##### Table of Contents



FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


|    |  |                                                                                          
|--- |  | -----------------------------------------------------------------------------------------
|[x] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) 
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2003

OR

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

Commission File Number: 001-31251

BANKNORTH GROUP, INC.




(Exact name of Registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Maine                                                          |  | 01-0437984                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|Two Portland Square, Portland, Maine     |  | 04112     
|                                         |  |           
|(Address of principal executive offices) |  | (Zip Code)

(207) 761-8500




(Registrants telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 Rule 12b-2 of the Exchange Act).
Yes  [x]  No  [  ]

The number of shares outstanding of the Registrants common stock and related
stock purchase rights as of October 31, 2003 is:

|                                       |  |               |  | 
|-------------------------------------- |  | ------------- |  | 
|Common stock, par value $.01 per share |  | 161,657,187  
|                                       |  |              
|(Class)                                |  | (Outstanding)

Available on the Web @ www.banknorth.com





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TABLE OF CONTENTS



|                                          |                                                                                       |                                                            |  |  |  |  |  | 
|----------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|                                          |                                                                                       | CONSOLIDATED BALANCE SHEETS                               
|                                          |                                                                                       | CONSOLIDATED STATEMENTS OF INCOME                         
|                                          |                                                                                       | CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
|                                          |                                                                                       | CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                                          |                                                                                       | Notes to Consolidated Financial Statements                
|                                          | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                          | Item 3. Quantitative and Qualitative Disclosures about Market Risk                   
|                                          | Item 4. Controls and Procedures                                                      
|Part II - Other Information              
|                                          | Item 1. Legal Proceedings                                                            
|                                          | Item 2. Changes in Securities and Use of Proceeds                                    
|                                          | Item 3. Defaults Upon Senior Securities                                              
|                                          | Item 4. Submission of Matters to a Vote of Security Holders                          
|                                          | Item 5. Other Information                                                            
|                                          | Item 6. Exhibits and Reports on Form 8-K                                             
|SIGNATURES                               
|EXHIBIT INDEX                            
|EX-3.(II) BYLAWS                         
|EX-31.1 SECT. 302 CERTIFICATION OF C.E.O.
|EX-31.2 SECT. 302 CERTIFICATION OF C.F.O.
|EX-32.1 SECT. 906 CERTIFICATION OF C.E.O.
|EX-32.2 SECT. 906 CERTIFICATION OF C.F.O.



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##### Table of Contents



INDEX
BANKNORTH GROUP, INC. AND SUBSIDIARIES

|         |  |                       |  |                                                                                       |  |     
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|         |  |                       |  |                                                                                       |  | PAGE
|         |  |                       |  |                                                                                       |  |     
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                      
|         |  | Item 1.               |  | Financial Statements                                                                  |  |     
|         |  |                       |  | Consolidated Balance Sheets                                                           |  | 3   
|         |  |                       |  | Consolidated Statements of Income                                                     |  | 4   
|         |  |                       |  | Consolidated Statements of Changes in Shareholders Equity                            |  | 5   
|         |  |                       |  | Consolidated Statements of Cash Flows                                                 |  | 6   
|         |  |                       |  | Notes to Consolidated Financial Statements                                            |  | 7   
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  | 14  
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                            |  | 44  
|         |  | Item 4.               |  | Controls and Procedures                                                               |  | 44  
|PART II. |  | OTHER INFORMATION     |  |                                                                                      
|         |  | Item 1.               |  | Legal proceedings                                                                     |  | 44  
|         |  | Item 2.               |  | Changes in securities and use of proceeds                                             |  | 44  
|         |  | Item 3.               |  | Defaults upon senior securities                                                       |  | 44  
|         |  | Item 4.               |  | Submission of matters to a vote of security holders                                   |  | 44  
|         |  | Item 5.               |  | Other information                                                                     |  | 44  
|         |  | Item 6.               |  | Exhibits and reports on Form 8-K                                                      |  | 44  
|         |  | Signatures            |  |                                                                                       |  | 45  
|         |  | Exhibits              |  |                                                                                       |  | 46  

2



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##### Table of Contents






BANKNORTH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (Unaudited)

|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |            |            |            | 
|----------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ------------------------------------------ | -------------------- | ---------- | ------------------ | ---------- | ----------------- | ---------- | ---------- | ---------- | 
|                                                                                                                              |                                           |                                            |                      |            | September 30, 2003 |            | December 31, 2002
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                  
|Assets                                                                                                                        |                                           |                                            |                      |            |                    |            |                   |           
|Cash and due from banks                                                                                                       |                                           | $                                          | 559,056              |            |                    | $          | 690,250           |           
|Federal funds sold and other short term investments                                                                           |                                           |                                            | 31,645               |            |                    |            | 79,753            |           
|Securities available for sale, at market value                                                                                |                                           |                                            | 6,938,938            |            |                    |            | 6,731,467         |           
|Securities held to maturity (fair value of $141,049 and $221,571 at September 30,
2003 and December 31, 2002, respectively)   |                                           |                                            | 141,626              |            |                    |            | 216,409           |           
|Loans held for sale                                                                                                           |                                           |                                            | 74,696               |            |                    |            | 128,622           |           
|Loans and leases:                                                                                                             |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              | Residential real estate mortgages         |                                            |                      | 2,702,895  |                    |            |                   | 2,382,197  |           
|                                                                                                                              | Commercial real estate mortgages          |                                            |                      | 5,310,179  |                    |            |                   | 4,792,049  |           
|                                                                                                                              | Commercial business loans and leases      |                                            |                      | 3,265,795  |                    |            |                   | 2,968,474  |           
|                                                                                                                              | Consumer loans and leases                 |                                            |                      | 4,646,983  |                    |            |                   | 3,913,288  |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              |                                           | Total loans and leases                     |                      |            | 15,925,852         |            |                   |            | 14,056,008 |           
|                                                                                                                              | Less: Allowance for loan and lease losses |                                            |                      | 229,581    |                    |            |                   | 208,273    |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              |                                           |                                            | Net loans and leases |            |                    | 15,696,271 |                   |            |            | 13,847,735 | 
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|Premises and equipment, net                                                                                                   |                                           |                                            | 264,752              |            |                    |            | 271,677           |           
|Goodwill                                                                                                                      |                                           |                                            | 1,094,334            |            |                    |            | 660,684           |           
|Identifiable intangible assets                                                                                                |                                           |                                            | 37,340               |            |                    |            | 34,474            |           
|Mortgage servicing rights                                                                                                     |                                           |                                            | 3,802                |            |                    |            | 3,598             |           
|Bank-owned life insurance                                                                                                     |                                           |                                            | 482,255              |            |                    |            | 380,405           |           
|Other assets                                                                                                                  |                                           |                                            | 416,222              |            |                    |            | 373,867           |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              | Total assets                              |                                            | $                    | 25,740,937 |                    |            | $                 | 23,418,941 |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|Liabilities and Shareholders Equity                                                                                          |                                           |                                            |                      |            |                    |            |                   |           
|Deposits:                                                                                                                     |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              | Savings accounts                          |                                            | $                    | 2,473,397  |                    |            | $                 | 1,940,195  |           
|                                                                                                                              | Money market access and NOW accounts      |                                            |                      | 6,922,924  |                    |            |                   | 6,091,429  |           
|                                                                                                                              | Certificates of deposit                   |                                            |                      | 4,943,292  |                    |            |                   | 4,658,778  |           
|                                                                                                                              | Demand deposits                           |                                            |                      | 3,444,084  |                    |            |                   | 2,974,199  |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              |                                           | Total deposits                             |                      |            | 17,783,697         |            |                   |            | 15,664,601 |           
|Short-term borrowings                                                                                                         |                                           |                                            | 1,048,499            |            |                    |            | 1,276,467         |           
|Long-term debt                                                                                                                |                                           |                                            | 3,911,469            |            |                    |            | 4,156,114         |           
|Other liabilities                                                                                                             |                                           |                                            | 521,692              |            |                    |            | 258,274           |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              | Total liabilities                         |                                            |                      | 23,265,357 |                    |            |                   | 21,355,456 |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|Shareholders Equity:                                                                                                         |                                           |                                            |                      |            |                    |            |                   |           
|Preferred stock (par value $0.01 per share, 5,000,000 shares authorized,
none issued)                                         |                                           |                                            |                     |            |                    |            |                  |           
|Common stock (par value $0.01 per share, 400,000,000 shares authorized,
Issued 2003 - 182,292,973; Issued 2002 - 168,892,284) |                                           |                                            | 1,823                |            |                    |            | 1,689             |           
|Paid-in capital                                                                                                               |                                           |                                            | 1,434,169            |            |                    |            | 1,059,778         |           
|Retained earnings                                                                                                             |                                           |                                            | 1,447,961            |            |                    |            | 1,269,422         |           
|Treasury stock, at cost (20,749,748 shares in 2003 and 18,313,517 shares in 2002)                                             |                                           |                                            | (444,073             | )          |                    |            | (382,350          | )         
|Accumulated other comprehensive income                                                                                        |                                           |                                            | 35,700               |            |                    |            | 114,946           |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              | Total shareholders equity                |                                            |                      | 2,475,580  |                    |            |                   | 2,063,485  |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           
|                                                                                                                              |                                           | Total liabilities and shareholders equity |                      | $          | 25,740,937         |            |                   | $          | 23,418,941 |           
|                                                                                                                              |                                           |                                            |                      |            |                    |            |                   |           

See accompanying Notes to unaudited Consolidated Financial Statements.

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##### Table of Contents






BANKNORTH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)

|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |         | 
|------------------------------------ | ---------------------------------------------- | ------------------------------------------------------------- | ------- | ------------------ | ------- | ----------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                     |                                                |                                                               |         | Three Months Ended |         | Nine Months Ended
|                                     |                                                |                                                               |         | September 30,      |         | September 30,    
|                                     |                                                |                                                               |         |                    |         |                  
|                                     |                                                |                                                               |         | 2003               |         | 2002              |         | 2003    |         | 2002
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |     
|Interest and dividend income:        |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |        
|                                     | Interest and fees on loans and leases          |                                                               | $       | 219,215            |         |                   | $       | 221,534 |         |      | $       | 665,309 |         |   | $       | 662,298 |        
|                                     | Interest and dividends on securities           |                                                               |         | 71,535             |         |                   |         | 91,622  |         |      |         | 237,246 |         |   |         | 266,251 |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|                                     |                                                | Total interest and dividend income                            |         |                    | 290,750 |                   |         |         | 313,156 |      |         |         | 902,555 |   |         |         | 928,549 | 
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|Interest expense:                    |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |        
|                                     | Interest on deposits                           |                                                               |         | 45,164             |         |                   |         | 62,335  |         |      |         | 147,290 |         |   |         | 188,642 |        
|                                     | Interest on borrowed funds                     |                                                               |         | 35,754             |         |                   |         | 49,825  |         |      |         | 127,722 |         |   |         | 142,952 |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|                                     |                                                | Total interest expense                                        |         |                    | 80,918  |                   |         |         | 112,160 |      |         |         | 275,012 |   |         |         | 331,594 | 
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|                                     |                                                | Net interest income                                           |         |                    | 209,832 |                   |         |         | 200,996 |      |         |         | 627,543 |   |         |         | 596,955 | 
|Provision for loan and lease losses  |                                                |                                                               | 10,500  |                    |         |                   | 10,829  |         |         |      | 31,901  |         |         |   | 33,486  |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|                                     |                                                | Net interest income after provision
for loan and lease losses |         |                    | 199,332 |                   |         |         | 190,167 |      |         |         | 595,642 |   |         |         | 563,469 | 
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|Noninterest income:                  |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |        
|                                     | Deposit services                               |                                                               |         | 25,167             |         |                   |         | 20,816  |         |      |         | 71,441  |         |   |         | 59,712  |        
|                                     | Insurance brokerage commissions                |                                                               |         | 10,930             |         |                   |         | 11,670  |         |      |         | 34,235  |         |   |         | 31,885  |        
|                                     | Merchant and electronic banking income, net    |                                                               |         | 11,115             |         |                   |         | 10,108  |         |      |         | 31,235  |         |   |         | 27,267  |        
|                                     | Trust and investment management services       |                                                               |         | 8,178              |         |                   |         | 7,791   |         |      |         | 23,486  |         |   |         | 24,587  |        
|                                     | Bank-owned life insurance                      |                                                               |         | 5,785              |         |                   |         | 5,107   |         |      |         | 16,952  |         |   |         | 14,477  |        
|                                     | Investment planning services                   |                                                               |         | 3,761              |         |                   |         | 2,770   |         |      |         | 10,928  |         |   |         | 8,452   |        
|                                     | Net securities gains                           |                                                               |         | 3,573              |         |                   |         | 208     |         |      |         | 39,778  |         |   |         | 578     |        
|                                     | Other noninterest income                       |                                                               |         | 20,147             |         |                   |         | 7,035   |         |      |         | 54,668  |         |   |         | 23,109  |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|                                     |                                                |                                                               | 88,656  |                    |         |                   | 65,505  |         |         |      | 282,723 |         |         |   | 190,067 |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|Noninterest expenses:                |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |        
|                                     | Compensation and employee benefits             |                                                               |         | 82,230             |         |                   |         | 79,718  |         |      |         | 245,170 |         |   |         | 230,763 |        
|                                     | Occupancy                                      |                                                               |         | 14,520             |         |                   |         | 12,715  |         |      |         | 44,584  |         |   |         | 37,999  |        
|                                     | Equipment                                      |                                                               |         | 11,668             |         |                   |         | 9,986   |         |      |         | 35,344  |         |   |         | 29,623  |        
|                                     | Data processing                                |                                                               |         | 10,466             |         |                   |         | 9,763   |         |      |         | 31,059  |         |   |         | 30,188  |        
|                                     | Advertising and marketing                      |                                                               |         | 5,553              |         |                   |         | 4,301   |         |      |         | 16,569  |         |   |         | 12,515  |        
|                                     | Amortization of identifiable intangible assets |                                                               |         | 2,320              |         |                   |         | 1,684   |         |      |         | 6,622   |         |   |         | 4,422   |        
|                                     | Merger and consolidation costs                 |                                                               |         | 808                |         |                   |         | 2,168   |         |      |         | 6,788   |         |   |         | 11,433  |        
|                                     | Prepayment penalties on borrowings             |                                                               |         |                   |         |                   |         |        |         |      |         | 30,490  |         |   |         |        |        
|                                     | Other noninterest expenses                     |                                                               |         | 24,082             |         |                   |         | 21,242  |         |      |         | 68,968  |         |   |         | 64,322  |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|                                     |                                                |                                                               | 151,647 |                    |         |                   | 141,577 |         |         |      | 485,594 |         |         |   | 421,265 |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|Income before income tax expense     |                                                |                                                               | 136,341 |                    |         |                   | 114,095 |         |         |      | 392,771 |         |         |   | 332,271 |        
|Applicable income tax expense        |                                                |                                                               | 46,063  |                    |         |                   | 37,233  |         |         |      | 133,574 |         |         |   | 110,771 |        
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|                                     |                                                | Net income                                                    |         | $                  | 90,278  |                   |         | $       | 76,862  |      |         | $       | 259,197 |   |         | $       | 221,500 | 
|                                     |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |         |        
|Basic earnings per share             |                                                | $                                                             | 0.56    |                    |         | $                 | 0.52    |         |         | $    | 1.61    |         |         | $ | 1.49    |        
|Diluted earnings per share           |                                                | $                                                             | 0.55    |                    |         | $                 | 0.51    |         |         | $    | 1.59    |         |         | $ | 1.48    |        
|Weighted average shares outstanding: |                                                |                                                               |         |                    |         |                   |         |         |         |      |         |         |         |   |         |        
|                                     |                                                | Basic                                                         |         |                    | 161,517 |                   |         |         | 148,099 |      |         |         | 160,498 |   |         |         | 148,208 | 
|                                     |                                                | Diluted                                                       |         |                    | 164,446 |                   |         |         | 149,662 |      |         |         | 162,789 |   |         |         | 149,935 | 

See accompanying Notes to unaudited
Consolidated Financial Statements.

4



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##### Table of Contents






BANKNORTH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(In thousands) (Unaudited)



|                                                                                              |                      |  |             |   |        |   |         |  |          |   |           |   |  |   |           |   | 
|--------------------------------------------------------------------------------------------- | -------------------- |  | ----------- | - | ------ | - | ------- |  | -------- | - | --------- | - |  | - | --------- | - | 
|                                                                                              |                      |  | Common      |   |        |   |         |  |          |   |           |   |  |   |          
|                                                                                              |                      |  | Shares      |   | Common |   | Paid-in |  | Retained
|                                                                                              |                      |  | Outstanding |   | Stock  |   | Capital |  | Earnings
|                                                                                              |                      |  |             |   |        |   |         |  |         
|Balances at December 31, 2002                                                                 |                      |  | 150,579     |   |        | $ | 1,689   |  |          | $ | 1,059,778 |   |  | $ | 1,269,422 |  
|Net income                                                                                    |                      |  |            |   |        |   |        |  |          |   |          |   |  |   | 259,197   |  
|Unrealized loss on available for sale securities, net of
tax and reclassification adjustment  |                      |  |            |   |        |   |        |  |          |   |          |   |  |   |          |  
|Unrealized gain on cash flow hedges,
net of tax and reclassification adjustment               |                      |  |            |   |        |   |        |  |          |   |          |   |  |   |          |  
|                                                                                              | Comprehensive income |  |             |   |        |   |         |  |          |   |           |   |  |   |           |   | 
|Issuance of stock and options exchanged
for acquisitions                                      |                      |  | 13,401      |   |        |   | 134     |  |          |   | 382,669   |   |  |   |          |  
|Treasury stock issued for employee benefit plans                                              |                      |  | 1,980       |   |        |   |        |  |          |   | (7,328    | ) |  |   |          |  
|Treasury stock purchased                                                                      |                      |  | (4,417      | ) |        |   |        |  |          |   |          |   |  |   |          |  
|Distribution of restricted stock                                                              |                      |  |            |   |        |   |        |  |          |   | (950      | ) |  |   |          |  
|Cash dividends declared                                                                       |                      |  |            |   |        |   |        |  |          |   |          |   |  |   | (80,658   | )
|                                                                                              |                      |  |             |   |        |   |         |  |          |   |           |   |  |   |           |  
|Balances at September 30, 2003                                                                |                      |  | 161,543     |   |        | $ | 1,823   |  |          | $ | 1,434,169 |   |  | $ | 1,447,961 |  
|                                                                                              |                      |  |             |   |        |   |         |  |          |   |           |   |  |   |           |  
|Balances at December 31, 2001                                                                 |                      |  | 151,221     |   |        | $ | 1,651   |  |          | $ | 958,764   |   |  | $ | 1,056,678 |  
|Net income                                                                                    |                      |  |            |   |        |   |        |  |          |   |          |   |  |   | 221,500   |  
|Unrealized gain on available for sales securities, net of
tax and reclassification adjustment |                      |  |             |   |        |   |        |  |          |   |          |   |  |   |          |  
|Unrealized loss on cash flow hedges,
net of tax and reclassification adjustment               |                      |  |            |   |        |   |        |  |          |   |          |   |  |   |          |  
|                                                                                              | Comprehensive income |  |             |   |        |   |         |  |          |   |           |   |  |   |           |   | 
|Issuance of stock and options exchanged
for acquisitions                                      |                      |  | 1,052       |   |        |   | 11      |  |          |   | 25,810    |   |  |   |          |  
|Treasury stock issued for employee benefit plans                                              |                      |  | 1,892       |   |        |   |        |  |          |   | (6,895    | ) |  |   |          |  
|Treasury stock purchased                                                                      |                      |  | (6,228      | ) |        |   |        |  |          |   |          |   |  |   |          |  
|Distribution of restricted stock                                                              |                      |  |            |   |        |   |        |  |          |   | (893      | ) |  |   |          |  
|Decrease in unearned compensation-ESOP                                                        |                      |  |            |   |        |   |        |  |          |   | 5,300     |   |  |   |          |  
|Cash dividends declared                                                                       |                      |  |            |   |        |   |        |  |          |   |          |   |  |   | (63,748   | )
|                                                                                              |                      |  |             |   |        |   |         |  |          |   |           |   |  |   |           |  
|Balances at September 30, 2002                                                                |                      |  | 147,937     |   |        | $ | 1,662   |  |          | $ | 982,086   |   |  | $ | 1,214,430 |  
|                                                                                              |                      |  |             |   |        |   |         |  |          |   |           |   |  |   |           |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                                              |                      |    |          |   |          |    |               |   |       |   |             |   |  |   |           |         | 
|--------------------------------------------------------------------------------------------- | -------------------- | -- | -------- | - | -------- | -- | ------------- | - | ----- | - | ----------- | - |  | - | --------- | ------- | 
|                                                                                              |                      |    |          |   |          |    |               |   |       |   | Accumulated |   |  |   |          
|                                                                                              |                      |    | Unearned |   |          |    |               |   | Other |   |             |   | 
|                                                                                              |                      |    | Compen-  |   | Treasury |    | Comprehensive |   |       |   |            
|                                                                                              |                      |    | sation   |   | Stock    |    | Income (Loss) |   | Total
|                                                                                              |                      |    |          |   |          |    |               |   |      
|Balances at December 31, 2002                                                                 |                      | $  |         |   |          | ($ | 382,350       | ) |       | $ | 114,946     |   |  | $ | 2,063,485 |        
|Net income                                                                                    |                      |    |         |   |          |    |              |   |       |   |            |   |  |   | 259,197   |        
|Unrealized loss on available for sale securities, net of
tax and reclassification adjustment  |                      |    |         |   |          |    |              |   |       |   | (80,290     | ) |  |   | (80,290   | )      
|Unrealized gain on cash flow hedges,
net of tax and reclassification adjustment               |                      |    |         |   |          |    |              |   |       |   | 1,044       |   |  |   | 1,044     |        
|                                                                                              |                      |    |          |   |          |    |               |   |       |   |             |   |  |   |           |        
|                                                                                              | Comprehensive income |    |          |   |          |    |               |   |       |   |             |   |  |   |           | 179,951 | 
|Issuance of stock and options exchanged
for acquisitions                                      |                      |    |         |   |          |    |              |   |       |   |            |   |  |   | 382,803   |        
|Treasury stock issued for employee benefit plans                                              |                      |    |         |   |          |    | 40,349        |   |       |   |            |   |  |   | 33,021    |        
|Treasury stock purchased                                                                      |                      |    |         |   |          |    | (103,662      | ) |       |   |            |   |  |   | (103,662  | )      
|Distribution of restricted stock                                                              |                      |    |         |   |          |    | 1,590         |   |       |   |            |   |  |   | 640       |        
|Cash dividends declared                                                                       |                      |    |         |   |          |    |              |   |       |   |            |   |  |   | (80,658   | )      
|                                                                                              |                      |    |          |   |          |    |               |   |       |   |             |   |  |   |           |        
|Balances at September 30, 2003                                                                |                      | $  |         |   |          | ($ | 444,073       | ) |       | $ | 35,700      |   |  | $ | 2,475,580 |        
|                                                                                              |                      |    |          |   |          |    |               |   |       |   |             |   |  |   |           |        
|Balances at December 31, 2001                                                                 |                      | ($ | 1,017    | ) |          | ($ | 267,529       | ) |       | $ | 40,568      |   |  | $ | 1,789,115 |        
|Net income                                                                                    |                      |    |         |   |          |    |              |   |       |   |            |   |  |   | 221,500   |        
|Unrealized gain on available for sales securities, net of
tax and reclassification adjustment |                      |    |         |   |          |    |              |   |       |   | 67,556      |   |  |   | 67,556    |        
|Unrealized loss on cash flow hedges,
net of tax and reclassification adjustment               |                      |    |         |   |          |    |              |   |       |   | (1,478      | ) |  |   | (1,478    | )      
|                                                                                              |                      |    |          |   |          |    |               |   |       |   |             |   |  |   |           |        
|                                                                                              | Comprehensive income |    |          |   |          |    |               |   |       |   |             |   |  |   |           | 287,578 | 
|Issuance of stock and options exchanged
for acquisitions                                      |                      |    |         |   |          |    |              |   |       |   |            |   |  |   | 25,821    |        
|Treasury stock issued for employee benefit plans                                              |                      |    |         |   |          |    | 36,569        |   |       |   |            |   |  |   | 29,674    |        
|Treasury stock purchased                                                                      |                      |    |         |   |          |    | (151,286      | ) |       |   |            |   |  |   | (151,286  | )      
|Distribution of restricted stock                                                              |                      |    |         |   |          |    | 1,719         |   |       |   |            |   |  |   | 826       |        
|Decrease in unearned compensation-ESOP                                                        |                      |    | 879      |   |          |    |              |   |       |   |            |   |  |   | 6,179     |        
|Cash dividends declared                                                                       |                      |    |         |   |          |    |              |   |       |   |            |   |  |   | (63,748   | )      
|                                                                                              |                      |    |          |   |          |    |               |   |       |   |             |   |  |   |           |        
|Balances at September 30, 2002                                                                |                      | ($ | 138      | ) |          | ($ | 380,527       | ) |       | $ | 106,646     |   |  | $ | 1,924,159 |        
|                                                                                              |                      |    |          |   |          |    |               |   |       |   |             |   |  |   |           |        

See accompanying Notes to unaudited Consolidated Financial Statements.

