  and
home equity  products.  Offsetting  some of the growth in the loan portfolio has
been  the  decrease  in the  investment  portfolio.  As of  June  30,  2005  the
investment  portfolio has averaged $175 million which is $16.9 million less than
2004 balances.  The decrease in the investment portfolio was a deliberate effort
to shift the mix of earning  assets  from lower  yielding  securities  to higher
yielding  loans.  The increase in earning assets was funded entirely by borrowed
money.

The net interest  margin (net interest income divided by average earning assets)
was 3.59% for the six-month  period ended June 30, 2005. The net interest margin
increased 26 basis points from the margin of 3.33% for the six months ended June
30, 2004. The  tax-equivalent  yield on earning assets through June 30, 2005 was
5.24%,  27 basis points above the 4.97% yield earned during the first six months
of 2004. The increase in the yield spread is attributable to a change in the mix
of earning assets as well as the overall interest rate environment.  The earning
asset  composition  over last year has shifted to 56% loans and 44%  investments
from, 50% loans and 50% investments in the previous year.

Funding costs were at 1.91%,  remaining  close to their previous year's level of
1.87%. Although the Company's mix of funding is shifting towards borrowed money,
demand  deposit  growth over the last year, as well as  management's  ability to
control raising deposit rates, has kept these costs low.

Provisions for Loan Losses

The provision for loan losses for the first six months of 2005 totaled $201,246,
which was an increase of $21,246 or 11.8% from the provision of $180,000 for the
first six months of 2004. The provision for loan losses is determined  quarterly
and assessed  along with the  adequacy of the  allowance  for loan  losses.  The
growth in the loan  portfolio,  an  increased  emphasis in  commercial  lending,
expansion into contiguous markets and cautious economic  expectations,  were the
motivation for the increased provision.


                                       19
<PAGE>

During the first six months of 2005,  the Company  recorded net  charge-offs  of
$2,444  compared  to net  charge-offs  of  $44,936  for the first  half of 2004.
Generally,  these  charge-offs  relate  to losses  in  consumer  loans or in the
discontinued dealer loan program.  Lower outstanding  balances in this portfolio
has resulted in lower losses,  however,  fluctuations in charge-off  levels will
occur from time to time due to weakened collateral values for these loans.

Noninterest Income

Year-to-date  noninterest  income as of June 30,  2005  totaled  $1,211,731,  up
$7,607 or within 1% of  noninterest  income from the same period in 2004.  Trust
fee income  totaled  $475,486  which is an  increase of $25,565 or 5.7% from the
first six months of 2004.  This increase is due mostly to a nonrecurring  rebate
of trust fees during the first  quarter of 2004.  Through  June of 2005,  assets
under  management  and the resultant fees are similar that of the previous year.
Banking  service  charges and fees totaled  $468,161,  which was consistent with
fees earned for the first six months of 2004. Other  noninterest  income totaled
$312,160,  an increase of 11.6% from the first six months of 2004.  Most of this
increase  is due to  increased  fee  income  from the Bank's  retail  investment
product as well as increased  income from the cash surrender value of bank owned
life insurance.  These increases  offset the $45,138 gain recorded from the sale
of OREO property  during the first quarter of 2004.  During the first six months
of 2005, the Bank recorded  losses on the sales of available for sale securities
totaling  $44,076.  These  sales  were made for the  purpose of  decreasing  the
volatility and interest rate exposure of the investment portfolio. There were no
similar sales occurring during 2004.

Noninterest Expense

Six-month  noninterest  expense  as of June  30,  2005  totaled  $5,442,798,  an
increase of $328,918 or 6.4% from the same period of 2004. The Company's growth,
the  regulatory  environment  as well as a  commitment  to product  and  service
delivery  remain the key drivers of the  increase in  noninterest  expense.  The
largest  component  of the increase  was in salary and  benefits  expense  which
totaled  $2,978,794,  increasing  $175,004  or 6.2% from the first six months of
2004. Costs related to new staffing in sales and business  development,  lending
and operations  increased salary expense.  Additionally,  new employees hired in
anticipation of the Canton, Connecticut branch opening slated for later in 2005,
also  contributed  to the increase.  Benefits costs also increased due to higher
staffing  levels as well as overall  cost  increases.  In an effort to  mitigate
increases in these costs,  during the second quarter of 2005, the Bank curtailed
its  defined  pension  plan  and  replaced  it with  an  enhanced  401(k)  plan.
Year-to-date  occupancy  and equipment  expenses  totaled  $561,458,  increasing
$35,075 or 6.7% from the previous  year.  These  increases were in bank building
maintenance,  utilities and equipment depreciation.  Six month 2005 expenses for
legal,  director fees,  computer  services,  supplies and  advertising  expenses
remained close to their 2004 levels.

