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

                                   FORM 10-QSB

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

                 For the quarterly period ended: June 30, 2000

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

           For the transition period from ___________ to ___________.

                         Commission File Number: 0-28815


                     FIRST LITCHFIELD FINANCIAL CORPORATION
                     --------------------------------------
        (Exact name of small business issuer as specified in its charter)


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

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

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

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

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

           Yes [ X ]         No  [    ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

           State  the  number  of  shares  outstanding  of each of the  issuer's
           classes  of  common  equity,  as  of  the  latest  practicable  date:
           1,514,931  shares of Common  Stock,  par value $.01 per  share,  were
           outstanding at July 25, 2000.

           Transitional Small Business Disclosure Format (check one):

           Yes [   ]      No  [ X ]


<PAGE>


                     FIRST LITCHFIELD FINANCIAL CORPORATION

                                   FORM 10-QSB

                                      INDEX
<TABLE>
<CAPTION>

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

         Item 1 - Financial Statements

                Consolidated Balance Sheets - June 30, 2000 (unaudited) and
                    December 31, 1999. . . . . . . . . . . . . . . . . . . . . . . .  . .  2

                Consolidated Statements of Income (unaudited) - Three months and
                    six months ended June 30, 2000 and 1999. . . . . . . . . . . . .  . .  3

                Consolidated Statements of Comprehensive Income (unaudited) -
                    Six months ended June 30, 2000 and 1999 . . . . . . . . . . . . .. . . 4

                Consolidated Statements of Cash Flows (unaudited) -  Six months
                    ended June 30, 2000 and 1999   . . . . . . . . . . . . . .. . . .. . . 5

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


         Item 2 - Management's Discussion and Analysis of Financial Condition
           and Results of Operations . . . . . . . . . . . . . . . . . . . . . .. . . . .  9


Part II - Other Information

         1.  Legal Proceedings   . . . . . . . . . . . . . . . . . . . . . . . . . . .  .  None

         2.  Changes in Securities and Use of Proceeds . . . . . . . . . . . . . . .  . .  None

         3.  Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . .  . .  None

         4.  Submission of Matters to a Vote of Security Holders . . . . . . . . . .  . .  18

         5.  Other Information  . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . None

         6.  Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . . . . . .  . .  19


Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .   20
</TABLE>


<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                              June 30,            December 31,
                                                                                                2000                 1999
                                                                                          ---------------      ----------------
                                                                                              (Unaudited)
<S>                                                                                       <C>                  <C>
ASSETS
   Cash and due from banks                                                                $     8,129,157      $     12,800,196
                                                                                          ---------------      ----------------
                                                          CASH AND CASH EQUIVALENTS             8,129,157            12,800,196
                                                                                          ---------------      ----------------
   Securities:
      Available for sale securities:
        US Treasuries and other securities (amortized cost $29,458,771-2000                    28,658,370            23,663,850
             and $24,491,689-1999)
        Mortgage-backed securities (amortized cost $23,155,592-2000
         and $19,279,026-1999)                                                                 22,846,559            19,036,632
      Held to maturity securities:
        Mortgage-backed securities (market value $3,423,473-2000
         and $4,147,716-1999)                                                                   3,438,397             4,188,851
                                                                                          ---------------      ----------------
                                                                   TOTAL SECURITIES            54,943,326            46,889,333
                                                                                          ---------------      ----------------

   Federal Home Loan Bank stock, at cost                                                        2,389,800             2,100,000
   Federal Reserve Bank stock, at cost                                                             81,850                81,850
   Loans Receivable:
      Real estate-residential mortgage                                                        118,279,580           115,392,170
      Real estate-commercial mortgage                                                          21,135,209            19,821,940
      Real estate-construction                                                                  5,842,060             7,090,241
      Commercial                                                                               10,588,537             8,063,552
      Installment                                                                              34,979,592            33,114,855
      Other                                                                                        15,367               123,370
                                                                                          ---------------      ----------------
                                                                        TOTAL LOANS           190,840,345           183,606,128
      Net deferred loan origination costs                                                       1,392,949             1,217,288
      Allowance for loan losses                                                                (1,033,317)           (1,014,522)
                                                                                          ---------------      ----------------
                                                                          NET LOANS           191,199,977           183,808,894
                                                                                          ---------------      ----------------
Foreclosed real estate                                                                            300,000                    --
Deferred taxes                                                                                    386,656               378,450
Bank premises and equipment, net                                                                2,952,057             3,017,976
Accrued interest receivable                                                                     1,712,069             1,455,363
Other assets                                                                                    5,635,716             5,441,728
                                                                                          ---------------      ----------------

                                                                       TOTAL ASSETS       $   267,730,608      $    255,973,790
                                                                                          ===============      ================

LIABILITIES
   Deposits:
      Noninterest bearing:
         Demand                                                                           $    41,481,580      $     33,990,059
      Interest bearing:
         Savings                                                                               36,924,106            36,556,699
         Money market                                                                          43,222,694            44,111,008
         Time certificates of deposit in denominations of $100,000 or more                     16,034,040            16,802,864
         Other time certificates of deposit                                                    69,588,582            65,772,152
                                                                                          ---------------      ----------------
                                                                     TOTAL DEPOSITS           207,251,002           197,232,782
                                                                                          ---------------      ----------------

   Federal Home Loan Bank advances                                                             42,650,000            41,730,000
   Collateralized borrowings                                                                      936,056               830,227
   Accrued expenses and other liabilities                                                       1,239,660             1,254,572
                                                                                          ---------------      ----------------
                                                                  TOTAL LIABILITIES           252,076,718           241,047,581
                                                                                          ---------------      ----------------
   Commitments & Contingencies                                                                         --                    --

SHAREHOLDERS' EQUITY
   Preferred stock $.00001 par value;  1,000,000  shares  authorized,  no shares
   outstanding Common stock $.01 par value
      Authorized - 5,000,000 shares
      2000 - Issued - 1,597,350 shares, outstanding - 1,514,931 shares
      1999 - Issued - 1,567,353 shares, outstanding - 1,484,934 shares                             15,973                15,674
   Capital surplus                                                                             11,150,626            10,933,465
   Retained earnings                                                                            5,865,661             5,324,445
   Less: Treasury stock at cost-82,419 shares                                                    (701,061)             (701,061)
   Accumulated other comprehensive loss-net unrealized loss
     on available for sale securities (net of taxes)                                             (677,309)             (646,314)
                                                                                          ----------------     ----------------
                                                         TOTAL SHAREHOLDERS' EQUITY            15,653,890            14,926,209
                                                                                          ---------------      ----------------
                                         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $   267,730,608      $    255,973,790
                                                                                          ===============      ================
</TABLE>
See Notes to Consolidated Financial Statements.