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BANKNORTH GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)

|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |            |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ------------------------------------------------------------- | -------- | ----------------- | -------- | ---- | ---------- | ---------- | -------- | -
|                                                                                                                                                          |                                                                                    |                                                               |          | Nine Months Ended
|                                                                                                                                                          |                                                                                    |                                                               |          | September 30,    
|                                                                                                                                                          |                                                                                    |                                                               |          |                  
|                                                                                                                                                          |                                                                                    |                                                               |          | 2003              |          | 2002
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |     
|Cash flows from operating activities:                                                                                                                     |                                                                                    |                                                               |          |                   |          |      |            |           
|                                                                                                                                                          | Net income                                                                         |                                                               | $        | 259,197           |          |      | $          | 221,500    |         
|                                                                                                                                                          | Adjustments to reconcile net income to net cash provided by operating activities:  |                                                               |          |                   |          |      |            |            |         
|                                                                                                                                                          |                                                                                    | Provision for loan and lease losses                           |          |                   | 31,901   |      |            |            | 33,486   |  
|                                                                                                                                                          |                                                                                    | Depreciation of banking premises and equipment                |          |                   | 32,481   |      |            |            | 26,126   |  
|                                                                                                                                                          |                                                                                    | Net amortization of premium and discounts                     |          |                   | 45,968   |      |            |            | 26,262   |  
|                                                                                                                                                          |                                                                                    | Amortization of other intangibles                             |          |                   | 6,622    |      |            |            | 4,422    |  
|                                                                                                                                                          |                                                                                    | Provision for deferred tax expense                            |          |                   | 17,100   |      |            |            | 8,539    |  
|                                                                                                                                                          |                                                                                    | ESOP expense                                                  |          |                   |         |      |            |            | 6,179    |  
|                                                                                                                                                          |                                                                                    | Distribution of restricted stock units                        |          |                   | 640      |      |            |            | 826      |  
|                                                                                                                                                          |                                                                                    | Net (gains) realized from sales of securities                 |          |                   | (39,778  | )    |            |            | (578     | )
|                                                                                                                                                          |                                                                                    | Prepayment penalties on borrowings                            |          |                   | 30,490   |      |            |            |         |  
|                                                                                                                                                          |                                                                                    | Net (gains) realized from sales of loans held for sale        |          |                   | (11,418  | )    |            |            | (6,330   | )
|                                                                                                                                                          |                                                                                    | Increase in cash surrender value of bank owned life insurance |          |                   | (16,952  | )    |            |            | (14,477  | )
|                                                                                                                                                          |                                                                                    | Net decrease in mortgage servicing rights                     |          |                   | 268      |      |            |            | 3,489    |  
|                                                                                                                                                          |                                                                                    | Proceeds from sales of loans held for sale                    |          |                   | 757,404  |      |            |            | 526,694  |  
|                                                                                                                                                          |                                                                                    | Residential loans originated and purchased for sale           |          |                   | (690,453 | )    |            |            | (481,341 | )
|                                                                                                                                                          |                                                                                    | Net decrease (increase) in other assets                       |          |                   | 65,308   |      |            |            | (16,067  | )
|                                                                                                                                                          |                                                                                    | Net (decrease) increase in other liabilities                  |          |                   | (100,267 | )    |            |            | 40,428   |  
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |           
|Net cash provided by operating activities                                                                                                                 |                                                                                    |                                                               | 388,511  |                   |          |      | 379,158    |           
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |           
|Cash flows from investing activities:                                                                                                                     |                                                                                    |                                                               |          |                   |          |      |            |           
|                                                                                                                                                          | Proceeds from sales of securities available for sale                               |                                                               |          | 2,890,179         |          |      |            | 746,317    |         
|                                                                                                                                                          | Proceeds from maturities and principal repayments of securities available for sale |                                                               |          | 2,674,338         |          |      |            | 1,515,446  |         
|                                                                                                                                                          | Purchases of securities available for sale                                         |                                                               |          | (5,207,824        | )        |      |            | (2,879,713 | )       
|                                                                                                                                                          | Proceeds from maturities and principal repayments of securities held to maturity   |                                                               |          | 74,783            |          |      |            | 86,492     |         
|                                                                                                                                                          | Net (increase) in loans and leases                                                 |                                                               |          | (465,465          | )        |      |            | (520,100   | )       
|                                                                                                                                                          | Net additions to premises and equipment                                            |                                                               |          | (13,937           | )        |      |            | (25,438    | )       
|                                                                                                                                                          | Purchases of bank owned life insurance                                             |                                                               |          |                  |          |      |            | (40,000    | )       
|                                                                                                                                                          | Cash (paid) for acquisitions, net of cash acquired                                 |                                                               |          | 48,354            |          |      |            | (27,197    | )       
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |           
|Net cash provided (used) by investing activities                                                                                                          |                                                                                    |                                                               | 428      |                   |          |      | (1,144,193 | )         
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |           
|Cash flows from financing activities:                                                                                                                     |                                                                                    |                                                               |          |                   |          |      |            |           
|                                                                                                                                                          | Net increase in deposits                                                           |                                                               |          | 207,044           |          |      |            | 351,796    |         
|                                                                                                                                                          | Net increase in securities sold under repurchase agreements                        |                                                               |          | 553,357           |          |      |            | 347,841    |         
|                                                                                                                                                          | Proceeds from Federal Home Loan Bank borrowings                                    |                                                               |          | 1,900             |          |      |            | 3,555      |         
|                                                                                                                                                          | Payments on Federal Home Loan Bank borrowings                                      |                                                               |          | (1,276,817        | )        |      |            | (316,711   | )       
|                                                                                                                                                          | Net (decrease) increase in other borrowings                                        |                                                               |          | (1,119            | )        |      |            | 49,591     |         
|                                                                                                                                                          | Issuance of senior notes, net                                                      |                                                               |          | 148,693           |          |      |            |           |         
|                                                                                                                                                          | Issuance of securities of subsidiary trusts, net                                   |                                                               |          |                  |          |      |            | 190,950    |         
|                                                                                                                                                          | Issuance of common stock                                                           |                                                               |          | 33,021            |          |      |            | 29,674     |         
|                                                                                                                                                          | Purchase of treasury stock                                                         |                                                               |          | (103,662          | )        |      |            | (151,286   | )       
|                                                                                                                                                          | Cash dividends paid to shareholders                                                |                                                               |          | (80,658           | )        |      |            | (63,748    | )       
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |           
|Net cash (used) provided by financing activities                                                                                                          |                                                                                    |                                                               | (518,241 | )                 |          |      | 441,662    |           
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |           
|Decrease in cash and cash equivalents                                                                                                                     |                                                                                    |                                                               | (129,302 | )                 |          |      | (323,373   | )         
|Cash and cash equivalents at beginning of period                                                                                                          |                                                                                    |                                                               | 717,003  |                   |          |      | 871,211    |           
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |            |         
|Cash and cash equivalents at end of period                                                                                                                |                                                                                    | $                                                             | 587,701  |                   |          | $    | 547,838    |           
|                                                                                                                                                          |                                                                                    |                                                               |          |                   |          |      |            |           
|For the nine months ended September 30, 2003 and 2002, interest of $276,928 and
$324,901 and income taxes of $111,055 and $59,833 were paid, respectively |                                                                                    |                                                               |          |                   |          |      |            |           

See accompanying Notes to unaudited Consolidated Financial Statements.

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BANKNORTH GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 2003
(In thousands, except per share data and as noted) (Unaudited)

Note 1  Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America and predominant practices within the banking industry. We,
Banknorth Group, Inc., have not changed our significant accounting and
reporting policies from those disclosed in our 2002 Annual Report. There have
been no significant changes in the methods or assumptions used in the
accounting policies which require material estimates and assumptions.

In the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of the unaudited consolidated
financial statements have been included herein. The results of operations for
the three and nine months ended September 30, 2003 are not necessarily
indicative of the results that may be expected for any other interim period or
the entire year ending December 31, 2003. Certain amounts in the prior periods
have been reclassified to conform to the current presentation. All significant
intercompany balances and transactions have been eliminated in the accompanying
unaudited consolidated financial statements.

Note 2  Acquisitions

Acquisitions are an important part of our strategic plan. The following table
summarizes acquisitions completed since January 1, 2002. The acquisitions were
accounted for as purchases and, as such, were included in our results of
operations from the date of acquisition.

|                                  |  |             |            |        |  |                  |         |          |  |              |       |       |  |                           |       |          |  |   |     |  |  |       |       |  |  |  |      |  |  |   |       | 
|--------------------------------- |  | ----------- | ---------- | ------ |  | ---------------- | ------- | -------- |  | ------------ | ----- | ----- |  | ------------------------- | ----- | -------- |  | - | --- |  |  | ----- | ----- |  |  |  | ---- |  |  | - | ----- | 
|                                  |  |             |            |        |  |                  |         |          |  |              |       |       |  | Transaction-Related Items
|                                  |  |             |            |        |  | Balance at       |         |         
|                                  |  |             |            |        |  | Acquisition Date |         |          |  |              |       | Other |  |                           |       |          |  |   |     |  |  | Total
|                                  |  | Acquisition |            |        |  |                  |         |          |  | Identifiable |       | Cash  |  | Shares                    |       | Purchase
|(Dollars and shares in millions)  |  | Date        |            | Assets |  | Equity           |         | Goodwill |  | Intangibles  |       | Paid  |  | Issued                    |       | Price   
|                                  |  |             |            |        |  |                  |         |          |  |              |       |       |  |                           |       |         
|American Financial Holdings, Inc. |  |             | 2/14/2003  |        |  | $                | 2,690.3 |          |  | $            | 408.2 |       |  | $                         | 426.8 |          |  | $ | 9.2 |  |  | $     | 328.5 |  |  |  | 13.4 |  |  | $ | 711.3 | 
|Insurance agency acquisitions     |  |             | 2003       |        |  |                  | 1.2     |          |  |              | 0.1   |       |  |                           | 2.4   |          |  |   | 0.7 |  |  |       | 3.2   |  |  |  |     |  |  |   | 3.2   | 
|Warren Bancorp, Inc.              |  |             | 12/31/2002 |        |  |                  | 466.1   |          |  |              | 45.3  |       |  |                           | 91.8  |          |  |   | 2.7 |  |  |       | 59.8  |  |  |  | 2.7  |  |  |   | 136.6 | 
|Bancorp Connecticut, Inc.         |  |             | 8/31/2002  |        |  |                  | 661.7   |          |  |              | 61.4  |       |  |                           | 97.4  |          |  |   | 8.7 |  |  |       | 161.2 |  |  |  |     |  |  |   | 154.2 | 
|Ipswich Bancshares, Inc.          |  |             | 7/26/2002  |        |  |                  | 318.0   |          |  |              | 13.9  |       |  |                           | 23.1  |          |  |   | 4.8 |  |  |       | 19.9  |  |  |  | 0.9  |  |  |   | 40.1  | 
|Insurance agency acquisition      |  |             | 2002       |        |  |                  | 2.5     |          |  |              |      |       |  |                           | 5.6   |          |  |   | 2.2 |  |  |       |      |  |  |  | 0.2  |  |  |   | 7.4   | 

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The following table summarizes the estimated fair value of the assets acquired
and liabilities assumed for American Financial Holdings, Inc. (American) at
the date of acquisition.

|                          |                           |   |           |           | 
|------------------------- | ------------------------- | - | --------- | --------- | 
|Assets:                   |                           |   |           |          
|Investments               |                           | $ | 608,291   |          
|Loans and leases, net     |                           |   | 1,437,279 |          
|Premises and equipment    |                           |   | 11,764    |          
|Mortgage servicing rights |                           |   | 472       |          
|Goodwill                  |                           |   | 426,794   |          
|Other intangibles         |                           |   | 9,241     |          
|Other assets              |                           |   | 543,031   |          
|                          |                           |   |           |          
|                          | Total assets acquired     |   |           | 3,036,872 | 
|                          |                           |   |           |          
|Liabilities:              |                           |   |           |          
|Deposits                  |                           |   | 1,923,154 |          
|Borrowings                |                           |   | 399,960   |          
|Other liabilities         |                           |   | 2,412     |          
|                          |                           |   |           |          
|                          | Total liabilities assumed |   |           | 2,325,526 | 
|                          |                           |   |           |          
|                          | Net assets acquired       |   | $         | 711,346   | 
|                          |                           |   |           |          

We expect that some adjustments of the estimated fair values assigned to the
assets acquired and liabilities assumed at the acquisition date will be
recorded after September 30, 2003, although such adjustments are not expected
to be significant.

On February 14, 2003, the date of acquisition of American, we accrued $13.0
million of merger-related costs for severance, contract terminations, and asset
write-downs with an offsetting charge to goodwill. Total merger charges
related to the American acquisition recorded as an expense by us totaled $5.6
million, of which $4.8 million was recorded in 2003.

Note 3  Stock Compensation Plans

Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation encourages all entities to adopt a fair value based
method of accounting for employee stock compensation plans, whereby
compensation cost is measured at the grant date based on the fair value of the
award and is recognized over the service period, which is usually the vesting
period. However, it also allows an entity to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees,
whereby compensation cost is the excess, if any, of the quoted market price of
the underlying stock at the grant date (or other measurement date) over the
amount an employee must pay to acquire the stock upon exercise of the stock
option. We have elected to continue using the intrinsic value method in APB
Opinion No. 25 and, as a result, must make pro forma disclosures of net income
and earnings per share as if the fair value based method of accounting had been
applied. The pro forma disclosures include the effects of all awards granted
and the effects of our employee stock purchase plan. There were 287,700 and
229,725 stock options granted under our stock option plans during the nine
months ended September 30, 2003 and 2002, respectively. Had we determined
compensation cost based on the fair value at the grant date for all stock
options and recorded expense related to our employee stock purchase plan under
SFAS No. 123, our net income and earnings per share would have been reduced to
the pro forma amounts indicated as follows:

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|                                                                                                                |                            |             |        |        |                                  |      |                                 |        |      |      |         |        |   |      |         |        |   |      | 
|--------------------------------------------------------------------------------------------------------------- | -------------------------- | ----------- | ------ | ------ | -------------------------------- | ---- | ------------------------------- | ------ | ---- | ---- | ------- | ------ | - | ---- | ------- | ------ | - | ---- | 
|                                                                                                                |                            |             |        |        | Three Months Ended September 30, |      | Nine Months Ended September 30,
|                                                                                                                |                            |             |        |        |                                  |      |                                
|                                                                                                                |                            |             |        |        | 2003                             |      | 2002                            |        | 2003 |      | 2002   
|                                                                                                                |                            |             |        |        |                                  |      |                                 |        |      |      |        
|Net income, as reported                                                                                         |                            | $           | 90,278 |        |                                  | $    | 76,862                          |        |      | $    | 259,197 |        |   | $    | 221,500 |       
|Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards |                            |             | (3,833 | )      |                                  |      | (2,310                          | )      |      |      | (12,253 | )      |   |      | (8,561  | )     
|                                                                                                                | Less tax effect            |             |        | 1,224  |                                  |      |                                 | 721    |      |      |         | 3,855  |   |      |         | 2,572  |  
|                                                                                                                |                            |             |        |        |                                  |      |                                 |        |      |      |         |        |   |      |         |       
|                                                                                                                | Net of related tax effects |             |        | (2,609 | )                                |      |                                 | (1,589 | )    |      |         | (8,398 | ) |      |         | (5,989 | )
|                                                                                                                |                            |             |        |        |                                  |      |                                 |        |      |      |         |        |   |      |         |       
|Proforma net income                                                                                             |                            | $           | 87,669 |        |                                  | $    | 75,273                          |        |      | $    | 250,799 |        |   | $    | 215,511 |       
|                                                                                                                |                            |             |        |        |                                  |      |                                 |        |      |      |         |        |   |      |         |       
|Earnings per share                                                                                              |                            |             |        |        |                                  |      |                                 |        |      |      |         |        |   |      |         |       
|                                                                                                                | Basic -                    | As reported |        |        | $                                | 0.56 |                                 |        | $    | 0.52 |         |        | $ | 1.61 |         |        | $ | 1.49 | 
|                                                                                                                |                            | Proforma    |        |        | $                                | 0.54 |                                 |        | $    | 0.51 |         |        | $ | 1.56 |         |        | $ | 1.45 | 
|                                                                                                                | Diluted -                  | As reported |        |        | $                                | 0.55 |                                 |        | $    | 0.51 |         |        | $ | 1.59 |         |        | $ | 1.48 | 
|                                                                                                                |                            | Proforma    |        |        | $                                | 0.53 |                                 |        | $    | 0.50 |         |        | $ | 1.54 |         |        | $ | 1.44 | 

On April 22, 2003, the Financial Accounting Standards Board (FASB) concluded
that all companies should expense the fair value of employee stock options. On
May 7, 2003, the FASB concluded that stock-based compensation should be
accounted for using the modified grant-date measurement approach as defined in
SFAS 123; as a result, compensation cost would be adjusted to reflect actual
forfeitures and outcomes of performance conditions. We have used the Black
Scholes model to calculate the expense of the fair value of stock options shown
above. We have not determined the effect on expense using alternative
valuation models. The FASB plans to issue an exposure draft later this year,
which could become effective in 2004. Until a new Statement is issued, the
provisions of SFAS No. 123 remain in effect.