Other  noninterest  expenses totaled $855,662 which was an increase of $124,292,
or 17.0% from the first six months of 2004.  Costs related to the outsourcing of
the  Company's  internal  audit  function  was the largest  contributor  to this
increase.  Additionally,  costs  for  computer  software,  executive  relocation
expenses and insurance  fees  comprised  the  remainder of the  increase.  These
increases  generally  relate to the  Company's  growth in various areas over the
last year as well as to the regulatory environment.

Income Taxes

The  provision  for  income  taxes  for the first  six  months  of 2005  totaled
$731,395,  an increase  of  $134,028 or 22.4% from the same period in 2004.  The
increase  in income tax  expense is due to higher  taxable  income  levels.  The
effective tax rate for the first six months of both 2005 and 2004 was 27%.


                                       20
<PAGE>

LIQUIDITY

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

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

As of June 30, 2005, the Company had $72,409,935 in loan  commitments and credit
lines  outstanding.  Since some commitments are expected to expire without being
drawn upon, the total commitment amount therefore does not necessarily represent
all future cash  requirements.  The funding of these commitments are anticipated
to  be  through  deposits,  loan  and  security  amortizations  and  maturities.
Management  believes  liquidity is adequate to meet its present and  foreseeable
needs.

CAPITAL

At June 30,  2005,  total  shareholders'  equity  was  $26,002,341  compared  to
$24,545,673  at December 31, 2004.  From a regulatory  perspective,  the capital
ratios of the Company  and the Bank place each entity in the  "well-capitalized"
categories  under  applicable  regulations.  The various  capital  ratios of the
Company and the Bank are as follows as of June 30, 2005:

                                          Minimum
                                       Regulatory
                                   Capital Levels       The Company    The Bank
                                   --------------       -----------    --------
TIER 1:
  Leverage capital ratio                       4%             7.77%       7.10%

  Risk-based capital ratio                     4%            13.75%      12.57%

  Total risk-based capital ratio               8%            14.39%      13.21%

ALLOWANCE FOR LOAN LOSSES AND CRITICAL ACCOUNTING POLICIES

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

The Bank makes  provisions for loan losses on a quarterly basis as determined by
a continuing  assessment of the adequacy of the  allowance for loan losses.  The
Bank performs an ongoing review of loans in accordance  with an individual  loan
rating system to determine  the required  allowance for loan losses at any given
date. The review of loans is performed to estimate potential exposure to losses.
Management's


                                       21
<PAGE>

judgment in determining  the adequacy of the allowance is inherently  subjective
and is based on an evaluation of the known and inherent risk characteristics and
size of the loan portfolios,  the assessment of current economic and real estate
market conditions, estimates of the current value of underlying collateral, past
loan loss experience,  review of regulatory  authority  examination  reports and
evaluations of impaired  loans,  and other relevant  factors.  Loans,  including
impaired  loans,  are  charged  against  the  allowance  for  loan  losses  when
management  believes that the  uncollectibility  of principal is confirmed.  Any
subsequent  recoveries  are  credited  to the  allowance  for loan  losses  when
received.  In connection with the determination of the allowance for loan losses
and the  valuation of foreclosed  real estate,  management  obtains  independent
appraisals for significant properties, when considered necessary.

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

There were no material changes in loan  concentration or loan quality that had a
significant  effect on the  allowance  for loan losses  calculation  at June 30,
2005. 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 June 30, 2005,  the allowance for loan losses was equivalent to 128% of total
non-performing  assets as compared  with 79% of total  non-performing  assets at
December 31, 2004. This ratio was favorably impacted during the first quarter of
2005 due to several  residential  mortgages  that were removed  from  nonaccrual
status.  The ratio of the  allowance  for loan losses to total loans at June 30,
2005 was .66% as compared  to .64% as of  December  31,  2004.  Despite  reduced
levels of  non-performing  loans, the increased  provisions and allowance levels
are  appropriate in light of the increased  focus on commercial  lending and the
growth of the portfolio.