                                       2
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<TABLE>
<CAPTION>

                                                              Three Months Ended June 30,              Six Months Ended June 30,
                                                                2000              1999                2000                 1999
                                                         ---------------    ---------------     ----------------     ---------------
<S>                                                      <C>                      <C>           <C>                  <C>
INTEREST AND DIVIDEND INCOME
   Interest and fees on loans                            $     3,729,325          3,133,688     $      7,307,496     $     6,025,751

   Interest and dividends on securities:
       Mortgage-backed                                           392,046            367,733              756,674             784,396
       US Treasury and other                                     501,273            403,125              950,801             772,610
   Deposits with banks                                                 9                  2                  106                  11
   Other interest income                                              --                 --                   --              11,594
                                                         ---------------    ---------------     ----------------     ---------------
                                 TOTAL INTEREST INCOME         4,622,653          3,904,548            9,015,077           7,594,362
                                                         ---------------    ---------------     ----------------     ---------------

INTEREST EXPENSE
   Interest on deposits:
       Savings                                                   128,375            126,840              254,691             253,069
       Money market                                              388,909            343,287              783,145             709,296
       Time certificates of deposit in denominations
            $100,000 or more                                     175,082            194,909              342,857             340,798
       Other time certificates of deposit                        996,525            772,814            1,918,548           1,673,660
                                                         ---------------    ---------------     ----------------     ---------------
                            TOTAL INTEREST ON DEPOSITS         1,688,891          1,437,850            3,299,241           2,976,823
   Interest on Federal Home Loan Bank advances                   704,029            263,257            1,247,210             376,363
   Interest on borrowed money                                         --                125                   --                 743
                                                         ---------------    ---------------     ----------------     ---------------
                                TOTAL INTEREST EXPENSE         2,392,920          1,701,232            4,546,451           3,353,929
                                                         ---------------    ---------------     ----------------     ---------------
                                   NET INTEREST INCOME         2,229,733          2,203,316            4,468,626           4,240,433
PROVISION FOR LOAN LOSSES                                         45,000             30,000               90,000              60,000
                                                         ---------------    ---------------     ----------------     ---------------
                             NET INTEREST INCOME AFTER
                             PROVISION FOR LOAN LOSSES         2,184,733          2,173,316            4,378,626           4,180,433
                                                         ---------------    ---------------     ----------------     ---------------
NONINTEREST INCOME
   Banking service charges and fees                              158,632            111,629              300,297             226,920
   Trust                                                         210,000            178,500              420,000             357,000
   Other                                                         101,538             49,558              189,574             130,333
                                                         ---------------    ---------------     ----------------     ---------------
                              TOTAL NONINTEREST INCOME           470,170            339,687              909,871             714,253
                                                         ---------------    ---------------     ----------------     ---------------
NONINTEREST EXPENSE
   Salaries                                                      821,142            724,888            1,583,540           1,369,746
   Employee benefits                                             207,957            181,007              439,805             350,916
   Net occupancy                                                 110,048            113,772              226,548             235,300
   Equipment                                                     124,044            103,427              238,554             200,633
   Legal fees                                                     69,749             23,568              135,133              49,458
   Directors fees                                                 38,500             36,125               74,204              73,875
   Computer services                                             159,207            174,543              358,453             366,584
   Supplies                                                       41,396             48,154               86,492             103,308
   Commissions, services and fees                                 55,755             68,949              133,129             122,017
   Postage                                                        24,990             29,039               50,822              57,457
   Advertising                                                    60,499             58,285               98,724             105,327
   OREO & non-performing loan expenses-net                         1,605              2,816                1,605               2,816
   Other                                                         297,228            286,958              559,632             573,017
                                                         ---------------    ---------------     ----------------     ---------------
                            TOTAL NONINTEREST EXPENSES         2,012,120          1,851,531            3,986,641           3,610,454
                                                         ---------------    ---------------     ----------------     ---------------

                            INCOME BEFORE INCOME TAXES           642,783            661,472            1,301,856           1,284,232
PROVISION FOR INCOME TAXES                                       234,573            213,549              457,654             407,393
                                                         ---------------    ---------------     ----------------     ---------------
                                            NET INCOME   $       408,210    $       447,923     $        844,202     $       876,839
                                                         ===============    ===============     ================     ===============

INCOME PER SHARE
                            BASIC NET INCOME PER SHARE   $          0.27    $          0.30     $           0.56     $          0.59
                                                         ===============    ===============     ================     ===============
                          DILUTED NET INCOME PER SHARE   $          0.27    $          0.29     $           0.55     $          0.57
                                                         ===============    ===============     ================     ===============


   Dividends Per Share                                   $          0.10    $          0.10     $           0.20     $          0.20
                                                         ===============    ===============     ================     ===============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       3
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>

Three months ended June 30, (Unaudited)                                                        2000                   1999
                                                                                       ------------------      -----------------
<S>                                                                                    <C>                     <C>
Net income                                                                             $          408,210      $        447,923
Unrealized holding gains (losses) on securities:
        Unrealized holding gains (losses) arising during the period, net of taxes                  19,688              (226,212)
                                                                                       ------------------      ----------------

Comprehensive income                                                                   $          427,898      $        221,711
                                                                                       ==================      ================



Six months ended June 30, (Unaudited)                                                              2000                  1999
                                                                                       ------------------      -----------------

Net income                                                                             $          844,202      $        876,839
Unrealized holding gains (losses) on securities:
        Unrealized holding losses arising during the period, net of taxes                         (30,995)             (320,548)
                                                                                       ------------------      -----------------

Comprehensive income                                                                   $          813,207      $        556,291
                                                                                       ==================      ================
</TABLE>

See Notes to Consolidated Financial Statements.