Note 4  Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill and identifiable intangible
assets for the nine months ended September 30, 2003 are summarized as follows:

|                                                    |           |            |           |          |  |         |        |                                 |        |              |        |              |       |   |        |   |        | 
|--------------------------------------------------- | --------- | ---------- | --------- | -------- |  | ------- | ------ | ------------------------------- | ------ | ------------ | ------ | ------------ | ----- | - | ------ | - | ------ | 
|                                                    |           |            |           |          |  |         |        | Indentifiable Intangible Assets
|                                                    |           |            |           |          |  |         |        |                                
|                                                    |           |            |           |          |  |         |        | Core Deposit                    |        | Other        |        | Total       
|                                                    |           |            |           |          |  |         |        | Intangibles                     |        | Identifiable |        | Identifiable
|                                                    |           |            |           | Goodwill |  | (CDI) |        | Intangibles                     |        | Intangibles 
|                                                    |           |            |           |          |  |         |        |                                 |        |             
|Balance, December 31, 2002                          |           | $          | 660,684   |          |  | $       | 28,438 |                                 |        | $            | 6,036  |              |       | $ | 34,474 |  
|Recorded during the year                            |           |            | 429,223   |          |  |         | 6,443  |                                 |        |              | 5,381  |              |       |   | 11,824 |  
|Adjust Warrens estimated CDI to actual             |           |            | 2,244     |          |  |         | (2,244 | )                               |        |              |       |              |       |   | (2,244 | )
|Amortization expense                                |           |            |          |          |  |         | (3,441 | )                               |        |              | (3,181 | )            |       |   | (6,622 | )
|Massachusetts REIT adjustment (see Note 12)         |           |            | 2,473     |          |  |         |       |                                 |        |              |       |              |       |   |       |  
|Other adjustments of purchase accounting estimates  |           |            | (290      | )        |  |         |       |                                 |        |              | (92    | )            |       |   | (92    | )
|                                                    |           |            |           |          |  |         |        |                                 |        |              |        |              |       |   |        |  
|Balance, September 30, 2003                         |           | $          | 1,094,334 |          |  | $       | 29,196 |                                 |        | $            | 8,144  |              |       | $ | 37,340 |  
|                                                    |           |            |           |          |  |         |        |                                 |        |              |        |              |       |   |        |  
|Estimated amortization expense for the year ending: |           |            |           |          |  |         |        |                                 |        |              |        |              |       |   |        |  
|                                                    | Remaining | 2003       |           |          |  |         |        | $                               | 1,134  |              |        | $            | 1,193 |   |        | $ | 2,327  | 
|                                                    |           | 2004       |           |          |  |         |        |                                 | 3,841  |              |        |              | 2,258 |   |        |   | 6,099  | 
|                                                    |           | 2005       |           |          |  |         |        |                                 | 3,550  |              |        |              | 1,101 |   |        |   | 4,651  | 
|                                                    |           | 2006       |           |          |  |         |        |                                 | 3,364  |              |        |              | 353   |   |        |   | 3,717  | 
|                                                    |           | 2007       |           |          |  |         |        |                                 | 3,245  |              |        |              | 353   |   |        |   | 3,598  | 
|                                                    |           | thereafter |           |          |  |         |        |                                 | 14,062 |              |        |              | 975   |   |        |   | 15,037 | 

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The components of identifiable intangible assets are as follows:

|                                |       |   |                    |        |              |   |              |        |  |   |        |        | 
|------------------------------- | ----- | - | ------------------ | ------ | ------------ | - | ------------ | ------ |  | - | ------ | ------ | 
|                                |       |   | September 30, 2003
|                                |       |   |                   
|                                |       |   | Gross Carrying     |        | Accumulated  |   | Net Carrying
|                                |       |   | Amount             |        | Amortization |   | Amount      
|                                |       |   |                    |        |              |   |             
|Identifiable intangible assets: |       |   |                    |        |              |   |              |        |  |   |        |       
|Core deposit intangibles        |       | $ | 54,781             |        |              | $ | 25,585       |        |  | $ | 29,196 |       
|Other identifiable intangibles  |       |   | 12,405             |        |              |   | 4,261        |        |  |   | 8,144  |       
|                                |       |   |                    |        |              |   |              |        |  |   |        |       
|                                | Total |   | $                  | 67,186 |              |   | $            | 29,846 |  |   | $      | 37,340 | 
|                                |       |   |                    |        |              |   |              |        |  |   |        |       

Note 5  Short-term Borrowings

A summary of short-term borrowings follows:

|                                                        |  |                    |           |                   |  |   |           | 
|------------------------------------------------------- |  | ------------------ | --------- | ----------------- |  | - | --------- | 
|                                                        |  | September 30, 2003 |           | December 31, 2002
|                                                        |  |                    |           |                  
|Securities sold under agreements to repurchase - retail |  | $                  | 1,045,249 |                   |  | $ | 1,222,466 | 
|Federal funds purchased                                 |  |                    | 3,000     |                   |  |   | 53,000    | 
|Treasury, tax and loan notes                            |  |                    | 250       |                   |  |   | 1,001     | 
|                                                        |  |                    |           |                   |  |   |           | 
|                                                        |  | $                  | 1,048,499 |                   |  | $ | 1,276,467 | 
|                                                        |  |                    |           |                   |  |   |           | 

Note 6  Long-term Debt

A summary of long-term debt (debt with original maturities of more than one
year) follows:

|                                                           |  |                    |           |                   |  |   |           | 
|---------------------------------------------------------- |  | ------------------ | --------- | ----------------- |  | - | --------- | 
|                                                           |  | September 30, 2003 |           | December 31, 2002
|                                                           |  |                    |           |                  
|Federal Home Loan Bank advances                            |  | $                  | 1,557,390 |                   |  | $ | 2,482,582 | 
|Securities sold under agreements to repurchase - wholesale |  |                    | 1,692,560 |                   |  |   | 1,171,049 | 
|Capital trust securities                                   |  |                    | 295,056   |                   |  |   | 295,056   | 
|Subordinated long-term debt 7.625%, due 2011               |  |                    | 200,000   |                   |  |   | 200,000   | 
|Senior notes 3.75%, due 2008                               |  |                    | 149,739   |                   |  |   |          | 
|Hedge-related basis adjustments on long-term debt          |  |                    | 9,665     |                   |  |   |          | 
|Other long-term debt                                       |  |                    | 7,059     |                   |  |   | 7,427     | 
|                                                           |  |                    |           |                   |  |   |           | 
|Total                                                      |  | $                  | 3,911,469 |                   |  | $ | 4,156,114 | 
|                                                           |  |                    |           |                   |  |   |           | 

Callable borrowings amounted to $1.9 billion and $1.0 billion at September 30,
2003 and December 31, 2002, respectively, the majority of which are long-term
in nature.

In the first quarter of 2003, we entered into an interest rate swap agreement
for $200 million to hedge the fair value of the $200 million subordinated debt
(fixed rate of 7.625% due in 2011). The effect of the hedge, which is
accounted for as a fair value hedge, was to synthetically convert this fixed
rate debt to a variable rate set at 3-month LIBOR plus 3.47%.

On April 30, 2003, we issued $150 million of 3.75% senior notes due May 1,
2008. Interest on the notes is scheduled to be paid semi-annually on May 1 and
November 1 of each year and the notes are not redeemable prior to their
maturity. There are no sinking fund provisions for the notes. Also on April
30, 2003, we entered into an interest rate swap agreement for $150 million to
hedge the fair value of the $150 million senior notes (fixed rate of 3.75% due
in 2008). The effect of the hedge, which is accounted for as a
fair value hedge, was to synthetically convert this fixed rate debt to a
variable rate set at 3-month LIBOR plus 0.41%.

On July 23, 2003, Banknorth entered into interest rate swap agreements for
$216.5 million to hedge the fair value of $216.5 million of FHLB advances. The
effect of the hedges, which are accounted for as fair value hedges, was to
synthetically convert this fixed rate debt to a variable rate set at an average
of 1-month

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LIBOR plus 3.82%. These FHLB advances had a weighted average cost of 5.47% and
an average term of 2 years.

Note 7  Share Repurchases

During the nine months ended September 30, 2003, we repurchased 4.4 million
shares of our outstanding common stock at an average price of $23.47. At
September 30, 2003, there were a total of 2.9 million shares remaining under
existing repurchase authorizations. There were no repurchases during the
quarter ended September 30, 2003.

Note 8 - Comprehensive Income

The following table presents the reconciliation of transactions affecting
accumulated other comprehensive income included in shareholders equity for the
periods indicated.

|                                                                      |  |                    |        |                    |  |        |        |         |  |        |        |        |  |   |        |   |  |    |        |   |  |   |        |  
|--------------------------------------------------------------------- |  | ------------------ | ------ | ------------------ |  | ------ | ------ | ------- |  | ------ | ------ | ------ |  | - | ------ | - |  | -- | ------ | - |  | - | ------ | -
|                                                                      |  | Three Months Ended |        | Three Months Ended
|                                                                      |  | September 30, 2003 |        | September 30, 2002
|                                                                      |  |                    |        |                   
|                                                                      |  | Pre-tax            |        | Tax                |  | Net of |        | Pre-tax |  | Tax    |        | Net of
|                                                                      |  | Amount             |        | Effect             |  | Tax    |        | Amount  |  | Effect |        | Tax   
|                                                                      |  |                    |        |                    |  |        |        |         |  |        |        |       
|Unrealized gain (loss) on securities available for sale               |  | ($                 | 90,449 | )                  |  | $      | 31,656 |         |  | ($     | 58,793 | )      |  | $ | 48,588 |   |  | ($ | 17,006 | ) |  | $ | 31,582 |  
|Unrealized gain (loss) on cash flow hedges                            |  |                    | 1,819  |                    |  |        | (636   | )       |  |        | 1,183  |        |  |   | (6,492 | ) |  |    | 2,272  |   |  |   | (4,220 | )
|Reclassification adjustment for gains (losses) realized
in net income |  |                    | (5,562 | )                  |  |        | 1,947  |         |  |        | (3,615 | )      |  |   | 5,202  |   |  |    | (1,821 | ) |  |   | 3,381  |  
|                                                                      |  |                    |        |                    |  |        |        |         |  |        |        |        |  |   |        |   |  |    |        |   |  |   |        |  
|Net change in unrealized gains (losses)                               |  | ($                 | 94,192 | )                  |  | $      | 32,967 |         |  | ($     | 61,225 | )      |  | $ | 47,298 |   |  | ($ | 16,555 | ) |  | $ | 30,743 |  
|                                                                      |  |                    |        |                    |  |        |        |         |  |        |        |        |  |   |        |   |  |    |        |   |  |   |        |  

|                                                                      |  |                    |         |                    |  |        |        |         |  |        |         |        |  |   |         |   |  |    |        |   |  |   |        |  
|--------------------------------------------------------------------- |  | ------------------ | ------- | ------------------ |  | ------ | ------ | ------- |  | ------ | ------- | ------ |  | - | ------- | - |  | -- | ------ | - |  | - | ------ | -
|                                                                      |  | Nine Months Ended  |         | Nine Months Ended 
|                                                                      |  | September 30, 2003 |         | September 30, 2002
|                                                                      |  |                    |         |                   
|                                                                      |  | Pre-tax            |         | Tax                |  | Net of |        | Pre-tax |  | Tax    |         | Net of
|                                                                      |  | Amount             |         | Effect             |  | Tax    |        | Amount  |  | Effect |         | Tax   
|                                                                      |  |                    |         |                    |  |        |        |         |  |        |         |       
|Unrealized gain (loss) on securities available for sale               |  | ($                 | 83,495  | )                  |  | $      | 29,061 |         |  | ($     | 54,434  | )      |  | $ | 104,511 |   |  | ($ | 36,579 | ) |  | $ | 67,932 |  
|Unrealized gain (loss) on cash flow hedges                            |  |                    | (6,018  | )                  |  |        | 2,106  |         |  |        | (3,912  | )      |  |   | (8,177  | ) |  |    | 2,862  |   |  |   | (5,315 | )
|Reclassification adjustment for gains (losses) realized
in net income |  |                    | (32,153 | )                  |  |        | 11,253 |         |  |        | (20,900 | )      |  |   | 5,325   |   |  |    | (1,864 | ) |  |   | 3,461  |  
|                                                                      |  |                    |         |                    |  |        |        |         |  |        |         |        |  |   |         |   |  |    |        |   |  |   |        |  
|Net change in unrealized gains (losses)                               |  | ($                 | 121,666 | )                  |  | $      | 42,420 |         |  | ($     | 79,246  | )      |  | $ | 101,659 |   |  | ($ | 35,581 | ) |  | $ | 66,078 |  
|                                                                      |  |                    |         |                    |  |        |        |         |  |        |         |        |  |   |         |   |  |    |        |   |  |   |        |  

Note 9  - Other Noninterest Income

Other noninterest income consisted of the following for the periods indicated.

|                                           |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|------------------------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                           |  | Three Months Ended |        | Nine Months Ended
|                                           |  | September 30,      |        | September 30,    
|                                           |  |                    |        |                  
|                                           |  | 2003               |        | 2002              |  | 2003 |       | 2002
|                                           |  |                    |        |                   |  |      |       |     
|Covered call premiums                      |  | $                  | 7,152  |                   |  | $    | 1,128 |      |  | $ | 21,390 |   |  | $ | 5,107  |  
|Loan fee income                            |  |                    | 7,376  |                   |  |      | 5,206 |      |  |   | 19,456 |   |  |   | 15,728 |  
|Mortgage banking services income (expense) |  |                    | 3,087  |                   |  |      | (455  | )    |  |   | 9,328  |   |  |   | 1,710  |  
|Venture capital write-downs                |  |                    | (374   | )                 |  |      | (469  | )    |  |   | (989   | ) |  |   | (2,171 | )
|Miscellaneous income                       |  |                    | 2,906  |                   |  |      | 1,625 |      |  |   | 5,483  |   |  |   | 2,735  |  
|                                           |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|Total                                      |  | $                  | 20,147 |                   |  | $    | 7,035 |      |  | $ | 54,668 |   |  | $ | 23,109 |  
|                                           |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  

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Note 10  Earnings Per Share

The computations of basic and diluted earnings per share and weighted average
shares outstanding are as follows:

|                                                   |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|-------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                   |  | Three Months Ended |         | Nine Months Ended
|                                                   |  | September 30,      |         | September 30,    
|                                                   |  |                    |         |                  
|                                                   |  | 2003               |         | 2002              |  | 2003 |         | 2002
|                                                   |  |                    |         |                   |  |      |         |     
|Net income                                         |  | $                  | 90,278  |                   |  | $    | 76,862  |      |  | $ | 259,197 |  |  | $ | 221,500 | 
|                                                   |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Weighted average basic common shares outstanding   |  |                    | 161,517 |                   |  |      | 148,099 |      |  |   | 160,498 |  |  |   | 148,208 | 
|Effect of dilutive stock options                   |  |                    | 2,929   |                   |  |      | 1,563   |      |  |   | 2,291   |  |  |   | 1,727   | 
|                                                   |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Weighted average diluted common shares outstanding |  |                    | 164,446 |                   |  |      | 149,662 |      |  |   | 162,789 |  |  |   | 149,935 | 
|                                                   |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Basic earnings per share                           |  | $                  | 0.56    |                   |  | $    | 0.52    |      |  | $ | 1.61    |  |  | $ | 1.49    | 
|                                                   |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Diluted earnings per share                         |  | $                  | 0.55    |                   |  | $    | 0.51    |      |  | $ | 1.59    |  |  | $ | 1.48    | 
|                                                   |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 

Note 11 - New Accounting Standards

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This
Statement applies generally to freestanding financial instruments that embody
obligations of the issuing entity to redeem the instrument or to settle the
obligation by repurchasing its equity shares through the transfer of assets or
through issuance of its own shares. Such freestanding instruments must be
classified as liabilities or, in some cases, assets. SFAS No. 150 requires that
financial instruments containing obligations to repurchase the issuing entitys
equity shares and, under certain circumstances, obligations that are settled by
delivery of the issuers shares, be classified as liabilities. This statement
is effective for financial instruments entered into or modified after May 31,
2003 and for contracts in existence at the start of the first interim period
beginning after June 15, 2003. The adoption of this standard on July 1, 2003
did not have a material impact on our financial condition, results of
operations, earnings per share or cash flows.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, resulting in more consistent reporting of contracts as
either derivatives or hybrid instruments. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003, and should be applied
prospectively. Implementation issues that have been effective for fiscal
quarters that began prior to June 15, 2003 should continue to be applied in
accordance with their respective effective dates. The adoption of this standard
on July 1, 2003 did not have a material impact on our financial condition,
results of operations, earnings per share or cash flows.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51 (FIN 46). FIN
46 provides a new framework for identifying variable interest entities (VIEs)
and determining when a company should include the assets, liabilities,
noncontrolling interests and results of activities of a VIE in its consolidated
financial statements. FIN 46 is effective immediately for VIEs created after
January 31, 2003; this has had no significant impact on our financial
condition, results of operations, earnings per share or cash flows. For
VIEs created prior to January 31, 2003, we must apply the provisions of FIN 46
by December 31, 2003. At present, we believe that this will not have a
significant impact on our financial condition, results of operations, earnings
per share or cash
flows. However, due to the complexity of the new guidance and the evolving
interpretations among accounting professionals, we continue to assess the
disclosure requirements of FIN 46 on all of our

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relationships with variable
interest entities. We, as well as other bank holding companies, are currently
evaluating whether trusts established prior to the adoption of FIN 46 to issue
preferred securities which are included in Tier 1 capital for regulatory
purposes may continue to be treated as consolidated subsidiaries under FIN 46
after October 1, 2003. For information regarding an ongoing evaluation of the
effects of FIN 46 on the treatment of capital securities issued by consolidated
subsidiary trusts for regulatory purposes, see Managements Discussion and
Analysis of Financial Condition and Results of Operations  Capital.

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This Interpretation requires the
recording at fair value of the issuance of guarantees which would include the
issuance of standby letters of credit. Banknorth adopted the provisions of
FASB Interpretation No. 45 beginning January 1, 2003. At September 30, 2003,
the approximate fair value of standby letters of credit was $912 thousand, of
which $448 thousand was unamortized and included in other liabilities on the
balance sheet. Adoption of the Interpretation did not materially affect our
financial condition, results of operations, earnings per share or cash flows.

Note 12  State Tax Assessment

During the second quarter of 2003, we entered into a settlement with the
Massachusetts Department of Revenue (DOR) concerning the dividends received
deduction relating to certain banks that we had acquired prior to 2003.
Legislation was enacted on March 5, 2003, which disallowed the
dividends-received deduction for dividends received from a Real Estate
Investment Trust (REIT) retroactive to 1999.

The aggregate assessment of $5.9 million (net of Federal income tax benefit)
was recorded in the first quarter of 2003 as an increase to goodwill related to
the acquired banks. During the second quarter of 2003, we entered into (and
paid) a settlement of $2.5 million, net of Federal income tax benefit, to the
DOR, which was part of a global settlement negotiated by approximately 50
similarly-situated financial institutions doing business in Massachusetts with
the DOR. Goodwill was reduced to reflect the final settlement.

Note 13  Pending Acquisition

On September 3, 2003, we entered into a definitive agreement to acquire First &
Ocean BanCorp for $51 million in cash. First & Ocean is located in
Newburyport, Massachusetts and had $274 million in assets at June 30, 2003.
The acquisition is expected to be completed in the fourth quarter of 2003.

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BANKNORTH GROUP, INC. AND SUBSIDIARIES




MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In thousands, except per share data and as noted)


OVERVIEW

Our financial statements for the three and nine months ended September 30, 2003
reflect the acquisition of American Financial Holdings, Inc. (American) from
the date of acquisition on February 14, 2003. American had total assets of
$2.7 billion at the date of acquisition. We also had two insurance agency
acquisitions in the third quarter of 2003 with annual premium revenues of
approximately $1.6 million. In addition, the financial statements reflect the
acquisitions of Community Insurance Agencies, Inc. (Community), which closed
on July 2, 2002, Ipswich Bancshares, Inc. (Ipswich), which closed on July 26,
2002, Bancorp Connecticut, Inc. (Bancorp), which closed on August 31, 2002,
and Warren Bancorp (Warren), which closed on December 31, 2002. These 2002
acquisitions increased total assets (including intangible assets) by $1.7
billion. All of these mergers were accounted for under the purchase method of
accounting and, as a result, the assets and liabilities of these companies and
their results of operations have been included in our financial statements
since the date of acquisition.

In April 2003, we completed a deleveraging program which benefited our net
interest margin, mitigated interest rate risk and reduced the level of assets
subject to prepayment risk. Under this deleveraging program, we sold $901
million of investment securities (which had a weighted average yield of 5.05%)
and used the proceeds to prepay $853 million of borrowings (which had a
weighted average rate of 4.49%). The gain on sale of these securities totaled
$29.2 million, while the prepayment charges on the borrowings which were
prepaid totaled $28.5 million. The reduction in assets freed up approximately
$54 million of Tier 1 capital, which was used to repurchase shares of our
common stock in the open market. These stock repurchases had the effect of
making the reduction in net interest income resulting from the deleveraging
program neutral in terms of our earnings per share.

SUMMARY

Consolidated net income was $90.3 million, or $0.55 per diluted share, for the
third quarter of 2003 as compared with $76.9 million, or $0.51 per diluted
share, for the third quarter of 2002, a per share increase of 8%. Our growth
in net income for the quarter ended September 30, 2003 over the same quarter
last year was due in part to acquisitions completed in 2003 and 2002. Results
were diminished by the effect of merger and consolidation costs of $808
thousand for the three months ended September 30, 2003 and $2.2 million for the
three months ended September 30, 2002.

Annualized return on average equity (ROE) and return on average assets
(ROA) were 14.85% and 1.39%, respectively, for the quarter ended September
30, 2003 and were 16.25% and 1.40%, respectively, for the comparable quarter
last year. The decline in ROE related primarily to the intangible equity created in the acquisition of American in February 2003.

Results for the third quarter of 2003 improved over the third quarter of 2002
due primarily to strong fee income and expense control. Net interest income
increased by $8.8 million (or 4%) over the third quarter of last year as
increased volume more than offset a 40 basis point decline in net interest
margin. Noninterest income was $88.7 million and $65.5 million for the
quarters ended September 30, 2003 and 2002, respectively, a 35% increase. The
increase in noninterest income was mostly attributable to increases in deposit
services income, net securities gains and other noninterest income.
Noninterest expenses totaled $151.6 million and $141.6 million for the quarters
ended September 30, 2003 and 2002, respectively, an increase of 7%.
Acquisitions in 2003 and 2002 were factors in the increased noninterest income
and noninterest expense. The efficiency ratio was 50.81% in the third quarter
of 2003 compared to 53.12% in the comparable period last year. For a
description of the methodology we use to calculate the efficiency ratio, see
Note 3 to Table 1.

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##### Table of Contents



For the nine months ended September 30, 2003, consolidated net income was
$259.2 million, or $1.59 per diluted share, as compared with $221.5 million, or
$1.48 per diluted share, for the same period in the prior year, a per share
increase of 7%. Results in each period were diminished by the effect of merger
and consolidation costs, which totaled $6.8 million for the nine months ended
September 30, 2003 and $11.4 million for the nine months ended September 30,
2002. (See Table 6 for merger and consolidation costs detail for the nine
months ended September 30, 2003 and 2002).

ROE and ROA were 14.45% and 1.36%, respectively, for the nine months ended
September 30, 2003, and 16.46% and 1.41% for the nine months ended September
30, 2002. The decline in ROE related primarily to the intangible equity created in the acquisition of American in February 2003.

Net interest income for the nine months ended September 30, 2003 increased by
$30.6 million or 5% from the same period last year. The increase was primarily
attributable to increases in the volume of interest-earning assets, primarily
due to acquisitions, which more than offset the effects of decreases in
interest rates. The provision for loan and lease losses for the nine months
ended September 30, 2003 decreased $1.6 million over the same period last year,
primarily due to lower levels of net charge-offs and a higher coverage ratio of
the allowance to non-performing loans and leases (see Table 4). Noninterest
income was $282.7 million and $190.1 million for the nine months ended
September 30, 2003 and 2002, respectively, a 49% increase. The increase in
noninterest income for the nine months ended September 30, 2003 was primarily
attributable to $39.8 million of gains from the sale of securities, of which
$29.2 million related to our deleveraging program in the second quarter, an
increase of $16.3 million in income from covered call premiums, an increase of
$11.7 million in deposit services income related to both new accounts
(including those of acquired banks) and increased transactions and an increase
of $7.6 million in mortgage banking services income. Noninterest expenses
totaled $485.6 million and $421.3 million for the nine months ended September
30, 2003 and 2002, respectively, an increase of 15%. The increase in
noninterest expense was primarily due to $28.5 million of prepayment penalties
on borrowings related to our deleveraging program in the second quarter and
compensation and employee benefits and occupancy expenses related to
acquisitions, which were mitigated by lower merger and consolidations costs and
incentive expense.

Selected quarterly data, ratios and per share data are provided in Table 1.