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

                                                      Six months ended June 30,
                                                       2005             2004
                                                   -----------      -----------

Balance at beginning of the year                   $ 1,389,947      $ 1,149,454
Provision for loan losses                              201,246          180,000
Loans charged off                                      (18,590)         (66,766)
Recoveries of loans previously charged off              16,146           21,830
                                                   -----------      -----------

Balance at end of period                           $ 1,588,749      $ 1,284,518
                                                   ===========      ===========

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

                                               June 30, 2005   December 31, 2004
                                               -------------   -----------------

Nonaccrual loans                                 $1,241,032        $1,634,999

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

Total nonperforming assets                       $1,241,032        $1,634,999
                                                 ==========        ==========

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



                                       22
<PAGE>

Potential Problem Loans

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

Impact of Inflation and Changing Prices

The financial  statements  and related  financial  data presented in this report
have been prepared in accordance with accepted accounting  principles  generally
accepted in the United  States of America,  which  require  the  measurement  of
financial  position and operating results in terms of historical dollars without
considering the change in the relative  purchasing  power of money over time due
to inflation.  The primary impact of inflation on our operations is reflected in
increased operating costs. Unlike most industrial  companies,  virtually all the
assets and liabilities of a financial  institution are monetary in nature.  As a
result,  interest rates generally have a more significant  impact on a financial
institution's performance than do general levels of inflation. Interest rates do
not  necessarily  move in the same direction or to the same extent as the prices
of goods and services.

OFF-BALANCE SHEET ARRANGEMENTS

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

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

FORWARD-LOOKING STATEMENTS

This Quarterly Report and future filings made by the Company with the Securities
and Exchange  Commission,  as well as other filings,  reports and press releases
made or  issued  by the  Company  and the  Bank,  and  oral  statements  made by
executive  officers  of  the  Company  and  Bank,  may  include  forward-looking
statements  relating  to  such  matters  as (a)  assumptions  concerning  future
economic and business  conditions and their effect on the economy in general and
on the  markets  in  which  the  Company  and  the  Bank  do  business,  and (b)
expectations  for  increased  revenues  and  earnings  for the  Company and Bank
through growth resulting from acquisitions,  attractions of new deposit and loan
customers   and  the   introduction   of  new   products  and   services.   Such
forward-looking  statements are based on assumptions  rather than  historical or
current facts and, therefore,  are inherently uncertain and subject to risk. For
those  statements,  the  Company  claims the  protection  of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.

The Company  notes that a variety of factors  could cause the actual  results or
experience  to  differ   materially  from  the  anticipated   results  or  other
expectations described or implied by such forward-looking  statements. The risks
and uncertainties that may affect the operations,  performance,  development and
results of the Company's and Bank's business include the following: (a) the risk
of adverse changes in business  conditions in the banking industry generally and
in the  specific  markets  in  which  the  Bank  operates;  (b)  changes  in the
legislative and regulatory  environment  that negatively  impact the Company and
Bank through increased operating expenses;  (c) increased competition from other
financial  and  nonfinancial  institutions;  (d)  the  impact  of  technological
advances;  and (e)  other  risks  detailed  from  time to time in the  Company's
filings with the Securities and Exchange  Commission.  Such  developments  could
have an adverse  impact on the Company  and the Bank's  financial  position  and
results of operation.


                                       23
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

ITEM 4.  CONTROLS AND PROCEDURES

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

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

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


                                       24
<PAGE>

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

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

On September  9, 2003,  the Bank  commenced an action in Superior  Court for the
Judicial  District of Litchfield,  Connecticut in a matter  captioned "The First
National   Bank  of   Litchfield   v.  Theresa   Sullivan  and  John   Sullivan:
CV-03-0091476-S"  in an effort to collect principal and past due interest due on
two (2) loans,  which the Bank extended several years earlier and upon which the
Borrowers had defaulted.  The aggregate principal balance outstanding on the two
(2) loans was approximately  $135,000. The Borrowers  counterclaimed against the
Bank alleging that the Bank,  through current and former  employees,  engaged in
conduct in violation  of  covenants  of good faith and fair dealing  pursuant to
both common law and Connecticut statutes,  that the Bank's conduct constitutes a
violation of the  Connecticut  Uniform Trade Practices Act. The Borrowers seek a
variety of  unspecified  damages  including  money damages,  interest,  punitive
damages, and "such other and further relief as the Court deems fair and just."

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

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

Item 3. Defaults Upon Senior Securities - Not applicable

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

The Annual Meeting of Shareholders  of First  Litchfield  Financial  Corporation
(the "Company") was held on Wednesday, May 18, 2005.