                                       4
<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)
<TABLE>
<CAPTION>

                                                                                              Six Months Ended June 30,
                                                                                              2000                   1999
                                                                                      ------------------      ----------------
<S>                                                                                   <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                            $          844,202      $        876,839
Adjustments to reconcile net income to net cash
  provided by operating activities:
        Amortization and accretion of premiums and discounts
           on investment securities, net                                                         (41,532)               40,215
        Provision for loan losses                                                                 90,000                60,000
        Depreciation and amortization                                                            186,877               189,245
        Loans originated for sale                                                                     --              (542,550)
        Proceeds from sales of loans held for sale                                                    --               922,150
        Loss on disposals of bank premises and equipment                                              --                   428
        Increase in accrued interest receivable                                                 (256,706)             (215,731)
        Increase in other assets                                                                (101,238)             (448,639)
        Increase in deferred loan origination costs                                             (175,661)             (511,241)
        (Decrease) increase in accrued expenses and other
             liabilities                                                                         (17,912)              260,305
                                                                                       -----------------      ----------------

            Net cash provided by operating activities                                            528,030               631,021
                                                                                       -----------------      ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Available for sale mortgage-backed securities:
        Proceeds from maturities and principal payments                                        1,870,858             4,598,021
        Purchases                                                                             (5,702,436)                   --
Available for sale US Treasury and other investment securities:
        Purchases                                                                             (4,962,135)           (7,000,000)
Held to maturity mortgage-backed securities:
        Proceeds from maturities and principal payments                                          742,051             1,642,163
Purchase of Federal Home Loan Bank Stock                                                        (289,800)              (54,000)
Net increase in loans                                                                         (7,605,422)          (17,377,112)
Purchase of bank premises and equipment                                                         (120,958)             (691,548)
Proceeds from sale of bank premises and equipment                                                     --                   (80)
Increase in cash surrender value of Bank owned
   life insurance                                                                                (92,750)                   --
                                                                                       -----------------      ----------------

        Net cash used in investing activities                                                (16,160,592)          (18,882,556)
                                                                                       -----------------      ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in savings, money market and
  demand deposits                                                                              6,970,614              (367,921)
Net increase (decrease) in certificates of deposit                                             3,047,606            (7,001,944)
Net increase in borrowings under Federal Home
  Loan  Bank advances                                                                            920,000            22,875,000
Net increase in collateralized borrowings                                                        105,829               108,967
Proceeds from exercise of stock options                                                          217,460               118,206
Dividends paid on common stock                                                                  (299,986)             (281,898)
                                                                                       -----------------      ----------------

        Net cash provided by financing activities                                             10,961,523            15,450,410
                                                                                       -----------------      ----------------

        Net decrease in cash and cash equivalents                                             (4,671,039)           (2,801,125)

CASH AND CASH EQUIVALENTS, at beginning of period                                             12,800,196             8,756,166
                                                                                       -----------------      ----------------

CASH AND CASH EQUIVALENTS, at end of period                                            $       8,129,157      $      5,955,041
                                                                                       =================      ================

SUPPLEMENTAL INFORMATION

Cash paid during the period for:
        Interest on deposits and borrowings                                            $       4,584,086      $      3,287,187
                                                                                       =================      ================
        Income taxes                                                                   $         446,952      $        514,476
                                                                                       =================      ================
Net cash investing and financing activities:
        Transfer of loans to other real estate owned                                   $         300,000      $             --
                                                                                       =================      ================
</TABLE>

See Notes to Consolidated Financial Statements.


                                       5

<PAGE>

FIRST LITCHFIELD FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  The  consolidated  balance  sheet at December 31, 1999 has been derived from
    the audited  financial  statements at that date, but does not include all of
    the  information  and footnotes  required by generally  accepted  accounting
    principles 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 generally accepted  accounting  principles 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  First  Litchfield   Financial   Corporation  (the
    "Company") and notes thereto for the fiscal year ended December 31, 1999.

    These  financial  statements  reflect,  in the  opinion of  Management,  all
    adjustments,  consisting of only normal recurring adjustments, necessary for
    a fair presentation of the Company's  financial  position and the results of
    its operations and its cash flows for the periods presented.  The results of
    operations  for the  three  and six  months  ended  June  30,  2000  are not
    necessarily indicative of the results of operations that may be expected for
    all of 2000.

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, 2000 and 1999.  The 1999
    information  has been  restated  to give  retroactive  effect  to all  stock
    dividends and stock splits for the periods presented.

<TABLE>
<CAPTION>

    For the Three Months Ended June 30, 2000
                                                          Net                            Per Share
                                                          Income           Shares         Amount
                                                        ---------      ----------        ---------
<S>                                                      <C>            <C>              <C>
    Basic Net Income Per Share
       Income available to common shareholders           $408,210       1,514,931        $     .27

    Effect of Dilutive Securities
       Options Outstanding                                     --          21,875

    Diluted Net Income Per Share
       Income available to common shareholders
                                                        ---------      ----------        ---------
       plus assumed conversions                          $408,210       1,536,806        $     .27
                                                         ========       =========        =========
</TABLE>


                                       6
<PAGE>


    For the Three Months Ended June 30, 1999
<TABLE>
<CAPTION>

                                                         Net                                Per Share
                                                         Income          Shares               Amount
                                                       ---------       -----------           ---------
<S>                                                     <C>             <C>                 <C>
    Basic Net Income Per Share
       Income available to common shareholders          $447,923        1,484,934           $     .30

    Effect of Dilutive Securities
       Options Outstanding                                    --           64,181

    Diluted Net Income Per Share
       Income available to common shareholders
                                                       ---------        ----------          ---------
       plus assumed conversions                        $447,923         1,549,115           $     .29
                                                       ========         =========           =========

    For the Six Months Ended June 30, 2000
                                                         Net                              Per Share
                                                         Income            Shares          Amount
                                                       ---------        ----------        ---------
    Basic Net Income Per Share
       Income available to common shareholders          $844,202        1,506,543         $     .56

    Effect of Dilutive Securities
       Options Outstanding                                    --           35,985

    Diluted Net Income Per Share
       Income available to common shareholders
                                                       ---------        ----------        ---------
       plus assumed conversions                         $844,202        1,542,528         $     .55
                                                        ========        =========         =========