15



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##### Table of Contents



TABLE 1 - Selected Quarterly Data



|                                                        |         |  |    |   |  |   |         |         |        |   |         |         |  |   |         |         | 
|------------------------------------------------------- | ------- |  | -- | - |  | - | ------- | ------- | ------ | - | ------- | ------- |  | - | ------- | ------- | 
|                                                        |         |  |    |   |  |   | 2003   
|                                                        |         |  |    |   |  |   |        
|                                                        |         |  |    |   |  |   | Third   |         | Second |   | First  
|                                                        |         |  |    |   |  |   |         |         |        |   |        
|Net interest income                                     |         |  | (A | ) |  | $ | 209,832 |         |        | $ | 211,574 |         |  | $ | 206,137 |        
|Provision for loan and lease losses                     |         |  |    |   |  |   | 10,500  |         |        |   | 10,500  |         |  |   | 10,901  |        
|                                                        |         |  |    |   |  |   |         |         |        |   |         |         |  |   |         |        
|Net interest income after loan and lease loss provision |         |  |    |   |  |   | 199,332 |         |        |   | 201,074 |         |  |   | 195,236 |        
|Noninterest income                                      |         |  | (B | ) |  |   | 88,656  |         |        |   | 115,828 |         |  |   | 78,238  |        
|Noninterest expenses                                    |         |  | (C | ) |  |   | 151,647 |         |        |   | 184,039 |         |  |   | 149,908 |        
|                                                        |         |  |    |   |  |   |         |         |        |   |         |         |  |   |         |        
|Income before income taxes                              |         |  |    |   |  |   | 136,341 |         |        |   | 132,863 |         |  |   | 123,566 |        
|Income tax expense                                      |         |  |    |   |  |   | 46,063  |         |        |   | 45,338  |         |  |   | 42,173  |        
|                                                        |         |  |    |   |  |   |         |         |        |   |         |         |  |   |         |        
|Net income                                              |         |  |    |   |  | $ | 90,278  |         |        | $ | 87,525  |         |  | $ | 81,393  |        
|                                                        |         |  |    |   |  |   |         |         |        |   |         |         |  |   |         |        
|Weighted average shares outstanding:                    |         |  |    |   |  |   |         |         |        |   |         |         |  |   |         |        
|                                                        | Basic   |  |    |   |  |   |         | 161,517 |        |   |         | 162,312 |  |   |         | 157,667 | 
|                                                        | Diluted |  |    |   |  |   |         | 164,446 |        |   |         | 164,559 |  |   |         | 159,328 | 
|Basic earnings per share:                               |         |  |    |   |  | $ | 0.56    |         |        | $ | 0.54    |         |  | $ | 0.52    |        
|Diluted earnings per share:                             |         |  |    |   |  | $ | 0.55    |         |        | $ | 0.53    |         |  | $ | 0.51    |        
|Return on average assets (1)                            |         |  |    |   |  |   | 1.39    | %       |        |   | 1.38    | %       |  |   | 1.32    | %      
|Return on average equity (1)                            |         |  |    |   |  |   | 14.85   | %       |        |   | 14.24   | %       |  |   | 14.26   | %      
|Net interest margin (fully-taxable equivalent) (1)      |         |  |    |   |  |   | 3.63    | %       |        |   | 3.71    | %       |  |   | 3.66    | %      
|Noninterest income as a percent of total income (2)     |         |  |    |   |  |   | 29.70   | %       |        |   | 35.38   | %       |  |   | 27.51   | %      
|Efficiency ratio (3)                                    |         |  |    |   |  |   | 50.81   | %       |        |   | 56.21   | %       |  |   | 52.71   | %      

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                        |         |   |         |         |       |   |         |         |       |   |         |         |  |   |         |         | 
|------------------------------------------------------- | ------- | - | ------- | ------- | ----- | - | ------- | ------- | ----- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                        |         |   | 2002   
|                                                        |         |   |        
|                                                        |         |   | Fourth  |         | Third |   | Second  |         | First
|                                                        |         |   |         |         |       |   |         |         |      
|Net interest income                                     |         | $ | 199,563 |         |       | $ | 200,996 |         |       | $ | 199,473 |         |  | $ | 196,486 |        
|Provision for loan and lease losses                     |         |   | 10,829  |         |       |   | 10,829  |         |       |   | 10,829  |         |  |   | 11,828  |        
|                                                        |         |   |         |         |       |   |         |         |       |   |         |         |  |   |         |        
|Net interest income after loan and lease loss provision |         |   | 188,734 |         |       |   | 190,167 |         |       |   | 188,644 |         |  |   | 184,658 |        
|Noninterest income                                      |         |   | 84,441  |         |       |   | 65,504  |         |       |   | 62,986  |         |  |   | 61,576  |        
|Noninterest expenses                                    |         |   | 158,126 |         |       |   | 141,577 |         |       |   | 136,791 |         |  |   | 142,897 |        
|                                                        |         |   |         |         |       |   |         |         |       |   |         |         |  |   |         |        
|Income before income taxes                              |         |   | 115,049 |         |       |   | 114,094 |         |       |   | 114,839 |         |  |   | 103,337 |        
|Income tax expense                                      |         |   | 37,911  |         |       |   | 37,232  |         |       |   | 38,680  |         |  |   | 34,859  |        
|                                                        |         |   |         |         |       |   |         |         |       |   |         |         |  |   |         |        
|Net income                                              |         | $ | 77,138  |         |       | $ | 76,862  |         |       | $ | 76,159  |         |  | $ | 68,478  |        
|                                                        |         |   |         |         |       |   |         |         |       |   |         |         |  |   |         |        
|Weighted average shares outstanding:                    |         |   |         |         |       |   |         |         |       |   |         |         |  |   |         |        
|                                                        | Basic   |   |         | 148,226 |       |   |         | 148,099 |       |   |         | 147,233 |  |   |         | 149,347 | 
|                                                        | Diluted |   |         | 149,389 |       |   |         | 149,662 |       |   |         | 149,064 |  |   |         | 151,116 | 
|Basic earnings per share:                               |         | $ | 0.52    |         |       | $ | 0.52    |         |       | $ | 0.52    |         |  | $ | 0.46    |        
|Diluted earnings per share:                             |         | $ | 0.52    |         |       | $ | 0.51    |         |       | $ | 0.51    |         |  | $ | 0.45    |        
|Return on average assets (1)                            |         |   | 1.35    | %       |       |   | 1.40    | %       |       |   | 1.46    | %       |  |   | 1.36    | %      
|Return on average equity (1)                            |         |   | 15.75   | %       |       |   | 16.25   | %       |       |   | 17.45   | %       |  |   | 15.73   | %      
|Net interest margin (fully-taxable equivalent) (1)      |         |   | 3.86    | %       |       |   | 4.03    | %       |       |   | 4.18    | %       |  |   | 4.23    | %      
|Noninterest income as a percent of total income (2)     |         |   | 29.73   | %       |       |   | 24.58   | %       |       |   | 24.00   | %       |  |   | 23.86   | %      
|Efficiency ratio (3)                                    |         |   | 55.68   | %       |       |   | 53.12   | %       |       |   | 52.12   | %       |  |   | 55.37   | %      



---

|(1) |  | Annualized.                                                                                                                                                                        
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Represents noninterest income as a percentage of net interest income and noninterest income.
Noninterest income as a percent of total income is calculated as (B) divided by (A+B).
|(3) |  | Represents noninterest expenses as a percentage of net interest income and noninterest income.
Efficiency ratio is calculated as (C) divided by (A+B).                             









RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the difference between interest income on earning assets
such as loans, leases and securities, and interest expense paid on liabilities
such as deposits and borrowings, and continues to be our largest revenue
source. Net interest income is affected by the level of interest rates,
changes in interest rates and by changes in the amount and composition of
interest-earning assets and interest-bearing liabilities.

Fully-taxable equivalent net interest income for the third quarter of 2003
increased $9.2 million, or 5%, compared to the third quarter of 2002. This
increase was primarily attributable to increases in the volume of
interest-earning assets and interest-bearing liabilities. Average earning
assets increased $3.2 billion, or 16%, for the three months ended September 30,
2003 compared to the same period in the prior year, primarily as a result of
acquisitions. Average loans and leases increased by $2.5 billion, or 19%,
compared to the third quarter of 2002 due primarily to acquisitions and, to a
lesser extent, internal loan growth. Average loans as a percent of average
earning assets was 69% and 67% for the quarters ended September 30, 2003 and
2002, respectively. Net interest margin, which represents fully-taxable
equivalent net interest income as a percentage of average interest-earning
assets, decreased from 4.03% to 3.63% during the three months ended September
30, 2002 and 2003, respectively, a decline of 10% (or 40 basis points). The
primary reasons for this margin compression were the effects of acquisitions
(18 basis points, including cash paid and lower margins at acquired banks), a
heavier weighting of U. S. agency securities in our investment portfolio versus
mortgage-backed securities (11 basis points) and the impact of prepayments and
repricing on loans, securities, deposits and borrowings in a declining rate
environment (11 basis points). The change in the investment portfolio from
mortgage-backed securities to U.S. agency securities was to reduce the exposure
to the loan prepayments inherent in mortgage-related assets. Interest rate spread,
which represents the difference between the yield earned on our
interest-earning assets and the rate paid on our interest-bearing liabilities,
decreased from 3.64% to 3.39% on a fully-taxable equivalent basis during the
three months ended September 30, 2002 and 2003, respectively, primarily due to
a 123 basis point decrease in interest rates earned on interest-earning assets
compared to a 98 basis point decrease in rates paid on interest-bearing
liabilities.

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Our net interest margin benefited from interest rate swap agreements that
synthetically converted fixed rate debt to variable rate debt. From March 2003
to July 2003 we entered into $566.5 million of notional amount swap agreements
on fixed rate debt, where we are paying variable (based on LIBOR plus a margin)
and
receiving a fixed rate. The combined effect of these interest rate swaps was
to lower interest expense by $2.5 million in the third quarter of 2003. See
Other Funding Sources for more detailed discussion.

Our fully-taxable equivalent net interest income for the nine months ended
September 30, 2003 increased $31.1 million compared to the nine months ended
September 30, 2002. The net interest margin decreased from 4.14% for the nine
months ended September 30, 2002 to 3.67% for the nine months ended September
30, 2003, and the fully-taxable equivalent interest rate spread decreased from
3.75% to 3.40% during the same period, respectively, primarily due to a 116
basis point decrease in interest rates earned on interest-earning assets
compared to an 81 basis point decrease in rates paid on interest-bearing
liabilities. Average net earning assets increased $440.2 million from the nine
months ended September 30, 2002 compared to the nine months ended September 30,
2003, primarily as a result of acquisitions. The margin compression was
mitigated somewhat by the positive impact of the deleveraging program completed
in the second quarter of 2003. Table 2 shows average balances, net interest
income by category and rates for each of the quarters in 2003 and 2002 and for
the nine months ended September 30, 2003 and 2002. Table 3 shows the changes
in fully-taxable equivalent net interest income by category due to changes in
rate and volume. See also Asset-Liability Management below.

The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income from interest-earning
assets and the resultant average yields; (ii) the total dollar amount of
interest expense on interest-bearing liabilities and the resultant average
cost; (iii) net interest income; (iv) interest rate spread; and (v) net
interest margin (net interest income divided by average interest-earning
assets). For purposes of the tables and the following discussion, (i) income
from interest-earning assets and net interest income is presented on a
fully-taxable equivalent basis primarily by adjusting income and yields earned
on tax-exempt interest received on loans to qualifying borrowers and on certain
of our securities to make them equivalent to income and yields earned on
fully-taxable investments, assuming a federal income tax rate of 35%, and (ii)
nonaccrual loans have been included in the appropriate average balance loan
category, but unpaid interest on nonaccrual loans has not been included for
purposes of determining interest income. Average balances are based on average
daily balances during the indicated periods.

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TABLE 2 - Average Balances, Yields and Rates

|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |        |      |      |      | 
|--------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------------------------------- | ---------------------- | ---------- | ------------------ | ---------- | ------------------- | ------- | -------- | ------- | --------------- | ---- | -------- | --------- | --------- | ---------- | ---------- | ---------- | ------ | ------- | ------ | ------- | ------ | ---- | ---- | ---- | 
|                                                    |                                      |                                            |                                    |                        |            | 2003 Third Quarter |            | 2003 Second Quarter
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      | Yield/   |           |           |            |            |            |        |         |        |         | Yield/
|                                                    |                                      |                                            |                                    |                        |            | Average Balance    |            | Interest            |         | Rate (1) |         | Average Balance |      | Interest |           | Rate (1) 
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |          
|Loans and leases (2):                               |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    | Residential real estate mortgages    |                                            | $                                  | 2,852,568              |            |                    | $          | 38,740              |         |          |         | 5.43            | %    |          | $         | 2,996,485 |            |            | $          | 43,147 |         |        |         | 5.76   | %   
|                                                    | Commercial real estate mortgages     |                                            |                                    | 5,263,002              |            |                    |            | 77,962              |         |          |         | 5.88            |      |          |           | 5,074,540 |            |            |            | 78,342 |         |        |         | 6.19   |     
|                                                    | Commercial business loans and leases |                                            |                                    | 3,216,254              |            |                    |            | 40,837              |         |          |         | 5.04            |      |          |           | 3,154,085 |            |            |            | 41,105 |         |        |         | 5.23   |     
|                                                    | Consumer loans and leases            |                                            |                                    | 4,577,421              |            |                    |            | 62,684              |         |          |         | 5.43            |      |          |           | 4,463,057 |            |            |            | 64,145 |         |        |         | 5.76   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    |                                      |                                            |                                    | Total loans and leases |            |                    | 15,909,245 |                     |         |          | 220,223 |                 |      |          | 5.50      |           |            |            | 15,688,167 |        |         |        | 226,739 |        |      |      | 5.79 | 
|Investment securities (3)                           |                                      |                                            | 7,270,800                          |                        |            |                    | 72,037     |                     |         |          | 3.96    |                 |      |          | 7,280,880 |           |            |            | 77,177     |        |         |        | 4.24    |       
|Federal funds sold and other short-term investments |                                      |                                            | 16,113                             |                        |            |                    | 55         |                     |         |          | 1.36    |                 |      |          | 18,077    |           |            |            | 54         |        |         |        | 1.20    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    |                                      | Total earning assets                       |                                    |                        | 23,196,158 |                    |            |                     | 292,315 |          |         |                 | 5.02 |          |           |           | 22,987,124 |            |            |        | 303,970 |        |         |        | 5.30 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|Bank owned life insurance                           |                                      |                                            | 478,572                            |                        |            |                    |            |                     |         |          |         |                 |      |          | 472,853   |           |            |            |            |        |         |        |         |       
|Noninterest-earning assets                          |                                      |                                            | 2,139,519                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 2,040,703 |           |            |            |            |        |         |        |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    |                                      | Total assets                               |                                    | $                      | 25,814,249 |                    |            |                     |         |          |         |                 |      |          |           | $         | 25,500,680 |            |            |        |         |        |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|Interest-bearing deposits:                          |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    | Regular savings                      |                                            | $                                  | 2,474,169              |            |                    | $          | 2,502               |         |          |         | 0.40            |      |          | $         | 2,468,244 |            |            |            | 3,089  |         |        |         | 0.50   |     
|                                                    | NOW and money market accounts        |                                            |                                    | 6,815,603              |            |                    |            | 13,727              |         |          |         | 0.80            |      |          |           | 6,582,004 |            |            |            | 15,908 |         |        |         | 0.97   |     
|                                                    | Certificates of deposit              |                                            |                                    | 5,053,277              |            |                    |            | 28,935              |         |          |         | 2.27            |      |          |           | 5,243,908 |            |            |            | 31,737 |         |        |         | 2.43   |     
|                                                    | Brokered deposits                    |                                            |                                    |                       |            |                    |            |                    |         |          |         |                |      |          |           |          |            |            |            |       |         |        |         | 0.00   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    |                                      |                                            | Total interest-bearing deposits    |                        |            | 14,343,049         |            |                     |         | 45,164   |         |                 |      | 1.25     |           |           |            | 14,294,156 |            |        |         | 50,734 |         |        |      | 1.42 |     
|Borrowed funds                                      |                                      |                                            | 5,407,580                          |                        |            |                    | 35,754     |                     |         |          | 2.63    |                 |      |          | 5,459,725 |           |            |            | 40,170     |        |         |        | 2.95    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    |                                      |                                            | Total interest-bearing liabilities |                        |            | 19,750,629         |            |                     |         | 80,918   |         |                 |      | 1.63     |           |           |            | 19,753,881 |            |        |         | 90,904 |         |        |      | 1.85 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|Non-interest bearing deposits                       |                                      |                                            | 3,388,018                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 3,099,420 |           |            |            |            |        |         |        |         |       
|Other liabilities                                   |                                      |                                            | 263,171                            |                        |            |                    |            |                     |         |          |         |                 |      |          | 181,765   |           |            |            |            |        |         |        |         |       
|Shareholders equity                                |                                      |                                            | 2,412,431                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 2,465,614 |           |            |            |            |        |         |        |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    |                                      | Total liabilities and shareholders equity |                                    | $                      | 25,814,249 |                    |            |                     |         |          |         |                 |      |          |           | $         | 25,500,680 |            |            |        |         |        |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|Net earning assets                                  |                                      | $                                          | 3,445,529                          |                        |            |                    |            |                     |         |          |         |                 |      | $        | 3,233,243 |           |            |            |            |        |         |        |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|Net interest income (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            | $                  | 211,397    |                     |         |          |         |                 |      |          |           |           |            |            | 213,066    |        |         |        |         |       
|Less: fully-taxable equivalent adjustments          |                                      |                                            |                                    |                        |            |                    | (1,565     | )                   |         |          |         |                 |      |          |           |           |            |            | (1,492     | )      |         |        |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|                                                    |                                      | Net interest income                        |                                    |                        |            |                    |            | $                   | 209,832 |          |         |                 |      |          |           |           |            |            |            | $      | 211,574 |        |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |        |         |       
|Net interest rate spread (fully-taxable equivalent) |                                      |                                            |                                    |                        |            |                    |            |                     |         |          | 3.39    | %               |      |          |           |           |            |            |            |        |         |        | 3.45    | %     
|Net interest margin (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    |            |                     |         |          | 3.63    | %               |      |          |           |           |            |            |            |        |         |        | 3.71    | %     



---

|(1) |  | Annualized.                                                
|--- |  | -----------------------------------------------------------
|   
|(2) |  | Loans and leases include loans held for sale.              
|   
|(3) |  | Includes securities available for sale and held to maturity

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##### Table of Contents



TABLE 2  Average Balances, Yields and Rates

|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |        |      |      |      | 
|--------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------------------------------- | ---------------------- | ---------- | ------------------ | ---------- | ------------------- | ------- | -------- | ------- | --------------- | ---- | -------- | --------- | --------- | ---------- | ---------- | ---------- | ------ | ------- | ------- | ------- | ------ | ---- | ---- | ---- | 
|                                                    |                                      |                                            |                                    |                        |            | 2003 First Quarter |            | 2002 Fourth Quarter
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      | Yield/   |           |           |            |            |            |        |         |         |         | Yield/
|                                                    |                                      |                                            |                                    |                        |            | Average Balance    |            | Interest            |         | Rate (1) |         | Average Balance |      | Interest |           | Rate (1) 
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |          
|Loans and leases (2):                               |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    | Residential real estate mortgages    |                                            | $                                  | 2,792,615              |            |                    | $          | 41,652              |         |          |         | 5.97            | %    |          | $         | 2,641,957 |            |            | $          | 42,420 |         |         |         | 6.42   | %   
|                                                    | Commercial real estate mortgages     |                                            |                                    | 4,913,188              |            |                    |            | 77,810              |         |          |         | 6.42            |      |          |           | 4,504,625 |            |            |            | 76,131 |         |         |         | 6.71   |     
|                                                    | Commercial business loans and leases |                                            |                                    | 3,006,370              |            |                    |            | 39,475              |         |          |         | 5.32            |      |          |           | 2,844,994 |            |            |            | 39,940 |         |         |         | 5.57   |     
|                                                    | Consumer loans and leases            |                                            |                                    | 4,186,917              |            |                    |            | 62,178              |         |          |         | 6.02            |      |          |           | 3,830,542 |            |            |            | 62,237 |         |         |         | 6.45   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    | Total loans and leases |            |                    | 14,899,090 |                     |         |          | 221,115 |                 |      |          | 6.00      |           |            |            | 13,822,118 |        |         |         | 220,728 |        |      |      | 6.35 | 
|Investment securities (3)                           |                                      |                                            | 7,879,925                          |                        |            |                    | 89,449     |                     |         |          | 4.54    |                 |      |          | 6,896,813 |           |            |            | 86,959     |        |         |         | 5.04    |       
|Federal funds sold and other short-term investments |                                      |                                            | 4,535                              |                        |            |                    | 25         |                     |         |          | 2.21    |                 |      |          | 22,576    |           |            |            | 88         |        |         |         | 1.54    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Total earning assets                       |                                    |                        | 22,783,550 |                    |            |                     | 310,589 |          |         |                 | 5.50 |          |           |           | 20,741,507 |            |            |        | 307,775 |         |         |        | 5.91 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Bank owned life insurance                           |                                      |                                            | 425,136                            |                        |            |                    |            |                     |         |          |         |                 |      |          | 376,857   |           |            |            |            |        |         |         |         |       
|Noninterest-earning assets                          |                                      |                                            | 1,858,791                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 1,527,324 |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Total assets                               |                                    | $                      | 25,067,477 |                    |            |                     |         |          |         |                 |      |          |           | $         | 22,645,688 |            |            |        |         |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Interest-bearing deposits:                          |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    | Regular savings                      |                                            | $                                  | 2,173,771              |            |                    |            | 3,075               |         |          |         | 0.57            |      |          | $         | 1,835,068 |            |            |            | 3,213  |         |         |         | 0.69   |     
|                                                    | NOW and money market accounts        |                                            |                                    | 6,217,880              |            |                    |            | 15,707              |         |          |         | 1.02            |      |          |           | 5,889,603 |            |            |            | 18,944 |         |         |         | 1.28   |     
|                                                    | Certificates of deposit              |                                            |                                    | 5,012,351              |            |                    |            | 32,609              |         |          |         | 2.64            |      |          |           | 4,624,776 |            |            |            | 33,753 |         |         |         | 2.90   |     
|                                                    | Brokered deposits                    |                                            |                                    |                       |            |                    |            |                    |         |          |         | 0.00            |      |          |           | 22,431    |            |            |            | 96     |         |         |         | 1.70   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            | Total interest-bearing deposits    |                        |            | 13,404,002         |            |                     |         | 51,391   |         |                 |      | 1.55     |           |           |            | 12,371,878 |            |        |         | 56,006  |         |        |      | 1.80 |     
|Borrowed funds                                      |                                      |                                            | 6,272,657                          |                        |            |                    | 51,799     |                     |         |          | 3.34    |                 |      |          | 5,296,244 |           |            |            | 51,000     |        |         |         | 3.83    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            | Total interest-bearing liabilities |                        |            | 19,676,659         |            |                     |         | 103,190  |         |                 |      | 2.13     |           |           |            | 17,668,122 |            |        |         | 107,006 |         |        |      | 2.41 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Non-interest bearing deposits                       |                                      |                                            | 2,905,737                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 2,837,369 |           |            |            |            |        |         |         |         |       
|Other liabilities                                   |                                      |                                            | 170,732                            |                        |            |                    |            |                     |         |          |         |                 |      |          | 196,567   |           |            |            |            |        |         |         |         |       
|Shareholders equity                                |                                      |                                            | 2,314,349                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 1,943,630 |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Total liabilities and shareholders equity |                                    | $                      | 25,067,477 |                    |            |                     |         |          |         |                 |      |          |           | $         | 22,645,688 |            |            |        |         |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Net earning assets                                  |                                      | $                                          | 3,106,891                          |                        |            |                    |            |                     |         |          |         |                 |      | $        | 3,073,385 |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Net interest income (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    | 207,399    |                     |         |          |         |                 |      |          |           |           |            |            | 200,769    |        |         |         |         |       
|Less: fully-taxable equivalent adjustments          |                                      |                                            |                                    |                        |            |                    | (1,262     | )                   |         |          |         |                 |      |          |           |           |            |            | (1,206     | )      |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Net interest income                        |                                    |                        |            |                    |            | $                   | 206,137 |          |         |                 |      |          |           |           |            |            |            | $      | 199,563 |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Net interest rate spread (fully-taxable equivalent) |                                      |                                            |                                    |                        |            |                    |            |                     |         |          | 3.37    | %               |      |          |           |           |            |            |            |        |         |         | 3.50    | %     
|Net interest margin (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    |            |                     |         |          | 3.66    | %               |      |          |           |           |            |            |            |        |         |         | 3.86    | %     