      1.    Election Of Directors.
            ----------------------

            The vote for re-electing  each of the two (2) Directors listed below
to serve for a term of three years were as follows:

                                                                Withholding
                                                   For           Authority
                                                   ---           ---------

Kathleen A. Kelley   Number of Shares:            1,380,541           86,289
                                               ------------     ------------
                     Percentage of
                     Shares Voted:                    94.12%            5.88%
                                               ------------     ------------
                     Percentage of Shares
                     Entitled to Vote:                68.10%            4.26%
                                               ------------     ------------

                                                                Withholding
                                                   For           Authority
                                                   ---           ---------

H. Ray Underwood     Number of Shares:            1,369,110           97,700
                                               ------------     ------------
                     Percentage of
                     Shares Voted:                    93.34%            6.66%
                                               ------------     ------------
                     Percentage of Shares
                     Entitled to Vote:                67.53%            4.82%
                                               ------------     ------------


                                       25
<PAGE>

Joseph J.  Greco,  Perley H.  Grimes,  Thomas A.  Kendall and Charles E. Orr are
currently  serving  terms on the  Board of  Directors  which  expire at the 2006
Annual Meeting of  Shareholders.  George M. Madsen,  Alan B. Magary,  Gregory D.
Oneglia, William J. Sweetman, and Patricia D. Werner are currently serving terms
on  the  Board  of  Directors  which  expire  at  the  2007  Annual  Meeting  of
Shareholders.

      2.    Appointment of Auditors.
            ------------------------

      Votes cast "FOR,"  "AGAINST"  and  "ABSTAIN" on the proposal to ratify the
appointment  of McGladrey & Pullen,  LLP to act as  independent  auditors of the
current fiscal year were as follows:

             "FOR APPROVAL"         "AGAINST APPROVAL"          "ABSTAIN"

              1,451,539                    112                   15,159
           ---------------------  -------------------   ----------------------
                       Number            Number                  Number

               71.60%                     0.01%                   0.75%
           ---------------------  -------------------   ----------------------
                             (Percent of shares entitled to vote)

               98.96%                     0.01%                   1.03%
           ---------------------  -------------------   ----------------------
                   (Percent of shares actually voted at the meeting)

Item 5. Other Information - Not applicable

Item 6. Exhibits

      A.    Exhibits

                                  EXHIBIT INDEX

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

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

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

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

10.1           1990  Stock  Option  Plan  for  Company's   President  and  Chief
               Executive  Officer,  as  amended.   Exhibit  is  incorporated  by
               reference to Exhibit 10.1 set forth in the Company's Registration


                                       26
<PAGE>

               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.

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.


                                       27
<PAGE>

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

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

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

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

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

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

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

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

10.21          The  First  National  Bank  of  Litchfield   Director   Incentive
               Retirement  Agreement  between  Patricia  D.  Werner and the Bank
               dated November 30, 2000.  Exhibit is incorporated by reference to
               Exhibit  10.21 set forth in the  Company's  Annual Report in Form
               10-KSB for the fiscal year ended  December 31, 2000 as filed with
               the Securities and Exchange Commission on April 2, 2001.


                                       28
<PAGE>

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

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

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

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

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

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

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

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


                                       29
<PAGE>

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

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

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

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

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

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

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

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

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

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

10.39          The  First  National  Bank  of  Litchfield   Executive  Incentive
               Retirement  Agreement  between Joseph J. Greco and the Bank dated
               December  19,  2002.  Exhibit is  incorporated  by  reference  to
               Exhibit  10.40 set forth in the  Company's  Annual Report in Form
               10-KSB for


                                       30
<PAGE>

               the  fiscal  year  ended  December  31,  2002 as  filed  with the
               Securities and Exchange Commission on March 31, 2003.

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

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

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

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

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

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

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

10.48          Split  dollar life  agreement  between  Laura R.  Szablak and the
               Company.  Exhibit is  incorporated  by reference to Exhibit 10.48
               set forth in the Company's  10-QSB for the quarter ended June 30,
               2003 as filed with the  Securities  and  Exchange  Commission  on
               August 13, 2003.

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

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


                                       31
<PAGE>

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

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

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

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

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

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

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

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

31.1           Certification of the Chief Executive Officer of the Company.

31.2           Certification of the Chief Financial Officer of the Company.

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


                                       32
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        FIRST LITCHFIELD FINANCIAL
                                        CORPORATION


Dated:  August 12, 2005                    By:   /s/ Joseph J. Greco
                                             -----------------------
                                                Joseph J. Greco, President and
                                                Chief Executive Officer


Dated:  August 12, 2005                    By: /s/ Carroll A. Pereira
                                             --------------------------
                                                Carroll A. Pereira
                                                Principal Accounting Officer


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