    For the Six Months Ended June 30, 1999
                                                         Net                              Per Share
                                                         Income            Shares          Amount
                                                       ---------        ----------        ---------
    Basic Net Income Per Share
       Income available to common shareholders          $876,839        1,482,864         $     .59

    Effect of Dilutive Securities
       Options Outstanding                                    --           64,053

    Diluted Net Income Per Share
       Income available to common shareholders
                                                       ---------        ----------         ---------
       plus assumed conversions                         $876,839         1,546,917         $     .57
                                                       =========       ===========         =========
</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, 2000
                                                                 -----------------------------------------------------------------

                                                                   Before-Tax          Tax (Expense)        Net-of-Tax
                                                                     Amount               Benefit             Amount
                                                                 -------------         -------------      -------------
<S>                                                                  <C>                <C>                 <C>
Unrealized holding gains arising during the period                   $ 32,249           $(12,561)           $ 19,688
Less: reclassification adjustment for amounts recognized in
 net income                                                                --                 --                  --
                                                                     --------           --------            --------

Unrealized holding gain on available for sale securities,
net of taxes                                                         $ 32,249           $(12,561)           $ 19,688
                                                                     ========           ========            ========
<CAPTION>


                                                                                           June 30, 1999
                                                                 -----------------------------------------------------------------

                                                                   Before-Tax          Tax (Expense)          Net-of-Tax
                                                                     Amount               Benefit               Amount
                                                                 -------------         -------------        -------------
<S>                                                                 <C>                  <C>                 <C>
Unrealized holding losses arising during the period                 $(369,354)           $ 143,142           $(226,212)
Less: reclassification adjustment for amounts recognized in
net income                                                                 --                   --                  --
                                                                    ---------            ---------           ---------


Unrealized holding loss on available for sale securities,
net of taxes                                                        $(369,354)           $ 143,142           $(226,212)
                                                                    =========            =========           =========

<CAPTION>

                                                                                         Six Months Ended
                                                                                           June 30, 2000
                                                                 -----------------------------------------------------------------

                                                                   Before-Tax          Tax (Expense)       Net-of-Tax
                                                                     Amount               Benefit            Amount
                                                                 -------------         -------------      -----------
<S>                                                                 <C>                 <C>                <C>
Unrealized holding losses arising during the period                 $(39,201)           $  8,206           $(30,995)
Less: reclassification adjustment for amounts recognized in
net income                                                                --                  --                 --
                                                                    --------            --------           --------

Unrealized holding loss on available for sale securities,
net of taxes                                                        $(39,201)           $  8,206           $(30,995)
                                                                   ==========          =========           ========
</TABLE>


                                       7
<PAGE>

<TABLE>
<CAPTION>

                                                                                           June 30, 1999
                                                                 -----------------------------------------------------------------

                                                                   Before-Tax          Tax (Expense)        Net-of-Tax
                                                                     Amount               Benefit             Amount
                                                                 -------------         -------------       -------------
<S>                                                                 <C>                  <C>                 <C>
Unrealized holding losses arising during the period                 $(527,522)           $ 206,974           $(320,548)
Less: reclassification adjustment for amounts recognized in
net income                                                                 --                   --                  --
                                                                    ---------            ---------           ---------

Unrealized holding loss on available for sale securities,
 net of taxes                                                       $(527,522)           $ 206,974           $(320,548)
                                                                    =========            =========           =========
</TABLE>


                                       8
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

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 (OCC.) The First National Bank of Litchfield
is the Company's  only  subsidiary  and only source of income.  The Bank has one
subsidiary, Lincoln Corporation, which is a Connecticut corporation. The purpose
of  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.

Both the Company and the Bank are headquartered in Litchfield, CT. The Bank is a
full-service  commercial bank serving both individuals and businesses  generally
within Litchfield County Connecticut. Deposits are insured up to specific limits
of the Federal Deposit Insurance Act by the Bank Insurance Fund (BIF),  which is
administered  by the Federal Deposit  Insurance  Corporation  (the "FDIC").  The
Bank's lending  activities  include loans secured by residential  and commercial
mortgages.  Other  loan  products  include  consumer  and  business  installment
lending,  as well as other  secured  and  nonsecured  lending.  The Bank has six
banking  locations located in the towns of Torrington,  Litchfield,  Washington,
Marble Dale, Goshen and Roxbury, Connecticut. 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.

As of June 30,  2000 the  Company  had  assets  of  $267,730,608,  which  was an
increase of $11,756,818 or 4.6% from year-end 1999 assets of  $255,973,790.  The
growth in assets was in the securities and loan portfolios.

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.

FINANCIAL CONDITION

Total assets as of June 30, 2000 were $267,730,608 an increase of $11,756,818 or
4.6% from year-end 1999 assets of $255,973,790.

Cash and cash equivalents  decreased by $4,671,039 or 36.5% during the first six
months of 2000. This decrease was the result of lower  requirements for cash and
liquid  funds  after  providing  for  greater  liquidity  as part of the  Bank's
preparation for Year 2000 contingency planning.

Growth in assets was  experienced  in both the loan and  securities  portfolios.
Total  securities  as of June  30,  2000  aggregated  $54,943,326,  which  is an
increase of $8,053,993  or 17.2% from the year-end 1999 level.  First and second
quarter  purchases of US Government  Treasury  securities  and agency bonds were
made in an effort to improve  liquidity  as well as to increase the yield on the
portfolio.  Net loans totaled  $191,199,977  as of June 30, 2000, an increase of
$7,391,083 or 4.0% over the balance at December 31, 1999. Growth was experienced


                                       9
<PAGE>

in  the  residential  and  commercial  mortgage   portfolios,   which  increased
$2,887,410  and  $1,313,269   respectively  from  the  year-end  1999  balances.
Commercial and installment loans increased by $2,524,985 or 31.3% and $1,864,737
or 5.6%,  respectively.  The increased loan demand continues to be the result of
the strong local economy as well as  competitively  priced loan products and the
Bank's reputation for excellent customer service.