---

|(1) |  | Annualized.                                                
|--- |  | -----------------------------------------------------------
|   
|(2) |  | Loans and leases include loans held for sale.              
|   
|(3) |  | Includes securities available for sale and held to maturity

19



---



##### Table of Contents



TABLE 2 - Average Balances, Yields and Rates

|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |        |      |      |      | 
|--------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------------------------------- | ---------------------- | ---------- | ------------------ | ---------- | ------------------- | ------- | -------- | ------- | --------------- | ---- | -------- | --------- | --------- | ---------- | ---------- | ---------- | ------ | ------- | ------- | ------- | ------ | ---- | ---- | ---- | 
|                                                    |                                      |                                            |                                    |                        |            | 2002 Third Quarter |            | 2002 Second Quarter
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      | Yield/   |           |           |            |            |            |        |         |         |         | Yield/
|                                                    |                                      |                                            |                                    |                        |            | Average Balance    |            | Interest            |         | Rate (1) |         | Average Balance |      | Interest |           | Rate (1) 
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |          
|Loans and leases (2):                               |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    | Residential real estate mortgages    |                                            | $                                  | 2,657,333              |            |                    | $          | 44,205              |         |          |         | 6.65            | %    |          | $         | 2,569,964 |            |            | $          | 43,946 |         |         |         | 6.84   | %   
|                                                    | Commercial real estate mortgages     |                                            |                                    | 4,347,508              |            |                    |            | 75,210              |         |          |         | 6.86            |      |          |           | 4,216,766 |            |            |            | 74,347 |         |         |         | 7.07   |     
|                                                    | Commercial business loans and leases |                                            |                                    | 2,754,430              |            |                    |            | 40,327              |         |          |         | 5.81            |      |          |           | 2,595,548 |            |            |            | 39,333 |         |         |         | 6.08   |     
|                                                    | Consumer loans and leases            |                                            |                                    | 3,662,187              |            |                    |            | 62,624              |         |          |         | 6.78            |      |          |           | 3,530,040 |            |            |            | 62,158 |         |         |         | 7.06   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    | Total loans and leases |            |                    | 13,421,458 |                     |         |          | 222,366 |                 |      |          | 6.58      |           |            |            | 12,912,318 |        |         |         | 219,784 |        |      |      | 6.82 | 
|Investment securities (3)                           |                                      |                                            | 6,487,448                          |                        |            |                    | 91,518     |                     |         |          | 5.64    |                 |      |          | 6,276,523 |           |            |            | 90,804     |        |         |         | 5.79    |       
|Federal funds sold and other short-term investments |                                      |                                            | 118,281                            |                        |            |                    | 510        |                     |         |          | 1.71    |                 |      |          | 25,856    |           |            |            | 52         |        |         |         | 0.81    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Total earning assets                       |                                    |                        | 20,027,187 |                    |            |                     | 314,394 |          |         |                 | 6.25 |          |           |           | 19,214,697 |            |            |        | 310,640 |         |         |        | 6.48 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Bank owned life insurance                           |                                      |                                            | 371,552                            |                        |            |                    |            |                     |         |          |         |                 |      |          | 366,488   |           |            |            |            |        |         |         |         |       
|Noninterest-earning assets                          |                                      |                                            | 1,399,012                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 1,309,697 |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Total assets                               |                                    | $                      | 21,797,751 |                    |            |                     |         |          |         |                 |      |          |           | $         | 20,890,882 |            |            |        |         |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Interest-bearing deposits:                          |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    | Regular savings                      |                                            | $                                  | 1,773,402              |            |                    |            | 4,207               |         |          |         | 0.94            |      |          | $         | 1,716,942 |            |            |            | 4,061  |         |         |         | 0.95   |     
|                                                    | NOW and money market accounts        |                                            |                                    | 5,608,231              |            |                    |            | 21,649              |         |          |         | 1.53            |      |          |           | 5,246,053 |            |            |            | 19,897 |         |         |         | 1.52   |     
|                                                    | Certificates of deposit              |                                            |                                    | 4,736,817              |            |                    |            | 36,307              |         |          |         | 3.04            |      |          |           | 4,652,499 |            |            |            | 37,273 |         |         |         | 3.21   |     
|                                                    | Brokered deposits                    |                                            |                                    | 37,000                 |            |                    |            | 173                 |         |          |         | 1.85            |      |          |           | 50,741    |            |            |            | 235    |         |         |         | 1.86   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            | Total interest-bearing deposits    |                        |            | 12,155,450         |            |                     |         | 62,336   |         |                 |      | 2.03     |           |           |            | 11,666,235 |            |        |         | 61,466  |         |        |      | 2.11 |     
|Borrowed funds                                      |                                      |                                            | 4,885,461                          |                        |            |                    | 49,825     |                     |         |          | 4.05    |                 |      |          | 4,784,197 |           |            |            | 48,448     |        |         |         | 4.06    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            | Total interest-bearing liabilities |                        |            | 17,040,911         |            |                     |         | 112,161  |         |                 |      | 2.61     |           |           |            | 16,450,432 |            |        |         | 109,914 |         |        |      | 2.68 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Non-interest bearing deposits                       |                                      |                                            | 2,684,263                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 2,520,968 |           |            |            |            |        |         |         |         |       
|Other liabilities                                   |                                      |                                            | 196,573                            |                        |            |                    |            |                     |         |          |         |                 |      |          | 168,403   |           |            |            |            |        |         |         |         |       
|Shareholders equity                                |                                      |                                            | 1,876,004                          |                        |            |                    |            |                     |         |          |         |                 |      |          | 1,751,079 |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Total liabilities and shareholders equity |                                    | $                      | 21,797,751 |                    |            |                     |         |          |         |                 |      |          |           | $         | 20,890,882 |            |            |        |         |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Net earning assets                                  |                                      | $                                          | 2,986,276                          |                        |            |                    |            |                     |         |          |         |                 |      | $        | 2,764,265 |           |            |            |            |        |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Net interest income (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    | 202,233    |                     |         |          |         |                 |      |          |           |           |            |            | 200,726    |        |         |         |         |       
|Less: fully-taxable equivalent adjustments          |                                      |                                            |                                    |                        |            |                    | (1,237     | )                   |         |          |         |                 |      |          |           |           |            |            | (1,253     | )      |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|                                                    |                                      | Net interest income                        |                                    |                        |            |                    |            | $                   | 200,996 |          |         |                 |      |          |           |           |            |            |            | $      | 199,473 |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                     |         |          |         |                 |      |          |           |           |            |            |            |        |         |         |         |       
|Net interest rate spread (fully-taxable equivalent) |                                      |                                            |                                    |                        |            |                    |            |                     |         |          | 3.64    | %               |      |          |           |           |            |            |            |        |         |         | 3.80    | %     
|Net interest margin (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    |            |                     |         |          | 4.03    | %               |      |          |           |           |            |            |            |        |         |         | 4.18    | %     



---

|(1) |  | Annualized.                                                
|--- |  | -----------------------------------------------------------
|   
|(2) |  | Loans and leases include loans held for sale.              
|   
|(3) |  | Includes securities available for sale and held to maturity

20



---



##### Table of Contents



TABLE 2 - Average Balances, Yields and Rates

|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |      |      |        |      | 
|--------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------------------------------- | ---------------------- | ---------- | ------------------ | ---------- | -------- | ------- | -------- | ------- | ---- | ---- | ------ | ---- | 
|                                                    |                                      |                                            |                                    |                        |            | 2002 First Quarter
|                                                    |                                      |                                            |                                    |                        |            |                   
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |      |      | Yield/
|                                                    |                                      |                                            |                                    |                        |            | Average Balance    |            | Interest |         | Rate (1)
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |         
|Loans and leases (2):                               |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    | Residential real estate mortgages    |                                            | $                                  | 2,675,415              |            |                    | $          | 47,265   |         |          |         | 7.07 | %   
|                                                    | Commercial real estate mortgages     |                                            |                                    | 4,101,873              |            |                    |            | 72,724   |         |          |         | 7.19 |     
|                                                    | Commercial business loans and leases |                                            |                                    | 2,464,378              |            |                    |            | 38,661   |         |          |         | 6.36 |     
|                                                    | Consumer loans and leases            |                                            |                                    | 3,539,213              |            |                    |            | 63,952   |         |          |         | 7.33 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      |                                            |                                    | Total loans and leases |            |                    | 12,780,879 |          |         |          | 222,602 |      |      |        | 7.04 | 
|Investment securities (3)                           |                                      |                                            | 5,943,057                          |                        |            |                    | 84,296     |          |         |          | 5.68    |     
|Federal funds sold and other short-term investments |                                      |                                            | 72,107                             |                        |            |                    | 415        |          |         |          | 2.33    |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      | Total earning assets                       |                                    |                        | 18,796,043 |                    |            |          | 307,313 |          |         |      | 6.59 |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|Bank owned life insurance                           |                                      |                                            | 324,376                            |                        |            |                    |            |          |         |          |         |     
|Noninterest-earning assets                          |                                      |                                            | 1,347,407                          |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      | Total assets                               |                                    | $                      | 20,467,826 |                    |            |          |         |          |         |      |      |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|Interest-bearing deposits:                          |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    | Regular savings                      |                                            | $                                  | 1,646,822              |            |                    |            | 3,964    |         |          |         | 0.98 |     
|                                                    | NOW and money market accounts        |                                            |                                    | 5,099,310              |            |                    |            | 18,895   |         |          |         | 1.50 |     
|                                                    | Certificates of deposit              |                                            |                                    | 4,762,399              |            |                    |            | 41,694   |         |          |         | 3.55 |     
|                                                    | Brokered deposits                    |                                            |                                    | 63,594                 |            |                    |            | 288      |         |          |         | 1.84 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      |                                            | Total interest-bearing deposits    |                        |            | 11,572,125         |            |          |         | 64,841   |         |      |      | 2.27   |     
|Borrowed funds                                      |                                      |                                            | 4,511,945                          |                        |            |                    | 44,679     |          |         |          | 4.01    |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      |                                            | Total interest-bearing liabilities |                        |            | 16,084,070         |            |          |         | 109,520  |         |      |      | 2.76   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|Non-interest bearing deposits                       |                                      |                                            | 2,446,539                          |                        |            |                    |            |          |         |          |         |     
|Other liabilities                                   |                                      |                                            | 171,449                            |                        |            |                    |            |          |         |          |         |     
|Shareholders equity                                |                                      |                                            | 1,765,768                          |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      | Total liabilities and shareholders equity |                                    | $                      | 20,467,826 |                    |            |          |         |          |         |      |      |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|Net earning assets                                  |                                      | $                                          | 2,711,973                          |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|Net interest income (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    | 197,793    |          |         |          |         |     
|Less: fully-taxable equivalent adjustments          |                                      |                                            |                                    |                        |            |                    | (1,307     | )        |         |          |         |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|                                                    |                                      | Net interest income                        |                                    |                        |            |                    |            | $        | 196,486 |          |         |      |      |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |          |         |          |         |     
|Net interest rate spread (fully-taxable equivalent) |                                      |                                            |                                    |                        |            |                    |            |          |         |          | 3.83    | %   
|Net interest margin (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    |            |          |         |          | 4.23    | %   



---

|(1) |  | Annualized.                                                
|--- |  | -----------------------------------------------------------
|   
|(2) |  | Loans and leases include loans held for sale.              
|   
|(3) |  | Includes securities available for sale and held to maturity

21



---



##### Table of Contents



TABLE 2 - Average Balances, Yields and Rates

|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |        |      |      |      | 
|--------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------------------------------- | ---------------------- | ---------- | ------------------ | ---------- | ------------------ | ------- | -------- | ------- | --------------- | ---- | -------- | --------- | --------- | ---------- | ---------- | ---------- | ------- | ------- | ------- | ------- | ------ | ---- | ---- | ---- | 
|                                                    |                                      |                                            |                                    |                        |            | Nine Months Ended  |            | Nine Months Ended 
|                                                    |                                      |                                            |                                    |                        |            | September 30, 2003 |            | September 30, 2002
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                   
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      | Yield/   |           |           |            |            |            |         |         |         |         | Yield/
|                                                    |                                      |                                            |                                    |                        |            | Average Balance    |            | Interest           |         | Rate (1) |         | Average Balance |      | Interest |           | Rate (1) 
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                   
|Loans and leases (2):                               |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    | Residential real estate mortgages    |                                            | $                                  | 2,880,776              |            |                    | $          | 123,538            |         |          |         | 5.72            | %    |          | $         | 2,634,050 |            |            | $          | 135,417 |         |         |         | 6.85   | %   
|                                                    | Commercial real estate mortgages     |                                            |                                    | 5,084,858              |            |                    |            | 234,115            |         |          |         | 6.16            |      |          |           | 4,222,861 |            |            |            | 222,281 |         |         |         | 7.04   |     
|                                                    | Commercial business loans and leases |                                            |                                    | 3,126,338              |            |                    |            | 121,416            |         |          |         | 5.19            |      |          |           | 2,605,746 |            |            |            | 118,320 |         |         |         | 6.07   |     
|                                                    | Consumer loans and leases            |                                            |                                    | 4,410,562              |            |                    |            | 189,007            |         |          |         | 5.73            |      |          |           | 3,577,483 |            |            |            | 188,734 |         |         |         | 7.05   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    |                                      |                                            |                                    | Total loans and leases |            |                    | 15,502,534 |                    |         |          | 668,076 |                 |      |          | 5.76      |           |            |            | 13,040,140 |         |         |         | 664,752 |        |      |      | 6.81 | 
|Investment securities (3)                           |                                      |                                            | 7,474,971                          |                        |            |                    | 238,664    |                    |         |          | 4.26    |                 |      |          | 6,237,668 |           |            |            | 266,617    |         |         |         | 5.70    |       
|Federal funds sold and other short-term investments |                                      |                                            | 12,922                             |                        |            |                    | 134        |                    |         |          | 1.39    |                 |      |          | 72,133    |           |            |            | 977        |         |         |         | 1.81    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    |                                      | Total earning assets                       |                                    |                        | 22,990,427 |                    |            |                    | 906,874 |          |         |                 | 5.27 |          |           |           | 19,349,941 |            |            |         | 932,346 |         |         |        | 6.43 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|Bank owned life insurance                           |                                      |                                            | 459,049                            |                        |            |                    |            |                    |         |          |         |                 |      |          | 354,311   |           |            |            |            |         |         |         |         |       
|Noninterest earning assets                          |                                      |                                            | 2,016,447                          |                        |            |                    |            |                    |         |          |         |                 |      |          | 1,356,848 |           |            |            |            |         |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    |                                      | Total assets                               |                                    | $                      | 25,465,923 |                    |            |                    |         |          |         |                 |      |          |           |           | 21,061,100 |            |            |         |         |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|Interest-bearing deposits:                          |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    | Regular savings                      |                                            | $                                  | 2,373,161              |            |                    |            | 8,667              |         |          |         | 0.49            |      |          | $         | 1,712,748 |            |            |            | 12,232  |         |         |         | 0.95   |     
|                                                    | NOW and money market accounts        |                                            |                                    | 6,540,686              |            |                    |            | 45,342             |         |          |         | 0.93            |      |          |           | 5,319,602 |            |            |            | 60,441  |         |         |         | 1.52   |     
|                                                    | Certificates of deposit              |                                            |                                    | 5,103,328              |            |                    |            | 93,281             |         |          |         | 2.44            |      |          |           | 4,716,914 |            |            |            | 115,274 |         |         |         | 3.27   |     
|                                                    | Brokered deposits                    |                                            |                                    |                       |            |                    |            |                   |         |          |         | 0.00            |      |          |           | 50,348    |            |            |            | 696     |         |         |         | 1.85   |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    |                                      |                                            | Total interest-bearing deposits    |                        |            | 14,017,175         |            |                    |         | 147,290  |         |                 |      | 1.40     |           |           |            | 11,799,612 |            |         |         | 188,643 |         |        |      | 2.14 |     
|Borrowed funds                                      |                                      |                                            | 5,710,875                          |                        |            |                    | 127,722    |                    |         |          | 2.99    |                 |      |          | 4,728,125 |           |            |            | 142,951    |         |         |         | 4.04    |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    |                                      |                                            | Total interest-bearing liabilities |                        |            | 19,728,050         |            |                    |         | 275,012  |         |                 |      | 1.87     |           |           |            | 16,527,737 |            |         |         | 331,594 |         |        |      | 2.68 |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|Non-interest bearing deposits                       |                                      |                                            | 3,132,825                          |                        |            |                    |            |                    |         |          |         |                 |      |          | 2,551,397 |           |            |            |            |         |         |         |         |       
|Other liabilities                                   |                                      |                                            | 206,378                            |                        |            |                    |            |                    |         |          |         |                 |      |          | 182,536   |           |            |            |            |         |         |         |         |       
|Shareholders equity                                |                                      |                                            | 2,398,670                          |                        |            |                    |            |                    |         |          |         |                 |      |          | 1,799,430 |           |            |            |            |         |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    |                                      | Total liabilities and shareholders equity |                                    | $                      | 25,465,923 |                    |            |                    |         |          |         |                 |      |          |           | $         | 21,061,100 |            |            |         |         |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|Net earning assets                                  |                                      | $                                          | 3,262,377                          |                        |            |                    |            |                    |         |          |         |                 |      | $        | 2,822,204 |           |            |            |            |         |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|Net interest income (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    | 631,862    |                    |         |          |         |                 |      |          |           |           |            |            | 600,752    |         |         |         |         |       
|Less: fully-taxable equivalent adjustments          |                                      |                                            |                                    |                        |            |                    | (4,319     | )                  |         |          |         |                 |      |          |           |           |            |            | (3,797     | )       |         |         |         |       
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|                                                    |                                      | Net interest income                        |                                    |                        |            |                    |            | $                  | 627,543 |          |         |                 |      |          |           |           |            |            |            | $       | 596,955 |         |         |        |      |     
|                                                    |                                      |                                            |                                    |                        |            |                    |            |                    |         |          |         |                 |      |          |           |           |            |            |            |         |         |         |         |       
|Net interest rate spread (fully-taxable equivalent) |                                      |                                            |                                    |                        |            |                    |            |                    |         |          | 3.40    | %               |      |          |           |           |            |            |            |         |         |         | 3.75    | %     
|Net interest margin (fully-taxable equivalent)      |                                      |                                            |                                    |                        |            |                    |            |                    |         |          | 3.67    | %               |      |          |           |           |            |            |            |         |         |         | 4.14    | %     



---

|(1) |  | Annualized.                                                
|--- |  | -----------------------------------------------------------
|   
|(2) |  | Loans and leases include loans held for sale.              
|   
|(3) |  | Includes securities available for sale and held to maturity

22



---



##### Table of Contents



The following table presents certain information on a fully-taxable equivalent
basis regarding changes in our interest income and interest expense
for the periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided with respect to changes
attributable to (i) changes in volume (change in volume multiplied by old rate),
(ii) changes in rate (change in rate multiplied by old volume) and (iii)
changes in rate/volume (change in rate multiplied by change in volume).

TABLE 3 - Rate /Volume Analysis



|                                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |        |  
|---------------------------------------------------- | ----------------------------- | - | ----------------------------------------- | ----- | ---- | -- | ---------- | ------- | ------ | -- | -------- | ------ | ----- | -- | ------- | ------ | -
|                                                     |                               |   | Three Months Ended                       
|                                                     |                               |   | September 30, 2003 vs. September 30, 2002
|                                                     |                               |   | Increase (decrease) due to               
|                                                     |                               |   |                                          
|                                                     |                               |   |                                           |       |      |    |            |         |        |    | Rate and |        | Total
|                                                     |                               |   | Volume (1)                                |       | Rate |    | Volume (2) |         | Change
|                                                     |                               |   |                                          
|Interest income:                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|Loans and leases                                     |                               | $ | 41,260                                    |       |      | ($ | 36,536     | )       |        | ($ | 6,867    | )      |       | ($ | 2,143   | )     
|Investment securities                                |                               |   | 11,136                                    |       |      |    | (27,471    | )       |        |    | (3,146   | )      |       |    | (19,481 | )     
|Federal funds sold and other short-term investements |                               |   | (440                                      | )     |      |    | (104       | )       |        |    | 89       |        |       |    | (455    | )     
|                                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|Total interest income                                |                               |   | 51,956                                    |       |      |    | (64,111    | )       |        |    | (9,924   | )      |       |    | (22,079 | )     
|                                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|Interest expense:                                    |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|Interest-bearing deposits:                           |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|                                                     | Regular savings               |   |                                           | 1,660 |      |    |            | (2,414  | )      |    |          | (951   | )     |    |         | (1,705 | )
|                                                     | NOW and money market accounts |   |                                           | 4,656 |      |    |            | (10,319 | )      |    |          | (2,259 | )     |    |         | (7,922 | )
|                                                     | Certificates of deposit       |   |                                           | 2,425 |      |    |            | (9,193  | )      |    |          | (604   | )     |    |         | (7,372 | )
|                                                     | Brokered deposits             |   |                                           | (173  | )    |    |            | (173    | )      |    |          | 173    |       |    |         | (173   | )
|                                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|Total interest-bearing deposits                      |                               |   | 8,568                                     |       |      |    | (22,099    | )       |        |    | (3,641   | )      |       |    | (17,172 | )     
|Borrowed funds                                       |                               |   | 5,330                                     |       |      |    | (17,486    | )       |        |    | (1,915   | )      |       |    | (14,071 | )     
|                                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|Total interest expense                               |                               |   | 13,898                                    |       |      |    | (39,585    | )       |        |    | (5,556   | )      |       |    | (31,243 | )     
|                                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       
|Net interest income (fully taxable equivalent)       |                               | $ | 38,058                                    |       |      | ($ | 24,526     | )       |        | ($ | 4,368    | )      |       | $  | 9,164   |       
|                                                     |                               |   |                                           |       |      |    |            |         |        |    |          |        |       |    |         |       

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |         |  
|---------------------------------------------------- | ----------------------------- | - | ----------------------------------------- | ------ | ---- | -- | ---------- | ------- | ------ | -- | -------- | ------ | ----- | - | ------- | ------- | -
|                                                     |                               |   | Nine Months Ended                        
|                                                     |                               |   | September 30, 2003 vs. September 30, 2002
|                                                     |                               |   | Increase (decrease) due to               
|                                                     |                               |   |                                          
|                                                     |                               |   |                                           |        |      |    |            |         |        |    | Rate and |        | Total
|                                                     |                               |   | Volume (1)                                |        | Rate |    | Volume (2) |         | Change
|                                                     |                               |   |                                          
|Interest income:                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|Loans and leases                                     |                               | $ | 125,422                                   |        |      | ($ | 102,410    | )       |        | ($ | 19,688   | )      |       | $ | 3,324   |        
|Investment securities                                |                               |   | 52,750                                    |        |      |    | (67,182    | )       |        |    | (13,521  | )      |       |   | (27,953 | )      
|Federal funds sold and other short-term investements |                               |   | (802                                      | )      |      |    | (227       | )       |        |    | 186      |        |       |   | (843    | )      
|                                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|Total interest income                                |                               |   | 177,370                                   |        |      |    | (169,819   | )       |        |    | (33,023  | )      |       |   | (25,472 | )      
|                                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|Interest expense:                                    |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|Interest-bearing deposits:                           |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|                                                     | Regular savings               |   |                                           | 4,693  |      |    |            | (5,893  | )      |    |          | (2,365 | )     |   |         | (3,565  | )
|                                                     | NOW and money market accounts |   |                                           | 13,882 |      |    |            | (23,475 | )      |    |          | (5,506 | )     |   |         | (15,099 | )
|                                                     | Certificates of deposit       |   |                                           | 9,451  |      |    |            | (29,282 | )      |    |          | (2,162 | )     |   |         | (21,993 | )
|                                                     | Brokered deposits             |   |                                           | (697   | )    |    |            | (697    | )      |    |          | 698    |       |   |         | (696    | )
|                                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|Total interest-bearing deposits                      |                               |   | 27,329                                    |        |      |    | (59,347    | )       |        |    | (9,335   | )      |       |   | (41,353 | )      
|Borrowed funds                                       |                               |   | 29,696                                    |        |      |    | (37,132    | )       |        |    | (7,793   | )      |       |   | (15,229 | )      
|                                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|Total interest expense                               |                               |   | 57,025                                    |        |      |    | (96,479    | )       |        |    | (17,128  | )      |       |   | (56,582 | )      
|                                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        
|Net interest income (fully taxable equivalent)       |                               | $ | 120,345                                   |        |      | ($ | 73,340     | )       |        | ($ | 15,895   | )      |       | $ | 31,110  |        
|                                                     |                               |   |                                           |        |      |    |            |         |        |    |          |        |       |   |         |        



---

|(1) |  | Volume increases include the effects of acquisitions, including the acquisition of
Ipswich on July 26, 2002, Bancorp onAugust 31, 2002, Warren on December 31, 2002 and American on February 14, 2003.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes changes in interest income and expense not due solely to volume or rate changes.                                                                                                             

Provision and Allowance for Loan and Lease Losses

We provided $10.5 million and $10.8 million for loan and lease losses in the
quarters ended September 30, 2003 and 2002, respectively. For the nine months
ended September 30, 2003 and 2002, we provided $31.9 million and $33.5 million
for loan and lease losses, respectively. The lower provisions were due to
lower levels of net-charge-offs, a higher coverage ratio of the allowance to
non-performing loans and leases and lower delinquency ratios. As shown in
Table 12, nonperforming assets amounted to $70.4 million at September 30, 2003
compared to $68.8 million at September 30, 2002. At September 30, 2003, the
allowance for loan and lease losses amounted to $229.6 million, or 1.44% of
total portfolio loans and leases, as compared to $208.3 million, or 1.48%, at
December 31, 2002. The 4 basis point decrease in this ratio was primarily
attributable to allowance for loan and lease losses established by acquired banks. The ratio of the allowance for loan and lease
losses to nonperforming loans was 344% at September 30, 2003, as compared to
319% at December 31, 2002 and 311% at September 30, 2002.

23



---



##### Table of Contents



The allowance for loan and lease losses is maintained at a level determined to
be adequate by management to absorb future charge-offs of loans and leases
deemed uncollectable. This allowance is increased by provisions charged to
income and by recoveries on loans previously charged off. Arriving at an
appropriate level of allowance for loan and lease losses necessarily involves a
high degree of judgment and is determined based on managements ongoing
evaluation. We believe that the methods used by us in determining the allowance
for loan and lease losses constitute a critical accounting policy. Although we
utilize judgment in providing for losses, for the reasons discussed under
Credit Risk Management - Nonperforming Assets, there can be no assurance that
we will not have to increase the amount of our provision for loan and lease
losses in future periods.

TABLE 4 - Allowance for Loan and Lease Losses



|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |        |       |  
|----------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------ | ---------- | ---------- | ------ | ----------- | ---------- | ---------- | ------ | ----------- | ---------- | ------ | ------ | -- | ---------- | ------ | ----- | -
|                                                                                                            |                                    |                                      |            | 2003 Third |        | 2003 Second |            | 2003 First |        | 2002 Fourth
|                                                                                                            |                                    |                                      |            | Quarter    |        | Quarter     |            | Quarter    |        | Quarter    
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |            
|Allowance at beginning of period                                                                            |                                    | $                                    | 227,240    |            |        | $           | 226,677    |            |        | $           | 208,273    |        |        | $  | 201,689    |       
|Additions due to acquisitions                                                                               |                                    |                                      |           |            |        |             |           |            |        |             | 16,346     |        |        |    | 4,972      |       
|Charge-offs:                                                                                                |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Residential real estate mortgages                                                                           |                                    |                                      | 63         |            |        |             | 53         |            |        |             | 55         |        |        |    | (263       | )     
|Commercial real estate mortgages                                                                            |                                    |                                      | 27         |            |        |             | 202        |            |        |             | 262        |        |        |    | 459        |       
|Commercial
business loans and leases                                                                        |                                    |                                      | 3,011      |            |        |             | 5,754      |            |        |             | 3,205      |        |        |    | 5,060      |       
|Consumer loans and leases                                                                                   |                                    |                                      | 8,782      |            |        |             | 6,959      |            |        |             | 7,609      |        |        |    | 7,597      |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|                                                                                                            | Total loans and leases charged off |                                      |            | 11,883     |        |             |            | 12,968     |        |             |            | 11,131 |        |    |            | 12,853 |      
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Recoveries:                                                                                                 |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Residential real estate mortgages                                                                           |                                    |                                      | 5          |            |        |             | 22         |            |        |             | 22         |        |        |    | 12         |       
|Commercial real estate mortgages                                                                            |                                    |                                      | 296        |            |        |             | 676        |            |        |             | 534        |        |        |    | 70         |       
|Commercial
business loans and leases                                                                        |                                    |                                      | 2,493      |            |        |             | 1,286      |            |        |             | 689        |        |        |    | 2,628      |       
|Consumer loans and leases                                                                                   |                                    |                                      | 930        |            |        |             | 1,047      |            |        |             | 1,043      |        |        |    | 927        |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|                                                                                                            | Total loans and leases recovered   |                                      |            | 3,724      |        |             |            | 3,031      |        |             |            | 2,288  |        |    |            | 3,637  |      
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Net charge-offs                                                                                             |                                    |                                      | 8,159      |            |        |             | 9,937      |            |        |             | 8,843      |        |        |    | 9,216      |       
|Provision for loan and lease losses                                                                         |                                    |                                      | 10,500     |            |        |             | 10,500     |            |        |             | 10,901     |        |        |    | 10,828     |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Allowance at end of period                                                                                  |                                    | $                                    | 229,581    |            |        | $           | 227,240    |            |        | $           | 226,677    |        |        | $  | 208,273    |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Average loans and leases outstanding
during the period (1)                                                  |                                    | $                                    | 15,841,521 |            |        | $           | 15,634,071 |            |        | $           | 14,829,108 |        |        | $  | 13,750,316 |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Ratio of net charge-offs to average
loans and leases outstanding
during the period, annualized (1)          |                                    |                                      | 0.20       | %          |        |             | 0.25       | %          |        |             | 0.24       | %      |        |    | 0.27       | %     
|Ratio of allowance to total loans
and leases at end of period (1)                                           |                                    |                                      | 1.44       | %          |        |             | 1.44       | %          |        |             | 1.46       | %      |        |    | 1.48       | %     
|Ratio of allowance to nonperforming
loans and leases at end of period                                       |                                    |                                      | 344        | %          |        |             | 374        | %          |        |             | 288        | %      |        |    | 319        | %     
|Ratio of net charge-offs (recoveries)
as a percent of average outstanding
loans and leases, annualized (1): |                                    |                                      |            |            |        |             |            |            |        |             |            |        |        |    |            |       
|Residential real estate mortgages                                                                           |                                    |                                      | 0.008      | %          |        |             | 0.004      | %          |        |             | 0.005      | %      |        |    | (0.042     | %)    
|                                                                                                            |                                    | Commercial real estate mortgages     |            |            | (0.020 | %)          |            |            | (0.037 | %)          |            |        | (0.022 | %) |            |        | 0.034 | %
|                                                                                                            |                                    | Commercial
business loans and leases |            |            | 0.064  | %           |            |            | 0.568  | %           |            |        | 0.339  | %  |            |        | 0.339 | %
|                                                                                                            |                                    | Consumer loans and leases            |            |            | 0.681  | %           |            |            | 0.531  | %           |            |        | 0.636  | %  |            |        | 0.691 | %

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |        |        |   |  |  |  | 
|----------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------ | ---------- | ---------- | ------ | ----------- | ---------- | ---------- | ----- | - | ---------- | ------ | ------ | - |  |  |  | 
|                                                                                                            |                                    |                                      |            | 2002 Third |        | 2002 Second |            | 2002 First
|                                                                                                            |                                    |                                      |            | Quarter    |        | Quarter     |            | Quarter   
|                                                                                                            |                                    |                                      |            |            |        |             |            |           
|Allowance at beginning of period                                                                            |                                    | $                                    | 193,444    |            |        | $           | 190,890    |            |       | $ | 189,837    |       
|Additions due to acquisitions                                                                               |                                    |                                      | 7,822      |            |        |             |           |            |       |   |           |       
|Charge-offs:                                                                                                |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Residential real estate mortgages                                                                           |                                    |                                      | 56         |            |        |             | 201        |            |       |   | (134       | )     
|Commercial real estate mortgages                                                                            |                                    |                                      | (76        | )          |        |             | 273        |            |       |   | 635        |       
|Commercial
business loans and leases                                                                        |                                    |                                      | 8,703      |            |        |             | 5,319      |            |       |   | 5,374      |       
|Consumer loans and leases                                                                                   |                                    |                                      | 5,922      |            |        |             | 5,834      |            |       |   | 7,042      |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|                                                                                                            | Total loans and leases charged off |                                      |            | 14,605     |        |             |            | 11,627     |       |   |            | 12,917 |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Recoveries:                                                                                                 |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Residential real estate mortgages                                                                           |                                    |                                      | 65         |            |        |             | 21         |            |       |   | 23         |       
|Commercial real estate mortgages                                                                            |                                    |                                      | (7         | )          |        |             | 27         |            |       |   | 27         |       
|Commercial
business loans and leases                                                                        |                                    |                                      | 3,108      |            |        |             | 2,136      |            |       |   | 1,101      |       
|Consumer loans and leases                                                                                   |                                    |                                      | 1,033      |            |        |             | 1,168      |            |       |   | 991        |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|                                                                                                            | Total loans and leases recovered   |                                      |            | 4,199      |        |             |            | 3,352      |       |   |            | 2,142  |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Net charge-offs                                                                                             |                                    |                                      | 10,406     |            |        |             | 8,275      |            |       |   | 10,775     |       
|Provision for loan and lease losses                                                                         |                                    |                                      | 10,829     |            |        |             | 10,829     |            |       |   | 11,828     |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Allowance at end of period                                                                                  |                                    | $                                    | 201,689    |            |        | $           | 193,444    |            |       | $ | 190,890    |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Average loans and leases outstanding
during the period (1)                                                  |                                    | $                                    | 13,375,980 |            |        | $           | 12,871,386 |            |       | $ | 12,723,083 |       
|                                                                                                            |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Ratio of net charge-offs to average
loans and leases outstanding
during the period, annualized (1)          |                                    |                                      | 0.31       | %          |        |             | 0.26       | %          |       |   | 0.34       | %     
|Ratio of allowance to total loans
and leases at end of period (1)                                           |                                    |                                      | 1.47       | %          |        |             | 1.48       | %          |       |   | 1.50       | %     
|Ratio of allowance to nonperforming
loans and leases at end of period                                       |                                    |                                      | 311        | %          |        |             | 289        | %          |       |   | 268        | %     
|Ratio of net charge-offs (recoveries)
as a percent of average outstanding
loans and leases, annualized (1): |                                    |                                      |            |            |        |             |            |            |       |   |            |       
|Residential real estate mortgages                                                                           |                                    |                                      | (0.001     | %)         |        |             | (0.029     | %)         |       |   | (0.024     | %)    
|                                                                                                            |                                    | Commercial real estate mortgage      |            |            | (0.006 | %)          |            |            | 0.023 | % |            |        | 0.060  | %
|                                                                                                            |                                    | Commercial
business loans and leases |            |            | 0.806  | %           |            |            | 0.492 | % |            |        | 0.703  | %
|                                                                                                            |                                    | Consumer loans and leases            |            |            | 0.530  | %           |            |            | 0.530 | % |            |        | 0..693 | %



---

|(1) |  | Excludes residential real estate loan held for sale.
|--- |  | ----------------------------------------------------

Noninterest Income

Noninterest income for the third quarter ended September 30, 2003 totaled $88.7
million, an increase of $23.2 million, or 35%, from the third quarter of 2002.
The increase was primarily due to increases in deposit services income, net
securities gains and other noninterest income (primarily covered call premium
income and mortgage banking services income). Noninterest income, including net
securities gains, as a percent of total income was 30% and 25% for the quarters
ended September 30, 2003 and 2002, respectively. For the nine months ended
September 30, 2003 and 2002, noninterest income amounted to $282.7 million and
$190.1 million, respectively, an increase of 49%. Included in this increase was
$29.2 million of gains from the sale of securities related to the deleveraging
program in the second quarter of 2003.

Deposit services income amounted to $25.2 million for the third quarter of 2003
compared to $20.8 million for the same period in 2002, an increase of $4.4
million, or 21%. For the nine months ended September 30, 2003 and 2002, deposit
services income amounted to $71.4 million and $59.7 million, respectively, an
increase of 20%. These increases were primarily attributable to an increased
number of deposit accounts and an increase in cash

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management and overdraft fees. Acquisitions in 2002 and 2003 comprised a
significant portion of the increased number of deposit accounts and increased
overdraft fees.

Insurance brokerage commissions income amounted to $10.9 million for the third
quarter of 2003 compared to $11.7 million for the same period in 2002, a
decrease of 6%. The decline was due to increased competition and market
pressures on policy renewals in all of our market areas. For the nine months
ended September 30, 2003 and 2002, insurance brokerage commissions amounted to
$34.2 million and $31.9 million, respectively, an increase of 7%. This year to
date increase was mostly attributable to the insurance acquisitions in the
third quarter of 2002 and 2003 and higher annual bonus and profit sharing
commissions from carriers recorded in 2003 compared to 2002.

Merchant and electronic banking income was $11.1 million for the third quarter
of 2003 compared to $10.1 million for the third quarter of 2002, an increase of
10%. For the nine months ended September 30, 2003 and 2002, merchant and
electronic banking income amounted to $31.2 million and $27.3 million,
respectively, an increase of 15%. This income represents fees and interchange
income generated by the use of our ATMs and debit cards issued by us along with
charges to merchants for credit card transactions processed, net of third-party
costs directly attributable to handling these transactions. The increases were
due primarily to increases in the volume of transactions processed and
increased market share from acquisitions.

Trust and investment management services income amounted to $8.2 million for
the quarter ended September 30, 2003 compared to $7.8 million for the third
quarter of 2002, an increase of 5%. For the nine months ended September 30,
2003 and 2002, trust and investment management services income amounted to
$23.5 million and $24.6 million, respectively, a decrease of 4%. Assets under
management increased to $8.7 billion at September 30, 2003 from $7.8 billion at
September 30, 2002, an increase of $849 million primarily
due to improvements in the financial markets and new accounts. Trust and investment management services income
is largely based on the market value of assets under management which increased
modestly as the market performance improved in the second and third quarters of
2003.

Bank-owned life insurance (BOLI) income was $5.8 million for the third
quarter of 2003, compared to $5.1 million for the same period in 2002, an
increase of 13%. For the nine months ended September 30, 2003 and 2002, BOLI
income amounted to $17.0 million and $14.5 million, respectively, an increase
of 17%. The increase related to BOLI purchased in 2002 and $85.6 million of
BOLI acquired in the American merger in the first quarter of 2003. Income from
BOLI represents the increase in the cash surrender value of life insurance
policies on the lives of certain employees who have provided a consent allowing
the Bank to be the beneficiary of such policies. Most of the BOLI is invested
in the general account of quality insurance companies. Standard and Poors
rated all such general account carriers AA- or better at September 30, 2003.
The BOLI investment provides a means to mitigate increasing employee benefit
costs. For the third quarter of 2003, the average carrying value of BOLI was
$479 million compared to $372 million for the third quarter of 2002.

Investment planning services income in the third quarter of 2003 amounted to
$3.8 million compared to $2.8 million in the third quarter of 2002, an increase
of $991 thousand, or 36%. For the nine months ended September 30, 2003 and
2002, investment planning services income amounted to $10.9 million and $8.5
million, respectively, an increase of 29%. These increases were primarily
attributable to commissions earned from increased sales of third party mutual
funds and annuities resulting from our acquisition of  American in 2003.

Net securities gains amounted to $3.6 million and $208 thousand during the
quarters ended September 30, 2003 and 2002, respectively. For the nine months
ended September 30, 2003 and 2002, net securities gains were $39.8 million and
$578 thousand, respectively. During the second quarter of 2003, we sold $901
million in securities as part of the deleveraging program discussed above. The
gains on sales of these securities amounted to $29.2 million, which were
substantially offset by prepayment penalties of $28.5 million related to
borrowings which were prepaid in connection with the deleveraging program.
Gains from the sale of securities are subject to market and economic conditions
and, as a result, there can be no assurance that gains reported in prior
periods will be achieved in the future.

The following table presents the detail of other noninterest income for the
periods indicated:

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Table 5 - Other noninterest income

|                                           |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|------------------------------------------ |  | ------------------ | ------ | ----------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                           |  | Three Months Ended |        | Nine Months Ended
|                                           |  | September 30,      |        | September 30,    
|                                           |  |                    |        |                  
|                                           |  | 2003               |        | 2002              |  | 2003 |       | 2002
|                                           |  |                    |        |                   |  |      |       |     
|Covered call premiums                      |  | $                  | 7,152  |                   |  | $    | 1,128 |      |  | $ | 21,390 |   |  | $ | 5,107  |  
|Loan fee income                            |  |                    | 7,376  |                   |  |      | 5,206 |      |  |   | 19,456 |   |  |   | 15,728 |  
|Mortgage banking services income
(expense) |  |                    | 3,087  |                   |  |      | (455  | )    |  |   | 9,328  |   |  |   | 1,710  |  
|Venture capital write-downs                |  |                    | (374   | )                 |  |      | (469  | )    |  |   | (989   | ) |  |   | (2,171 | )
|Miscellaneous income                       |  |                    | 2,906  |                   |  |      | 1,625 |      |  |   | 5,483  |   |  |   | 2,735  |  
|                                           |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  
|Total                                      |  | $                  | 20,147 |                   |  | $    | 7,035 |      |  | $ | 54,668 |   |  | $ | 23,109 |  
|                                           |  |                    |        |                   |  |      |       |      |  |   |        |   |  |   |        |  

Other noninterest income amounted to $20.1 million and $7.0 million for the
quarters ended September 30, 2003 and 2002. For the nine months ended
September 30, 2003 and 2002, other noninterest income amounted to $54.7 million
and $23.1 million, respectively. These increases were mostly due to increases
in covered call premium income resulting from call options written on
securities we own as well as securities we had committed to buy. Loan fee
income included $1.8 million and $3.8 million of fees to arrange for
pass-through swaps between commercial borrowers and third parties for the three
and nine months ended September 30, 2003, respectively. We did not have a
commercial loan swap program during the nine months ended September 30, 2002.
Mortgage banking income, which consist primarily of gains from sale of loans,
also contributed to the increase in other income as a result of higher levels
of mortgage refinancings driven by lower interest rates.

Noninterest Expense

Noninterest expense was $151.6 million and $141.6 million for the quarters
ended September 30, 2003 and 2002, respectively, which represented an increase
of $10.0 million, or 7%. This increase included higher compensation and
employee benefits expense ($2.5 million), occupancy expense ($1.8 million) and
equipment expense ($1.7 million). For the nine months ended September 30, 2003
and 2002, noninterest expenses amounted to $485.6 million and $421.3 million,
respectively. Included in this increase was $28.5 million of prepayment
penalties on borrowings related to the aforementioned deleveraging program in
the second quarter. This amount represented 44% of the total increase of $64.3
million. The remaining increases in noninterest expense for the quarter and
nine months ended September 30, 2003 over the comparable periods last year were
primarily attributable to acquisitions.