Total liabilities were $252,076,718 as of June 30, 2000, which is an increase of
$11,029,137  or 4.6% from the December 31, 1999 level of  $241,047,581.  Deposit
growth during the second quarter of 2000 was the cause of this  increase.  Total
deposits  were  $207,251,002,  which was a  $10,018,220  or a 5.1% increase over
December  31,  1999.  Demand  deposits  totaled  $41,481,580,   an  increase  of
$7,491,521 from December 31, 1999. The increase in demand deposits is attributed
to seasonal  growth  typically  arising from tax deposits and refunds as well as
growth  resulting  from new  accounts  due to the  consolidation  of  competitor
institutions. Other time certificates of deposit increased by $3,816,430 or 5.8%
from  December 31, 1999.  This growth was  experienced  primarily in  short-term
certificates  of  deposit  . This  increase  offset  decreases  in money  market
deposits and  certificates  of deposit of $100,000 or more.  These deposits have
declined  due to customer  preferences  towards  shorter  term  certificates  of
deposit.

Federal Home Loan Bank advances increased by $920,000 or 2.2% over the six month
period.  This  relatively  small  increase was used along with deposit growth to
fund the growth of earning assets.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

Summary

Net income for the second calendar  quarter of 2000 totaled  $408,210 which is a
decline  of $39,713 or 8.9% from  second  quarter  1999  earnings  of  $447,923.
Quarterly  basic and fully  diluted net income per share for 2000 were both $.27
compared to $.30 and $.29, respectively, for the same period in 1999.

Net Interest Income

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

                                           2000                   1999
                                       -----------            -----------

Interest and dividend income            $4,622,653             $3,904,548
Tax-equivalent adjustments                  16,269                  5,406
Interest expense                         2,392,920              1,701,232
                                         ---------              ---------

Net interest income                     $2,246,002             $2,208,722
                                        ==========             ==========

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, 2000 and 1999.  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.


                                       10
<PAGE>


DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
<TABLE>
<CAPTION>

                                          Three months ended June 30, 2000                  Three months ended June 30,  1999
                                  -----------------------------------------------    --------------------------------------------
                                                     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                              $190,398,000    $3,745,594        7.87%           $164,267,000      $3,139,094        7.64%
Investment Securities                55,946,000       893,319        6.39%             51,142,000         770,858        6.03%
Other interest earning assets             3,000             9        1.20%                  1,000               2         .80%
                                  -------------    ----------                       -------------     -----------

Total interest earning assets       246,347,000     4,638,922        7.53%            215,410,000       3,909,954        7.26%

Allowance for loan losses              (987,000)                                       (1,054,000)
Cash and due from banks               6,368,000                                         5,554,000
Bank premises and equipment           2,959,000                                         2,500,000
Net unrealized gain/loss on
  securities                         (1,386,000)                                          (33,000)
Foreclosed real estate                   76,000                                                 0
Other assets                          7,642,000                                         3,147,000
                                  -------------                                     -------------

Total Average Assets               $261,019,000                                     $ 225,524,000
                                  =============                                     =============


Liabilities and Shareholder's Equity
Interest Bearing Liabilities:
Savings deposits                  $  35,850,000    $  128,375        1.43%          $  35,490,000     $   126,840        1.43%
Money Market deposits                43,363,000       388,909        3.59%             42,084,000         343,287        3.26%
Time deposits                        85,842,000     1,171,607        5.46%             78,313,000         967,723        4.94%
Borrowed funds                       43,098,000       704,029        6.53%             20,137,000         263,382        5.23%
                                  -------------    ----------                       -------------     -----------

Total interest bearing
liabilities                         208,153,000     2,392,920        4.60%            176,024,000       1,701,232        3.87%

Demand deposits                      36,468,000                                        34,148,000
Other liabilities                       972,000                                           645,000
Shareholders' Equity                 15,426,000                                        14,707,000
                                  -------------                                     -------------

Total liabilities and equity      $ 261,019,000                                     $ 225,524,000
                                  =============                                     =============

Net interest income                                $2,246,002                                         $ 2,208,722
                                                   ==========                                         ===========
Net interest spread                                                  2.93%                                               3.39%
Net interest margin                                                  3.65%                                               4.10%

</TABLE>


RATE/VOLUME ANALYSIS
<TABLE>
<CAPTION>
                                                                      Three months ended
                                                                  6/30/00 Compared to 6/30/99
                                                                   Increase (Decrease) Due to
                                                    -----------------------------------------------------

                                                      Volume                Rate                Total
                                                    ---------            ---------            ---------
<S>                                                  <C>                 <C>                  <C>
Interest earned on:
Loans                                                $ 511,764           $  94,736            $ 606,500
Investment securities                                   75,044              47,417              122,461
Other interest income                                        6                   1                    7
                                                     ---------           ---------            ---------
Total interest earning assets                          586,813             142,155              728,968

Interest paid on:
Deposits                                                87,797             163,244              251,041
Borrowed money                                         361,683              78,964              440,647
                                                     ---------           ---------            ---------
Total interest bearing liabilities                     449,480             242,208              691,688

Increase (decrease) in net interest income           $ 137,334           $(100,054)           $  37,280
                                                     =========           =========            =========
</TABLE>

Of the  $37,280  increase  in the net  interest  income,  a decrease of $100,054
resulted from interest rate fluctuations during 2000 and an increase of $137,334
is attributed to increases in the volume of average  interest earning assets and
interest bearing liabilities.


                                       11
<PAGE>


Tax  equivalent  net interest  income for the second  quarter of 2000  increased
$37,280 or 1.7% from second quarter 1999. The increase in net interest income is
due  primarily to the higher  levels of earning  assets over last year.  Average
earning  assets for the second  quarter  of 2000 were $246  million  which is an
increase of $31 million from the average  earning  assets for the second quarter
of 1999.  Offsetting  much of the  increase  resulting  from the higher level of
earning assets was a lower net interest margin experienced in the second quarter
of 2000. The net interest  margin for the second  quarter of 2000 was 3.65%,  45
basis points lower than that for the second  quarter of the previous  year.  The
cause  of the  decline  in the  net  interest  margin  is due to  funding  costs
increasing  at a faster rate than  interest on earning  assets.  From the second
quarter of 1999 funding costs rose 73 basis points from 3.87% to 4.60%.  Earning
assets yields however,  only rose 27 basis points,  from 7.26% to 7.53%. This is
due to the higher balances of borrowed funds which may change  frequently due to
market conditions and rate competition for deposits,  while many fixed rate loan
products do not reprice when market conditions change.