Compensation and employee benefits expense of $82.2 million for the quarter
ended September 30, 2003 increased $2.5 million, or 3%, from the same quarter
of last year. For the nine months ended September 30, 2003 and 2002,
compensation and employee benefits expense amounted to $245.2 million and
$230.8 million, respectively. These increases were primarily due to additional
employees from acquisitions and increased benefit costs, which were partially
offset by lower incentive expense. The total number of full-time equivalent
employees was approximately 6,700 at September 30, 2003 compared to 6,500 at
September 30, 2002. Pension expense under the defined benefit pension plan
(which is included in compensation and employee benefits expense) was $3.3
million and $1.2 million for the three months ended September 30, 2003 and
2002, respectively, and increased primarily due to a lower discount rate and a
lower expected rate of return on plan assets. The fair value of plan assets as
of September 30, 2003 was $179.8 million as compared to $154.9 million at
December 31, 2002.

Data processing expense amounted to $10.5 million and $9.8 million for the
quarters ended September 30, 2003 and 2002, respectively, an increase of $703
thousand, or 7%. The increase was primarily due to increased transaction
volume (core processing and data lines) and other expenses related to
acquisitions and software licensing costs. The increase was partially offset
by lower bank card expenses due to lower fees charged by a new third-party
processor. For the nine months ended September 30, 2003 and 2002, data
processing expense amounted to $31.1 million and $30.2 million, respectively.
Beginning in July 2002, check processing was insourced and the primary costs
are now

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##### Table of Contents



recorded in compensation and employee benefits. Previously, a
third-party vendor handled check processing and its charges were recorded as
data processing costs.

Occupancy expense of $14.5 million during the three months ended September 30,
2003 increased $1.8 million, or 14%, from the same quarter in 2002, primarily
due to the cost of a new back-office facility in West Falmouth, Maine and the
cost of facilities assumed in acquisitions. For the nine months ended
September 30, 2003 and 2002, occupancy expense amounted to $44.6 million and
$38.0 million, respectively, an increase of 17%.

Equipment expense of $11.7 million during the three months ended September 30,
2003 increased $1.7 million, or 17%, from the third quarter of last year. For
the nine months ended September 30, 2003 and 2002, equipment expense amounted
to $35.3 million and $29.6 million, respectively. These increases were
primarily due to depreciation expense on new technology equipment and software
(e.g., check imaging and e-commerce) and depreciation/maintenance of equipment
obtained through acquisitions.

Advertising and marketing expense amounted to $5.6 million and $4.3 million for
the three months ended September 30, 2003 and 2002, respectively. The $1.3
million, or 29%, increase was largely due to new advertising promotions and
corporate sponsorships and additional expenses for the introduction of our
products in new market areas. For the nine months ended September 30, 2003 and
2002, advertising and marketing expense amounted to $16.6 million and $12.5
million, respectively, an increase of 32% primarily for the same reasons
described above.

Amortization of identifiable intangible assets of $2.3 million during the three
months ended September 30, 2003 increased $636 thousand from the third quarter
of last year. This increase was primarily due to amortization of core deposit
intangibles and other identifiable intangibles recorded in connection with
acquisitions. For the nine months ended September 30, 2003 and 2002,
amortization of identifiable intangible assets amounted to $6.6 million and
$4.4 million, respectively. For additional information, see Note 4 to the
unaudited Consolidated Financial Statements included herein.

Merger and consolidation costs amounted to $808 thousand and $2.2 million for
the three months ended September 30, 2003 and 2002, respectively. For the nine
months ended September 30, 2003 and 2002, merger and consolidation costs
amounted to $6.8 million and $11.4 million, respectively. The following
table summarizes merger and consolidation costs for the three and nine months
ended September 30, 2003 and 2002.

27



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##### Table of Contents



Table 6 - Merger and Consolidation Costs

|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|---------------------------------------------------------- |  | ------------------ | --- | ----------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                                                           |  | Three Months Ended |     | Nine Months Ended
|                                                           |  | September 30,      |     | September 30,    
|                                                           |  |                    |     |                  
|                                                           |  | 2003               |     | 2002              |  | 2003 |       | 2002
|                                                           |  |                    |     |                   |  |      |       |     
|American Merger Charges                                    |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Personnel costs                                            |  | $                  | 24  |                   |  | $    |      |      |  | $ | 1,068 |   |  | $ |       |  
|Systems conversion and integration/customer communications |  |                    | 413 |                   |  |      |      |      |  |   | 2,318 |   |  |   |       |  
|Other costs                                                |  |                    | (5  | )                 |  |      | 1     |      |  |   | 1,393 |   |  |   | 1      |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|                                                           |  |                    | 432 |                   |  |      | 1     |      |  |   | 4,779 |   |  |   | 1      |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Warren Merger Charges                                      |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Personnel costs                                            |  |                    | 61  |                   |  |      |      |      |  |   | 898   |   |  |   |       |  
|Systems conversion and integration/customer communications |  |                    | 268 |                   |  |      |      |      |  |   | 1,138 |   |  |   |       |  
|Other costs                                                |  |                    | 16  |                   |  |      | 5     |      |  |   | 363   |   |  |   | 5      |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|                                                           |  |                    | 345 |                   |  |      | 5     |      |  |   | 2,399 |   |  |   | 5      |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Bancorp Connecticut Merger Charges                         |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Personnel costs                                            |  |                    | 4   |                   |  |      | 5     |      |  |   | (10   | ) |  |   | 42     |  
|Systems conversion and integration/customer communications |  |                    |    |                   |  |      | 500   |      |  |   | 24    |   |  |   | 536    |  
|Other costs                                                |  |                    | 12  |                   |  |      | 227   |      |  |   | 107   |   |  |   | 233    |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|                                                           |  |                    | 16  |                   |  |      | 732   |      |  |   | 121   |   |  |   | 811    |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Ipswich Merger Charges                                     |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Personnel costs                                            |  |                    |    |                   |  |      | 78    |      |  |   | 14    |   |  |   | 102    |  
|Systems conversion and integration/customer communications |  |                    |    |                   |  |      | 913   |      |  |   |      |   |  |   | 1,486  |  
|Other costs                                                |  |                    |    |                   |  |      | 181   |      |  |   | 127   |   |  |   | 219    |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|                                                           |  |                    |    |                   |  |      | 1,172 |      |  |   | 141   |   |  |   | 1,807  |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Andover/MetroWest Merger Charges                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Personnel costs                                            |  |                    |    |                   |  |      |      |      |  |   | 1     |   |  |   | 635    |  
|Systems conversion and integration/customer communications |  |                    |    |                   |  |      | 90    |      |  |   |      |   |  |   | 3,142  |  
|Other costs                                                |  |                    | 15  |                   |  |      | 63    |      |  |   | 5     |   |  |   | 1,921  |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|                                                           |  |                    | 15  |                   |  |      | 153   |      |  |   | 6     |   |  |   | 5,698  |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Charter Consolidation Costs                                |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Personnel costs                                            |  |                    |    |                   |  |      |      |      |  |   |      |   |  |   | 770    |  
|Branch signage                                             |  |                    |    |                   |  |      | 143   |      |  |   |      |   |  |   | 872    |  
|Customer notices                                           |  |                    |    |                   |  |      | 24    |      |  |   |      |   |  |   | 591    |  
|Forms and documents                                        |  |                    |    |                   |  |      | 2     |      |  |   |      |   |  |   | 578    |  
|Other costs                                                |  |                    |    |                   |  |      | 1     |      |  |   |      |   |  |   | 781    |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|                                                           |  |                    |    |                   |  |      | 170   |      |  |   |      |   |  |   | 3,592  |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Other Costs                                                |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Branch decommissioning costs                               |  |                    |    |                   |  |      | 16    |      |  |   |      |   |  |   | 82     |  
|Reverse auto lease reserves (Banknorth - Vermont)          |  |                    |    |                   |  |      |      |      |  |   | (615  | ) |  |   |       |  
|Other costs                                                |  |                    |    |                   |  |      | (81   | )    |  |   | (43   | ) |  |   | (563   | )
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|                                                           |  |                    |    |                   |  |      | (65   | )    |  |   | (658  | ) |  |   | (481   | )
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Total Merger and Consolidation Costs                       |  | $                  | 808 |                   |  | $    | 2,168 |      |  | $ | 6,788 |   |  | $ | 11,433 |  
|                                                           |  |                    |     |                   |  |      |       |      |  |   |       |   |  |   |        |  

















The following table summarizes activity in the accrual account for merger and
consolidation costs from December 31, 2002 through September 30, 2003.

TABLE 7 - Merger and Consolidation Costs - Activity in the Accrual Account

|                                     |  |          |       |                |  |         |        |          |  |             |       |                 |  |         |          |   |  |                |         |   |  |   |       | 
|------------------------------------ |  | -------- | ----- | -------------- |  | ------- | ------ | -------- |  | ----------- | ----- | --------------- |  | ------- | -------- | - |  | -------------- | ------- | - |  | - | ----- | 
|                                     |  |          |       |                |  |         |        |          |  |             |       |                 |  |         |          |   |  | Non-cash Write |         |   |  |  
|                                     |  | Balance  |       | Accrued        |  |         |        |          |  | Cash        |       | Downs and Other |  | Balance
|                                     |  | 12/31/02 |       | at Acquisition |  | Charges |        | Payments |  | Adjustments |       | 9/30/03        
|                                     |  |          |       |                |  |         |        |          |  |             |       |                
|American Merger                      |  | $        |      |                |  | $       | 13,600 |          |  | $           | 4,779 |                 |  |         | ($16,978 | ) |  |                | ($1,135 | ) |  | $ | 266   | 
|Warren Merger                        |  |          | 2,052 |                |  |         |       |          |  |             | 2,399 |                 |  |         | (4,641   | ) |  |                | 221     |   |  |   | 31    | 
|Bancorp Connecticut Merger           |  |          | 3,097 |                |  |         |       |          |  |             | 122   |                 |  |         | (791     | ) |  |                | (1,798  | ) |  |   | 630   | 
|Ipswich Merger                       |  |          |      |                |  |         |       |          |  |             | 141   |                 |  |         | (141     | ) |  |                |        |   |  |   |      | 
|Andover / MetroWest Mergers          |  |          | 321   |                |  |         |       |          |  |             | 6     |                 |  |         | (52      | ) |  |                | (189    | ) |  |   | 86    | 
|Other Merger and Consolidation Costs |  |          | 84    |                |  |         |       |          |  |             | (659  | )               |  |         | (25      | ) |  |                | 615     |   |  |   | 15    | 
|                                     |  |          |       |                |  |         |        |          |  |             |       |                 |  |         |          |   |  |                |         |   |  |   |       | 
|Total                                |  | $        | 5,554 |                |  | $       | 13,600 |          |  | $           | 6,788 |                 |  |         | ($22,628 | ) |  |                | ($2,286 | ) |  | $ | 1,028 | 
|                                     |  |          |       |                |  |         |        |          |  |             |       |                 |  |         |          |   |  |                |         |   |  |   |       | 

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Prepayment penalties on borrowings amounted to $30.5 million for the nine
months ended September 30, 2003, $28.5 million of which was incurred in
connection with the above-discussed deleveraging program in the second quarter,
and $2.0 million of which was incurred in connection with the early payoff of
other borrowings. There were no prepayment penalties during the third quarter.

Other noninterest expenses amounted to $24.1 million and $21.2 million during
the three months ended September 30, 2003 and 2002, respectively. For the nine
months ended September 30, 2003 and 2002, other noninterest expenses amounted
to $69.0 million and $64.3 million, respectively. The following table
summarizes the principal components of other noninterest expenses for the
periods indicated.

TABLE 8 - Other Noninterest Expenses

|                                                       |  |         |        |         |  |         |        |         |  |         |        |         |  |         |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|------------------------------------------------------ |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | ------- | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                                       |  | 2003    |        | 2002   
|                                                       |  |         |        |        
|                                                       |  | Third   |        | Second  |  | First   |        | Fourth  |  | Third   |        | Second  |  | First  
|                                                       |  | Quarter |        | Quarter |  | Quarter |        | Quarter |  | Quarter |        | Quarter |  | Quarter
|                                                       |  |         |        |         |  |         |        |         |  |         |        |         |  |        
|Telephone                                              |  | $       | 3,666  |         |  | $       | 2,595  |         |  | $       | 3,468  |         |  | $       | 3,600  |  |  | $ | 3,276  |  |  | $ | 3,332  |  |  | $ | 3,189  | 
|Office supplies                                        |  |         | 2,611  |         |  |         | 2,523  |         |  |         | 2,794  |         |  |         | 2,594  |  |  |   | 2,726  |  |  |   | 2,597  |  |  |   | 2,819  | 
|Postage and freight                                    |  |         | 2,246  |         |  |         | 3,223  |         |  |         | 3,074  |         |  |         | 2,490  |  |  |   | 2,402  |  |  |   | 2,206  |  |  |   | 2,609  | 
|Miscellaneous loan costs                               |  |         | 1,729  |         |  |         | 1,563  |         |  |         | 948    |         |  |         | 1,178  |  |  |   | 239    |  |  |   | 1,706  |  |  |   | 1,167  | 
|Deposits and other assessments                         |  |         | 963    |         |  |         | 974    |         |  |         | 899    |         |  |         | 871    |  |  |   | 969    |  |  |   | 901    |  |  |   | 799    | 
|Collection and carrying costs
of non-performing assets |  |         | 709    |         |  |         | 947    |         |  |         | 308    |         |  |         | 595    |  |  |   | 662    |  |  |   | 807    |  |  |   | 649    | 
|Other                                                  |  |         | 12,158 |         |  |         | 11,689 |         |  |         | 9,880  |         |  |         | 13,698 |  |  |   | 10,968 |  |  |   | 10,518 |  |  |   | 9,791  | 
|                                                       |  |         |        |         |  |         |        |         |  |         |        |         |  |         |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|Total                                                  |  | $       | 24,082 |         |  | $       | 23,514 |         |  | $       | 21,371 |         |  | $       | 25,026 |  |  | $ | 21,242 |  |  | $ | 22,067 |  |  | $ | 21,023 | 
|                                                       |  |         |        |         |  |         |        |         |  |         |        |         |  |         |        |  |  |   |        |  |  |   |        |  |  |   |        | 

|                                                       |  |                   |        |           |  |   |        | 
|------------------------------------------------------ |  | ----------------- | ------ | --------- |  | - | ------ | 
|                                                       |  | Nine Months Ended
|                                                       |  |                  
|                                                       |  | 9/30/2003         |        | 9/30/2002
|                                                       |  |                   |        |          
|Telephone                                              |  | $                 | 9,729  |           |  | $ | 9,797  | 
|Office supplies                                        |  |                   | 7,928  |           |  |   | 8,142  | 
|Postage and freight                                    |  |                   | 8,543  |           |  |   | 7,217  | 
|Miscellaneous loan costs                               |  |                   | 4,240  |           |  |   | 3,112  | 
|Deposits and other assessments                         |  |                   | 2,836  |           |  |   | 2,669  | 
|Collection and carrying costs
of non-performing assets |  |                   | 1,964  |           |  |   | 2,118  | 
|Other                                                  |  |                   | 33,728 |           |  |   | 31,267 | 
|                                                       |  |                   |        |           |  |   |        | 
|Total                                                  |  | $                 | 68,968 |           |  | $ | 64,322 | 
|                                                       |  |                   |        |           |  |   |        | 

Taxes

The effective tax rate was 34% and 33% for the three months ended September 30,
2003 and 2002, respectively and 34% and 33% for the nine months ended September
30, 2003 and 2002, respectively. The increase in the effective tax rates was
primarily the result of an increase in state taxes during 2003.

Comprehensive Income

Comprehensive income amounted to $29.1 million and $107.6 million during the
three months ended September 30, 2003 and 2002, respectively and $180.0 million
and $287.6 million for the nine months ended September 30, 2003
and 2002, respectively. Comprehensive income was different from our net income
during the respective periods as a result of changes in the amount of
unrealized gains and losses on our portfolio of securities available for sale
and on our derivative contracts (primarily forward sales commitments related to
loans held for sale) that are accounted for as cash flow hedges. For
additional information, see Note 8 to the unaudited Consolidated Financial
Statements.

Our available for sale investment portfolio had net unrealized gains, net of
applicable income tax effects, of $37.4 million, $118.0 million and $108.2
million at September 30, 2003, December 31, 2002 and September 30, 2002,

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respectively. At September 30, 2003, the net unrealized gains of $57.6
million, before related tax effect, represented 1% of securities available for
sale. We attempt to balance the interest rate risk of interest-earning assets
and interest-bearing liabilities (see Interest Rate Risk and Asset Liability
Management). However, the change in fair value of our interest-bearing
liabilities which would tend to offset the change in fair value of available
for sale securities is not included in other comprehensive income.

FINANCIAL CONDITION

Our consolidated total assets amounted to $25.7 billion and $23.4 billion at
September 30, 2003 and December 31, 2002, respectively. Total average assets
were $25.8 billion and $21.8 billion for the three months ended September 30,
2003 and 2002, respectively. These increases were largely due to the
acquisitions in 2003 and 2002, which added $4.7 billion in assets.
Shareholders equity totaled $2.5 billion at September 30, 2003 and $2.1
billion at December 31, 2002.

Securities

The securities portfolio (including securities classified as held to maturity)
averaged $7.3 billion during the third quarter of 2003, as compared to $6.5
billion in the third quarter of 2002. The net increase in the securities
portfolio resulted from the acquisitions in 2003 and 2002. The securities
portfolio consists primarily of mortgage-backed securities and U.S. Government
and agency securities. Other securities in the portfolio are collateralized
mortgage obligations, which included securitized residential real estate loans
held in a REMIC, and asset-backed securities. The majority of securities
available for sale were rated AAA or equivalently rated at September 30, 2003.
At September 30, 2003 and December 31, 2002, we had $614.7 million and $830.1
million of securities available for sale with call provisions. The average
yield on securities was 3.96% for the quarter ended September 30, 2003 and
5.64% for the quarter ended September 30, 2002. With the exception of
securitized residential real estate loans held in a REMIC that were classified
as held to maturity and carried at cost, all of our securities are classified
as available for sale and carried at market value. Securities available for
sale had an after-tax unrealized gain of $37.4 million and $118.0 million at
September 30, 2003 and December 31, 2002, respectively. These unrealized gains
do not impact net income or regulatory capital but are recorded as adjustments
to shareholders equity, net of related deferred income taxes. Unrealized
gains, net of related deferred income taxes, are a component of Comprehensive
Income contained in the unaudited Consolidated Statement of Changes in
Shareholders Equity.

Loans and Leases

Total loans and leases (including loans held for sale) averaged $15.9 billion
during the third quarter of 2003, an increase of $2.5 billion, or 19%, from the
third quarter of 2002. This increase was primarily attributable to
acquisitions. Average loans and leases as a percent of average earning assets
was 69% during the quarter ended September 30, 2003 compared to 67% during the
quarter ended September 30, 2002.

Average residential real estate loans (which include mortgage loans held for
sale) of $2.9 billion during the third quarter of 2003 increased $195 million
from the average amount of such loans during the third quarter of last year.
Excluding acquisitions, average residential loans decreased approximately $892
million, or 24%, as a result of increased refinancing activity and prepayments
in a lower interest rate environment. Mortgage loans held for sale amounted to
$74.7 million and $128.6 million at September 30, 2003 and December 31, 2002,
respectively. We are currently selling substantially all of the conforming
30-year fixed-rate loans we originate.

Average commercial real estate loans of $5.3 billion increased $915 million, or
21%, from the third quarter of last year. Excluding acquisitions, average
commercial real estate loans increased $605 million or 13%. While most of our
markets reflected increases, the largest increases were in Massachusetts and
Connecticut. The average yield on
commercial real estate loans during the third quarter of 2003 was 5.88%, as
compared to 6.86% in the third quarter of 2002, a decrease of 98 basis points.
The lower yield reflects the effect of the downward repricing of variable-rate
loans, the refinancing of fixed-rate loans at lower rates and the origination
of new loans at the lower prevailing rates.

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Commercial business loans and leases averaged $3.2 billion during the third
quarter of 2003, an increase of $462 million, or 17%, over the third quarter of
2002. Excluding acquisitions, average commercial business loans and leases
increased $329 million or 11%. Massachusetts reflected the greatest amount of
growth. The yield on commercial business loans and leases decreased to 5.04%
in the third quarter of 2003 from 5.81% in the third quarter of 2002. The
decrease in the yield was primarily due to lower rates on new loans and the
repricing of variable-rate loans.

Consumer loans and leases averaged $4.6 billion during the third quarter of
2003, an increase of $915 million, or 25%, from the third quarter of 2002.
Acquisitions accounted for approximately $506 million of the increase, while
internal loan growth accounted for approximately $409 million of the increase.
Internal growth was primarily in home equity loans and indirect auto loans.
The average yield on consumer loans and leases decreased to 5.43% in the third
quarter of 2003 from 6.78% in the third quarter of 2002. For a description of
the types of loans and leases in our loan and lease portfolio and a breakdown
of our consumer loans, see Credit Risk.

Deposits

Total deposits averaged $17.7 billion during the third quarter of 2003, an
increase of $2.9 billion from the third quarter of 2002. Excluding
acquisitions, average core deposits (deposits excluding certificates of deposit
and brokered deposits) increased $1.4 billion from the third quarter of last
year, or 12%. Excluding acquisitions, the average balances of certificates of
deposit and brokered deposits decreased $788.5 million from the third quarter
of 2002, or 13%. The ratio of loans to deposits was 90% at September 30, 2003
and December 31, 2002.

Average noninterest-bearing deposits totaled $3.4 billion during the third
quarter of 2003, an increase of $704 million, or 26%, from the third quarter of
2002. This increase was largely due to strong growth in existing market areas
as well as $151 million of average noninterest-bearing deposits acquired in
acquisitions.

Average interest-bearing deposits of $14.3 billion during the third quarter of
2003 increased $2.2 billion from the third quarter of 2002. Excluding
acquisitions, average money market and NOW deposits increased by $583 million
and average regular savings deposits increased $224 million, while average
certificates of deposit and brokered deposits declined by
$788.5 million in the aggregate. The
decline in certificates of deposits resulted from our decision to allow
deposits priced above alternate funding costs to run off. The average rates
paid on NOW and money market accounts decreased 73 basis points from 1.53% in
the third quarter of 2002 to 0.80% in the third quarter of 2003 due largely to
lower prevailing interest rates. The average rates paid on all deposit types
decreased by 78 basis points from 2.03% in the third quarter of 2002 to 1.25%
in the third quarter of 2003, reflecting the decline in prevailing interest
rates.