Provision for Loan Losses

The  provision  for loan  losses  for the  second  quarter  of the year  totaled
$45,000,  an increase of $15,000 from the second  quarter of 1999.  The increase
was necessitated by growth in the loan portfolio.

During the second  quarter  of 2000 the  Company  recorded  net  charge-offs  of
$70,533  compared to net  recoveries  of $557 for the same  period in 1999.  The
increase in net charge-offs  relates primarily to increases in the consumer loan
portfolio.  Loans charged off during the second  quarter of 2000 were  primarily
installment loans made through the indirect loan program.

Noninterest Income

Three month  noninterest  income  through  June 30, 2000  totaled  $470,170,  an
increase of $130,483  or 38.4% from the  $339,687  earned for the same period in
1999.  Banking service charges and fees have increased by $47,003 or 42.1%. This
increase was caused by increases in fees from overdrafts,  ATMs and debit cards.
Trust fees  increased by $31,500 or 17.6%  resulting from higher levels of trust
assets and fee  increases.  Second  quarter  other  noninterest  income  totaled
$101,538,  an increase  of $51,980  from 1999.  Increases  were caused by income
relating to increases in the cash surrender  value of bank owned life insurance.
Also contributing to the increase in other noninterest income was increased safe
deposit rental income.

Noninterest Expense

For  the  three  months  ended  June  30,  2000,   noninterest  expense  totaled
$2,012,120, an increase of $160,589 or 8.7% and from the similar period of 1999.
The primary cause of this increase was salary and benefits costs which increased
by $123,204 due mostly to additional staffing primarily for the Loan Department.

Contributing to the growth in second quarter noninterest expense were legal fees
which  totaled  $69,749,  representing  an increase  of $46,181  from the second
quarter of 1999.  The increase in such fees resulted  from services  relating to
the  Company's  filings  of  registration  statements  with  the  United  States
Securities  and  Exchange  Commission  registering  its  securities  and to fees
associated with the Company's  disclosure and reporting  responsibilities  as an
SEC reporting


                                       12
<PAGE>


company.  In addition,  legal fees relating to the Bank's collection efforts and
to legal  matters  involving  the  Bank's  trust  function  contributed  to such
increase.   Finally,   second  quarter  expenses  for  equipment   depreciation,
maintenance  and  purchases  increased by $20,617 over the same quarter in 1999.
Costs for supplies, commissions, postage and computer services decreased for the
second quarter of 2000.

Income Taxes

The  provision  for income  taxes for the three month period ended June 30, 2000
totaled  $234,573  which is an increase of $21,024 from the same period in 1999.
Although taxable income was higher for 1999, the historic  renovation tax credit
taken in 1999  resulted in the 1999 tax expense to be lower than that for second
quarter of 2000.

RESULTS OF  OPERATIONS - SIX MONTHS  ENDED JUNE 30, 2000  COMPARED TO SIX MONTHS
ENDED JUNE 30, 1999

Summary

Net  income for the  Company  for the six months  ended  June 30,  2000  totaled
$844,202,  a decrease of $32,637 or 3.7% from 1999  earnings of $876,839.  Basic
and diluted net income per share for the six month period were $.56 and $.55 per
share respectively.  These results are slightly lower than the $.59 and $.57 per
share reported for the first six months of 1999.

Net Interest Income

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

                                                 2000                1999
                                           ----------------     ----------------

         Interest and dividend income      $      9,015,077     $      7,594,362
         Tax-equivalent adjustments                  31,752               10,226
         Interest expense                         4,546,451            3,353,929
                                           ----------------     ----------------

         Net interest income               $      4,500,378     $      4,250,659
                                           ================     ================

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, 2000 and 1999.  Average loans outstanding  include  nonaccruing  loans.
Interest income is presented on a tax-equivalent  basis which reflects a federal
tax rate of 34% for all periods presented.


                                       13
<PAGE>


DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
<TABLE>
<CAPTION>

                                          Six months ended June 30, 2000                    Six months ended June 30,  1999
                                  ----------------------------------------------     ----------------------------------------------
                                                    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                              $188,026,000    $7,339,248       7.81%           $159,333,000      $6,035,977       7.58%
Investment Securities                53,856,000     1,707,475       6.34%             51,692,000       1,557,006       6.02%
Other interest earning assets            11,000           106       1.93%                497,000          11,605       4.67%
                                  -------------    ----------                      -------------     -----------

Total interest earning assets       241,893,000     9,046,829       7.48%            211,522,000       7,604,588       7.19%

Allowance for loan losses              (993,000)                                      (1,040,000)
Cash and due from banks               6,234,000                                        5,409,000
Bank premises and equipment           2,974,000                                        2,356,000
Net unrealized gain/loss on
  securities                         (1,117,000)                                         (75,000)
Foreclosed real estate                   38,000                                                0
Other assets                          7,412,000                                        2,963,000
                                  -------------                                    -------------

Total Average Assets               $256,441,000                                    $ 221,135,000
                                  =============                                    =============


Liabilities and Shareholder's Equity
Interest Bearing Liabilities:
Savings deposits                  $  35,743,000    $  254,691       1.43%          $  35,231,000     $   253,069       1.44%
Money Market deposits                44,386,000       783,145       3.53%             43,513,000         709,296       3.26%
Time deposits                        85,263,000     2,261,405       5.30%             81,020,000       2,014,458       4.97%
Borrowed funds                       39,670,000     1,247,210       6.29%             14,365,000         377,106       5.25%
                                  -------------    ----------                      -------------     -----------

Total interest bearing liabilities  205,062,000     4,546,451       4.43%            174,129,000       3,353,929       3.85%


Demand deposits                      35,049,000                                       31,918,000
Other liabilities                     1,028,000                                          477,000
Shareholders' Equity                 15,302,000                                       14,611,000
                                  -------------                                    -------------

Total liabilities and equity      $ 256,441,000                                    $ 221,135,000
                                  =============                                    =============

Net interest income                                $4,500,378                                        $ 4,250,659
                                                   ==========                                        ===========
Net interest spread                                                 3.05%                                              3.34%
Net interest margin                                                 3.72%                                              4.02%

</TABLE>


RATE/VOLUME ANALYSIS
<TABLE>
<CAPTION>
                                                                   Six months ended
                                                             6/30/00 Compared to 6/30/99
                                                              Increase (Decrease) Due to
                                             ----------------------------------------------------------

                                               Volume                  Rate                  Total
                                              ---------              --------              ---------
<S>                                           <C>                   <C>                   <C>
Interest earned on:
Loans                                         $ 1,115,215           $   188,056           $ 1,303,271
Investment securities                              66,701                83,768               150,469
Other interest income                              (7,184)               (4,315)              (11,499)
                                              -----------           -----------           -----------
Total interest earning assets                   1,174,732               267,509             1,442,241

Interest paid on:
Deposits                                          107,329               215,089               322,418
Borrowed money                                    782,338                87,766               870,104
                                              -----------           -----------           -----------
Total interest bearing liabilities                889,666               302,856             1,192,522

Increase in net interest income               $   285,065           $   (35,346)          $   249,719
                                              ===========           ===========           ===========
</TABLE>


Of the  $249,719  increase  in the net  interest  income,  a decrease of $35,346
resulted from interest rate fluctuations during 2000 and an increase of $285,065
is attributed to increases in the volume of average  interest earning assets and
interest bearing liabilities.


                                       14
<PAGE>


Tax  equivalent  net interest  income for the first six months of 2000 increased
$249,719 or 5.9% from the same  period in 1999.  The  increase  in net  interest
income is due primarily to the higher  levels of earning  assets over last year.
Average  earning  assets  through June 30, 2000 totaled $242 million which is an
increase of $30 million from average  earning  assets of $212 million as of June
30,  1999.  The  effect of the  increased  level of  earning  assets  offset the
negative effect of the lower net interest margin (net interest income divided by
average  earning  assets)  earned during the year.  The net interest  margin was
3.72% for the six months ended June 30, 2000. This margin has decreased 30 basis
points from the 4.02% for the similar period of 1999.  The higher  interest rate
environment  experienced over the first six months of 2000 has had the effect of
decreasing the Company's net interest margin by increasing funding costs quicker
than earning asset  interest has risen.  The yield on earning assets is 29 basis
points  above that for the six months  ended  June 30,  1999,  while the cost of
funds  is  58  basis  points  higher.   Intense  rate   competition  with  other
institutions  as well as fixed rate  products  have  caused the yield on earning
assets to increase at a much slower pace than  increases  in the  interest  rate
environment.  On the other hand, the funding  liabilities of the company are now
comprised of a  significant  amount of borrowed  funds which  adjust  rapidly to
interest rate changes.  Deposit costs have also increased  though not as rapidly
as that for borrowed funds.  Deposit interest rate increases have been caused by
intense rate  competition for deposits  locally as well as overall  increases in
the market rate environment.

Provision for Loan Losses

The  provision  for loan  losses  for the first six  months of the year  totaled
$90,000, an increase of $30,000 from the first six months of 1999. Growth in the
loan portfolio,  particularly in the consumer installment loans, was the primary
reason for the increased provision.  The provision for loan losses is determined
quarterly and assessed along with the adequacy of the loan loss reserve.

During the first six months of 2000,  the Company  recorded net  charge-offs  of
$71,205  compared to net charge-offs of $4,054 for the first six months of 1999.
The increase in net  charge-offs  for the first six months of 2000 was caused by
credit losses in the consumer loan  portfolio,  particularly  in installment and
credit card loans.

Noninterest Income

Year to date  noninterest  income  as of June  30,  2000  totaled  $909,871,  an
increase of $195,618  or 27.4% from the  $714,253  earned for the same period in
1999.  Banking  service charges and fees have increased by $73,377 or 32.3% from
the first six months of 1999. This increase was caused by increases in fees from
overdrafts,  ATMs  and  debit  cards.  Also  contributing  to  the  increase  in
noninterest  income is increased trust fees. Fees from trust services  increased
by  $63,000  or  17.6%.  The  increased  volume  of trust  assets as well as the
imposition  of fee increases  effective in 2000 have resulted in the  additional
income.  Other  noninterest  income totaled $189,574 for the first six months of
the year.  This income  represents  an increase of $59,241  over the same period
last year due to income  resulting from increases in the cash surrender value of
bank-owned  life  insurance.  Income from the sale of mutual  funds  amounted to
$59,587,  which  represented a decrease of $41,470 from the same period in 1999.
The  decrease  in such  income can be  attributed  primarily  to the  decline in
customer interest in purchasing mutual funds.


                                       15
<PAGE>


Noninterest Expense

As of June 30,  2000,  six month  noninterest  expense  totaled  $3,986,641,  an
increase of 10.4% and $376,187 from the same period of 1999. Salary and benefits
costs  increased by a total of $302,683 due to salary  adjustments and additions
to staff.

Legal  fees for the  first  six  months  of 2000  totaled  $135,133  which is an
increase of $85,675 or 173.2% from the first six months of 1999. The increase in
such  fees  resulted  from  services   relating  to  the  Company's   filing  of
registration  statements  with the United  Securities  and  Exchange  Commission
registering its securities and to fees associated with the Company's  disclosure
and reporting  responsibilities as an SEC reporting company. In addition,  legal
fees relating to the Bank's  collection  efforts and to legal matters  involving
the Bank's trust function contributed to such increase.  Equipment costs in 2000
resulting from the Bank's continued  investment in technology  increased $37,921
or 18.9% from 1999.  Offsetting  some of these  increases are decreases in costs
for supplies, advertising and other noninterest expenses.

Income Taxes

The  provision  for  income  taxes  for the first  six  months  of 2000  totaled
$457,654,  an  increase of $50,261  from the same period in 1999.  There are two
factors  contributing to this increase: a higher level of taxable income in 2000
and the fact that 1999 taxes  incorporated  an investment  tax credit related to
the renovation of the building  housing the executive  offices.  This tax credit
reduced income tax expense for 1999.

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 and the sale of  mortgage  loans in the  secondary
market are available to fund short term cash needs.

As of June 30, 2000 the Company had  $25,671,474 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 is confident  that the Company has  sufficient  liquidity to meet its
present and foreseeable needs.

CAPITAL

At June 30,  2000,  total  shareholders'  equity  was  $15,653,890  compared  to
$14,926,209  at December 31, 1999.  From a regulatory  perspective,  the capital
ratios of the Company and the


                                       16
<PAGE>


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, 2000.

                                       Minimum
                                    Regulatory
                                   Capital Levels     The Company      The Bank
TIER 1:
  Leverage capital ratio                       4%           6.20%         6.15%

  Risk-based capital ratio                     4%           9.85%         9.80%

  Total risk-based capital ratio               8%          10.47%        10.42%


ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses for the periods ended June 30, 2000 and
1999 are shown below:

                                                   Six months ended June 30,
                                                   2000               1999
                                                -----------       -----------

Balance at beginning of the year                $ 1,014,522       $ 1,013,949
Provision for loan losses                            90,000            60,000
Loans charged off                                  (132,018)           (5,981)
Recoveries of loans previously charged off           60,813             1,927
                                                -----------       -----------

Balance at end of period                        $ 1,033,317       $ 1,069,895
                                                ===========       ===========

The following table  summarizes the Bank's OREO, past due and nonaccrual  loans,
and nonperforming assets as of June 30, 2000 and December 31, 1999.

                                             June 30, 2000     December 31, 1999
                                             -------------     -----------------

Nonaccrual loans                                $  863,064         $1,394,305

Other real estate owned                            300,000                 --
                                                ----------         ----------

Total nonperforming assets                      $1,163,064         $1,394,305
                                                ==========         ==========

Loans past due in excess of 90 days and
  accruing interest                             $   41,866         $   33,441
                                                ==========         ==========

Potential Problem Loans

As of June 30, 2000,  there were no potential  problem loans not disclosed above
which  cause  management  to  have  serious  doubts  as to the  ability  of such
borrowers to comply with their present loan repayment terms.

FORWARD-LOOKING STATEMENTS

This Quarterly Report and future filings made by the Company with the Securities
and Exchange  Commission,  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.  For  those


                                       17
<PAGE>

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. The Company and Bank do not
undertake  any  obligation  to update or revise any  forward-looking  statements
subsequent to the date on which they are made.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings - Not applicable

Neither the Company  nor the Bank is  involved  in any  pending  material  legal
proceedings  other than  routine  legal  proceedings  occurring  in the ordinary
course of business.  Such  routine  legal  proceedings,  in the  aggregate,  are
believed by management to be immaterial to the Company's  financial condition or
results of operations.

Item 2.  Changes in Securities and Use of Proceeds - Not applicable

Item 3.  Defaults Upon Senior Securities - Not applicable

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

           The Annual  Meeting of  Shareholders  of First  Litchfield  Financial
Corporation  (the "Company") was held on Wednesday,  May 24, 2000.  Shareholders
voted on the election of directors.

The vote for  re-electing  each of the four (4) Directors  listed below to serve
for a term of three years is as follows:
<TABLE>
<CAPTION>

                                                                                                   Withholding
                                                                                 For                Authority
                                                                                -----              -----------
<S>                        <C>                                                  <C>                        <C>
John H. Field              Number of Shares:                                    1,215,728                  6,456
                                                                         ----------------        ---------------
                           Percentage of Shares Voted:                              99.47%                   .53%
                                                                         ----------------        ---------------
                           Percentage of Shares Entitled to Vote:                   80.25%                   .43%
                                                                         ----------------        ---------------
<CAPTION>

                                                                                                  Withholding
                                                                                 For               Authority
                                                                                -----             -----------
<S>                        <C>                                                  <C>                        <C>
Perley H.Grimes, Jr.       Number of Shares:                                    1,216,158                  6,026
                                                                         ----------------        ---------------
                           Percentage of Shares Voted:                              99.51%                   .49%
                                                                         ----------------        ---------------
                           Percentage of Shares Entitled to Vote:                   80.28%                   .40%
                                                                         ----------------        ---------------
</TABLE>


                                       18
<PAGE>

<TABLE>
<CAPTION>

                                                                                                  Withholding
                                                                                 For               Authority
                                                                                -----             ------------
<S>                        <C>                                                  <C>                        <C>
Thomas A. Kendall          Number of Shares:                                    1,216,684                  5,500
                                                                         ----------------        ---------------
                           Percentage of Shares Voted:                              99.55%                   .45%
                                                                         ----------------        ---------------
                           Percentage of Shares Entitled to Vote:                   80.31%                   .36%
                                                                         ----------------        ---------------
<CAPTION>

                                                                                                   Withholding
                                                                                 For                Authority
                                                                                -----             ------------
<S>                        <C>                                                  <C>                        <C>
Charles E. Orr             Number of Shares:                                    1,194,232                 27,952
                                                                         ----------------        ---------------
                           Percentage of Shares Voted:                              97.71%                  2.29%
                                                                        -----------------        ---------------
                           Percentage of Shares Entitled to Vote:                   78.83%                  1.85%
                                                                          ---------------        ---------------
</TABLE>


                                      18
<PAGE>

Item 5. Other Information - Not applicable

Item 6. Exhibits and Reports on Form 8-K

a.         Exhibits

                Exhibit 27 - Financial Data Schedule

b.         Reports on Form 8-K

                The  Company  filed a Form  8-K on June 1,  2000 to  report  the
                events  and  results  of  the   Company's   Annual   Meeting  of
                Shareholders that was held on Wednesday, May 24, 2000.

                The Form 8-K also reported that the Company's Board of Directors
                declared a quarterly cash dividend of $ .10 per share to be paid
                on July 25, 2000 to shareholders of record as of June 23, 2000.


                                       19
<PAGE>


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.


Dated: August 8, 2000                    FIRST LITCHFIELD FINANCIAL CORPORATION


                                         By:  /s/ Jerome J. Whalen
                                              ---------------------------------
                                               Jerome J. Whalen, President and
                                               Chief Executive Officer


Dated:  August 8, 2000                   By:  /s/ Carroll A. Pereira
                                              ---------------------------------
                                               Carroll A. Pereira, Treasurer
                                               (Principal Accounting Officer)



                                       20