Included within the deposit categories above are government banking deposits,
which averaged $1.3 billion in the third quarter of 2003 and $1.2 billion in
the third quarter of 2002. Government banking deposits include deposits
received from state and local governments, school districts, public
colleges/universities, utility districts, public housing authorities and court
systems in our market area. Many of these deposits exceed the FDIC insurance
coverage amounts and require us to pledge specific collateral or maintain
private insurance.

Other Funding Sources

We use both short-term and long-term borrowings to fund the growth of earning
assets in excess of deposit growth. Short-term borrowings, which include
federal funds purchased, retail securities sold under agreements to repurchase
and other short-term borrowings, amounted to $1.05 billion and $1.28 billion at
September 30, 2003 and December 31, 2002, respectively, a decrease of $228
million, or 18%.

At September 30, 2003, we also had a $110 million unsecured line of credit.
The line is renewable every 364 days and, if used, carries interest at LIBOR
plus 0.625%. There were no drawdowns on this line in 2003.

Long-term debt includes FHLB advances, senior notes, subordinated notes,
capital trust securities, wholesale securities sold under agreements to
repurchase, capital lease obligations and other debt with terms greater than
one

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year. Long-term debt amounted to $3.6 billion and $3.9 billion at
September 30, 2003 and December 31, 2002,
respectively. The decrease in long-term debt was primarily due to the
prepayment of $853 million of borrowings in connection with our deleveraging
program in the second quarter of 2003, which was partially offset by the
issuance of $150 million of senior notes in the second quarter of 2003 and $400
million of borrowings assumed in acquisitions.

At September 30, 2003 and December 31, 2002, FHLB borrowings amounted to $1.6
billion. FHLB collateral consists primarily of first mortgage loans secured by
single-family properties, certain unencumbered securities and other qualified
assets. Our additional borrowing capacity with the FHLB at September 30, 2003
was approximately $2.6 billion. These borrowings had an average cost of 4.23%
during the three months ended September 30, 2003 as compared to 4.48% during
the three months ended September 30, 2002. On July 23, 2003, we entered into
interest rate swap agreements for $216.5 million to hedge the fair value of
$216.5 million of FHLB advances. The effect of the hedges, which are accounted
for as fair value hedges, was to synthetically convert this fixed rate debt to
a variable rate set at an average of 1-month LIBOR (1.12% at September 30,
2003) plus 3.82%. These FHLB advances had a weighted average cost of 5.47% and
an average term of 2 years.

In April 2003, we issued $150 million of 5-year senior notes carrying a fixed
rate of 3.75%. We simultaneously entered into a $150 million interest rate
swap agreement pursuant to which we receive a fixed rate of 3.75% and pay a
variable rate based on 3-month LIBOR (1.16% at September 30, 2003) plus 0.41%.
This swap is accounted for as a fair value hedge of the notes. The proceeds
from the notes offering were used for general corporate purposes.

At September 30, 2003 and December 31, 2002, subordinated debt consisted of
$200 million of 7.625% subordinated notes due 2011 issued by our banking
subsidiary in 2001. The notes qualify as Tier 2 capital for regulatory
purposes. In the first quarter of 2003, we entered into an interest rate swap
for $200 million to hedge the fair value of the $200 million of subordinated
debt. The effect of the hedge, which is accounted for as a fair value hedge,
was to synthetically convert this fixed rate debt to a variable rate set at
3-month LIBOR plus 3.47%.

At September 30, 2003 and December 31, 2002, through subsidiary trusts, we had
outstanding $295.1 million of capital securities which currently qualify as
Tier 1 capital for regulatory purposes. See the Capital section below.

At September 30, 2003 and December 31, 2002, wholesale securities sold under
repurchase agreements amounted to $1.7 billion and $1.2 billion, respectively,
and were collateralized by mortgage-backed securities and U.S. Government
obligations.

We have a shelf registration on file with the Securities and Exchange
Commission which allows us to sell up to $1.0 billion of debt securities,
preferred stock, depository shares, common stock and warrants and which allows
subsidiary trusts to sell capital securities. We had $650 million of remaining
authority under this shelf registration statement as of September 30, 2003.

At September 30, 2003 and December 31, 2002, other liabilities totaled $521.7
million and $258.3 million, respectively. The increase in other liabilities
was primarily attributable to $361 million of amounts due to brokers for
securities transactions that settled in October 2003.

CONTRACTUAL OBLIGATIONS

We have entered into numerous contractual obligations and commitments. The
following tables summarize our contractual cash obligations, other commitments
and derivative financial instruments at September 30, 2003.

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TABLE 9 - Contractual Obligations

Contractual Obligations (1)

|                                  |                      |   |           |           |        |   |                        |         |       |   |           |           |         |   |         |         |  |   |           |           | 
|--------------------------------- | -------------------- | - | --------- | --------- | ------ | - | ---------------------- | ------- | ----- | - | --------- | --------- | ------- | - | ------- | ------- |  | - | --------- | --------- | 
|                                  |                      |   |           |           |        |   | Payments Due By Period
|                                  |                      |   |           |           |        |   |                       
|                                  |                      |   |           |           |        |   | Less than              |         | 1 - 3 |   | 4 - 5     |           | After 5
|                                  |                      |   | Total     |           | 1 Year |   | Years                  |         | Years |   | Years    
|                                  |                      |   |           |           |        |   |                        |         |       |   |          
|Long-term debt                    |                      | $ | 2,212,865 |           |        | $ | 73,441                 |         |       | $ | 826,933   |           |         | $ | 180,560 |         |  | $ | 1,131,931 |          
|Capital lease obligations         |                      |   | 6,044     |           |        |   | 50                     |         |       |   | 182       |           |         |   | 757     |         |  |   | 5,055     |          
|Repurchase agreements - wholesale |                      |   | 1,692,560 |           |        |   | 392,560                |         |       |   | 1,200,000 |           |         |   |        |         |  |   | 100,000   |          
|                                  |                      |   |           |           |        |   |                        |         |       |   |           |           |         |   |         |         |  |   |           |          
|                                  | Total long-term debt |   |           | 3,911,469 |        |   |                        | 466,051 |       |   |           | 2,027,115 |         |   |         | 181,317 |  |   |           | 1,236,986 | 
|Operating lease obligations       |                      |   | 133,813   |           |        |   | 23,429                 |         |       |   | 38,523    |           |         |   | 28,177  |         |  |   | 43,684    |          
|                                  |                      |   |           |           |        |   |                        |         |       |   |           |           |         |   |         |         |  |   |           |          
|Total contractual obligations     |                      | $ | 4,045,282 |           |        | $ | 489,480                |         |       | $ | 2,065,638 |           |         | $ | 209,494 |         |  | $ | 1,280,670 |          
|                                  |                      |   |           |           |        |   |                        |         |       |   |           |           |         |   |         |         |  |   |           |          

(1) Other liabilities are short term in nature, except for liabilities related to employee benefit plans.

Other Commitments

|                                   |  |           |           |           |  |                                              |           |       |  |         |         |  |  |   |         |  |  |   |           | 
|---------------------------------- |  | --------- | --------- | --------- |  | -------------------------------------------- | --------- | ----- |  | ------- | ------- |  |  | - | ------- |  |  | - | --------- | 
|                                   |  |           |           |           |  | Amount of Commitment Expiration - Per Period
|                                   |  | Total     |           |          
|                                   |  | Amounts   |           | Less than |  | 1 - 3                                        |           | 4 - 5 |  | After 5
|                                   |  | Committed |           | 1 Year    |  | Years                                        |           | Years |  | Years  
|                                   |  |           |           |           |  |                                              |           |       |  |        
|Unused portions on lines of credit |  | $         | 4,119,340 |           |  | $                                            | 291,224   |       |  | $       | 218,591 |  |  | $ | 44,214  |  |  | $ | 3,565,311 | 
|Standby letters of credit          |  |           | 395,552   |           |  |                                              | 101,556   |       |  |         | 83,555  |  |  |   | 84,969  |  |  |   | 125,472   | 
|Commitments to originate loans     |  |           | 1,718,545 |           |  |                                              | 1,250,967 |       |  |         | 236,939 |  |  |   | 34,388  |  |  |   | 196,251   | 
|Other commitments                  |  |           | 45,645    |           |  |                                              | 9,127     |       |  |         | 9,530   |  |  |   | 2,165   |  |  |   | 24,823    | 
|                                   |  |           |           |           |  |                                              |           |       |  |         |         |  |  |   |         |  |  |   |           | 
|Total commitments                  |  | $         | 6,279,082 |           |  | $                                            | 1,652,874 |       |  | $       | 548,615 |  |  | $ | 165,736 |  |  | $ | 3,911,857 | 
|                                   |  |           |           |           |  |                                              |           |       |  |         |         |  |  |   |         |  |  |   |           | 

Derivative Financial Instruments

|                                       |                                       |                                                   |         |           |         |           |         |                                              |        |       |        |         |       |  |   |         |        |  |   |         |         | 
|-------------------------------------- | ------------------------------------- | ------------------------------------------------- | ------- | --------- | ------- | --------- | ------- | -------------------------------------------- | ------ | ----- | ------ | ------- | ----- |  | - | ------- | ------ |  | - | ------- | ------- | 
|                                       |                                       |                                                   |         |           |         |           |         | Amount of Commitment Expiration - Per Period
|                                       |                                       |                                                   |         | Total     |         |          
|                                       |                                       |                                                   |         | Amounts   |         | Less than |         | 1 - 3                                        |        | 4 - 5 |        | After 5
|                                       |                                       |                                                   |         | Committed |         | 1 Year    |         | Years                                        |        | Years |        | Years  
|                                       |                                       |                                                   |         |           |         |           |         |                                              |        |       |        |        
|Interest rate swaps (notional amount): |                                       |                                                   |         |           |         |           |         |                                              |        |       |        |         |       |  |   |         |        |  |   |        
|                                       | Commercial loan swap program:         |                                                   |         |           |         |           |         |                                              |        |       |        |         |       |  |   |         |        |  |   |         |        
|                                       |                                       | Interest rate swaps with commercial borrowers (1) |         | $         | 297,907 |           |         | $                                            | 13,577 |       |        | $       | 8,290 |  |   | $       | 53,562 |  |   | $       | 222,478 | 
|                                       |                                       | Interest rate swaps with dealers (2)              |         |           | 297,907 |           |         |                                              | 13,577 |       |        |         | 8,290 |  |   |         | 53,562 |  |   |         | 222,478 | 
|                                       | Interest rate swaps on borrowings (3) |                                                   |         | 566,500   |         |           |         |                                             |        |       |        | 216,500 |       |  |   | 150,000 |        |  |   | 200,000 |        
|Forward commitments to sell loans      |                                       |                                                   | 127,520 |           |         |           | 127,520 |                                              |        |       |       |         |       |  |  |         |        |  |  |        
|Foreign currency forward contracts (4) |                                       |                                                   | 25,582  |           |         |           | 14,403  |                                              |        |       | 11,179 |         |       |  |  |         |        |  |  |        



---

|(1) |  | Swaps with commercial loan customers (Banknorth receives fixed, pays variable)                                                        
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Offsetting swaps with dealers (Banknorth pays fixed, receives variable)
which offset the interest rate swaps with commercial borrowers
|(3) |  | Swaps on borrowings (Banknorth pays variable, receives fixed)                                                                         
|(4) |  | Forward contracts for customer accommodations                                                                                         

RISK MANAGEMENT

The primary goal of our risk management program is to determine how certain
existing or emerging issues in the financial services industry affect the
nature and extent of the risks faced by us. Based on a periodic
self-evaluation, we determine key issues and develop plans and/or objectives to
address risk. Our board of directors and management believe that there are
seven applicable risk categories, consisting of credit, interest rate,
liquidity, transaction, compliance, strategic and reputation risk. Each risk
category is viewed from a quantity of risk perspective (high, medium or low)
coupled with a quality of risk management perspective. In addition, an
aggregate level of risk is assigned as a whole as well as the direction of risk
(stable, increasing or decreasing). Each risk category and the overall risk
level is compared to regulatory views on a regular basis and then reported to
the board with an accompanying explanation as to the existence of any
differences. The risk program includes risk identification, measurement,
control and monitoring.

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Our board of directors has established the overall strategic direction for
Banknorth. It approves our overall risk policies and oversees our overall risk
management process. The board has established two board committees, consisting
of Audit and Board Risk Management, and has charged each committee with
overseeing key risks. In addition, there is a management Operational Risk
Committee, which is comprised of senior officers in key business lines, which
identifies and monitors key operational risks. The Operational Risk Committee
reports to the Board Risk Management Committee on a regular basis.

CREDIT RISK MANAGEMENT

General

The Board Risk Management Committee monitors our credit risk management. Our
strategy for credit risk management includes centralized policies and uniform
underwriting criteria for all loans. The strategy also includes
diversification on a geographic, industry and customer level, regular credit
examinations and quarterly management review of large loans and loans with a
deterioration of credit quality. We maintain an internal rating system that
provides a mechanism to regularly monitor the credit quality of our loan
portfolio. The rating system is intended to identify and measure the credit
quality of lending relationships. For consumer loans, we utilize standard
credit scoring systems to assess consumer credit risks and to price consumer
products accordingly. We strive to identify potential problem loans early,
take any necessary charge-offs promptly and maintain adequate reserve levels.
See Results of Operations -  Provision and Allowance for Loan and Lease
Losses.

Our residential loan portfolio accounted for 17% of the total loan portfolio at
September 30, 2003 and at December 31, 2002. Our residential loans are
generally secured by single-family homes (one-to-four units) and have a maximum
loan to value ratio of 80%, unless the excess is protected by mortgage
insurance. At September 30, 2003, 0.34% of our residential loans were
nonperforming, as compared to 0.24% at December 31, 2002 and 0.25% at September
30, 2002. Net charge-offs to average residential loans outstanding for the
three months ended September 30, 2003 was .01%.

Our commercial real estate loan portfolio accounted for 33% of the total loan
portfolio at September 30, 2003 and 34% at December 31, 2002. This portfolio
consists primarily of loans secured by income-producing commercial real estate
(including office and industrial buildings), service industry real estate
(including hotels and health care facilities), multi-family (over four units)
residential properties and retail trade real estate. These loans generally are
secured by properties located in the New England states and upstate New York.
At September 30, 2003, 0.51% of our commercial real estate loans were
nonperforming, as compared to 0.37% at December 31, 2002 and 0.38% at September
30, 2002. Net charge-offs (recoveries) to average commercial real estate loans
outstanding for the three months ended September 30, 2003 was (0.02%).

Our commercial business loan and lease portfolio accounted for 21% of the total
loan portfolio at September 30, 2003 and December 31, 2002. Commercial
business loans and leases are generally made to small to medium size businesses
located within our market areas. These loans are not concentrated in any
particular industry, but reflect the broad-based economy of New England and
upstate New York. Commercial loans consist primarily of loans secured by
various equipment, machinery and other corporate assets, as well as loans to
provide working capital to businesses in the form of lines of credit. Through
a subsidiary, we also offer direct equipment leases, which amounted to $95.6
million at September 30, 2003. We do not emphasize the purchase of
participations in syndicated commercial loans. At September 30, 2003, we had
$297 million of outstanding participations in syndicated commercial loans and
had an additional $312 million of unfunded commitments related to these
participations. At September 30, 2003, 0.70% of our commercial business loans
were nonperforming, as compared to 1.10% at December 31, 2002 and 1.15% at
September 30, 2002. Net charge-offs to average commercial business loans and
leases outstanding for the three months ended September 30, 2003 was 0.06%.

The following table presents the geographic distribution of our commercial
loans and leases at September 30, 2003 and December 31, 2002.

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Table 10 - Commercial Loans and Leases by State

|              |       |   |                   |           |                     |   |                  |           |              |   |               |           |              |   |         |           |  |   |           |           |  |   |           |           | 
|------------- | ----- | - | ----------------- | --------- | ------------------- | - | ---------------- | --------- | ------------ | - | ------------- | --------- | ------------ | - | ------- | --------- |  | - | --------- | --------- |  | - | --------- | --------- | 
|              |       |   | Commercial        |           | Commercial Business |   | Total Commercial
|              |       |   | Real Estate Loans |           | Loans and Leases    |   | Loans and Leases
|              |       |   |                   |           |                     |   |                 
|              |       |   | September 30,     |           | December 31,        |   | September 30,    |           | December 31, |   | September 30, |           | December 31,
|              |       |   | 2003              |           | 2002                |   | 2003             |           | 2002         |   | 2003          |           | 2002        
|              |       |   |                   |           |                     |   |                  |           |              |   |               |           |             
|Massachusetts |       | $ | 2,430,249         |           |                     | $ | 2,174,534        |           |              | $ | 1,111,621     |           |              | $ | 982,078 |           |  | $ | 3,541,870 |           |  | $ | 3,156,612 |          
|Maine         |       |   | 873,759           |           |                     |   | 868,091          |           |              |   | 678,979       |           |              |   | 640,258 |           |  |   | 1,552,738 |           |  |   | 1,508,349 |          
|New Hampshire |       |   | 725,103           |           |                     |   | 703,743          |           |              |   | 504,173       |           |              |   | 461,079 |           |  |   | 1,229,276 |           |  |   | 1,164,822 |          
|Vermont       |       |   | 629,101           |           |                     |   | 594,849          |           |              |   | 423,383       |           |              |   | 419,291 |           |  |   | 1,052,484 |           |  |   | 1,014,140 |          
|Connecticut   |       |   | 468,910           |           |                     |   | 286,658          |           |              |   | 345,853       |           |              |   | 265,503 |           |  |   | 814,763   |           |  |   | 552,161   |          
|New York      |       |   | 183,057           |           |                     |   | 164,174          |           |              |   | 201,786       |           |              |   | 200,265 |           |  |   | 384,843   |           |  |   | 364,439   |          
|              |       |   |                   |           |                     |   |                  |           |              |   |               |           |              |   |         |           |  |   |           |           |  |   |           |          
|              | Total |   | $                 | 5,310,179 |                     |   | $                | 4,792,049 |              |   | $             | 3,265,795 |              |   | $       | 2,968,474 |  |   | $         | 8,575,974 |  |   | $         | 7,760,523 | 
|              |       |   |                   |           |                     |   |                  |           |              |   |               |           |              |   |         |           |  |   |           |           |  |   |           |          

Consumer loans and leases accounted for 29% of our total loan portfolio at
September 30, 2003 and 28% at December 31, 2002. At September 30, 2003, 0.16%
of our consumer loans were nonperforming, as compared to 0.23% at December 31,
2002 and 0.22% at September 30, 2002. Net charge-offs to average consumer
loans outstanding for the three months ended September 30, 2003 was 0.68%. The
following table lists our consumer loans by type as of September 30, 2003 and
December 31, 2002:

Table 11 - Composition of Consumer Loans

|                                               |  |               |           |              |  |        |        |       |  |   |           |      |  |  |        |  
|---------------------------------------------- |  | ------------- | --------- | ------------ |  | ------ | ------ | ----- |  | - | --------- | ---- |  |  | ------ | -
|                                               |  | September 30, |           | December 31,
|                                               |  | 2003          |           | 2002        
|                                               |  |               |           |             
|                                               |  |               |           |              |  | % of   |        |       |  |   |           | % of
|                                               |  | Amount        |           | Total        |  | Amount |        | Total
|                                               |  |               |           |              |  |        |        |      
|Home equity lines                              |  | $             | 2,228,295 |              |  |        | 47.95  | %     |  | $ | 1,572,816 |      |  |  | 40.19  | %
|Automobile and other vehicle loans and leases  |  |               | 1,590,691 |              |  |        | 34.23  | %     |  |   | 1,478,228 |      |  |  | 37.77  | %
|Mobile home loans                              |  |               | 148,376   |              |  |        | 3.19   | %     |  |   | 171,715   |      |  |  | 4.39   | %
|Vision, dental, and orthodontia fee plan loans |  |               | 143,240   |              |  |        | 3.08   | %     |  |   | 172,861   |      |  |  | 4.42   | %
|Education loans                                |  |               | 118,357   |              |  |        | 2.55   | %     |  |   | 135,386   |      |  |  | 3.46   | %
|Other                                          |  |               | 418,024   |              |  |        | 9.00   | %     |  |   | 382,282   |      |  |  | 9.77   | %
|                                               |  |               |           |              |  |        |        |       |  |   |           |      |  |  |        |  
|Total                                          |  | $             | 4,646,983 |              |  |        | 100.00 | %     |  | $ | 3,913,288 |      |  |  | 100.00 | %
|                                               |  |               |           |              |  |        |        |       |  |   |           |      |  |  |        |  

Nonperforming Assets

Nonperforming assets consist of nonperforming loans (which do not include
accruing loans 90 days or more overdue), other real estate owned, repossessed
assets and certain securities available for sale. Total nonperforming assets
as a percentage of total assets were 0.27% at September 30, 2003, 0.29% at
December 31, 2002 and 0.31% at September 30, 2002. Total nonperforming assets
as a percentage of total loans and total other nonperforming assets was 0.44%
at September 30, 2003, 0.49% at December 31, 2002 and
0.50% at September 30, 2002. See Table 12 for a summary of nonperforming
assets for the last seven quarters. On a dollar basis, our nonperforming
assets increased from $68.8 million at September 30, 2002 to $70.4 million at
September 30, 2003. Acquisitions contributed to our increased nonperforming
assets in recent periods. See Table 13 for the nonperforming assets of acquired banks at date of
acquisition.

We continue to focus on asset quality and to allocate significant resources to
the key asset quality control functions of credit policy and administration and
loan review. The collection, workout and asset management functions focus on
the reduction of nonperforming assets. Despite the ongoing focus on asset
quality and reductions of nonperforming asset levels, there can be no assurance
that adverse changes in the real estate markets and economic conditions in our
primary market areas will not result in higher nonperforming asset levels in
the future and negatively impact our operations through higher provisions for
loan losses, net loan charge-offs, decreased accrual of interest income and
increased noninterest expenses as a result of the allocation of resources to
the collection and workout of nonperforming assets.

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The following table presents nonperforming assets for the last seven quarters.

TABLE 12 - Nonperforming Assets

|                                                                                                              |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |        | 
|------------------------------------------------------------------------------------------------------------- | --------------------------------- | - | ------------ | ------ | ------- | - | -------- | ------ | ----------- | - | ------------ | ------ | ------- | - | -------- | ------ |  | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                                                                              |                                   |   | 2003         |        | 2002   
|                                                                                                              |                                   |   |              |        |        
|                                                                                                              |                                   |   | September 30 |        | June 30 |   | March 31 |        | December 31 |   | September 30 |        | June 30 |   | March 31
|                                                                                                              |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |         
|Nonaccrual loans and leases:                                                                                  |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |       
|Residential real estate loans                                                                                 |                                   | $ | 9,135        |        |         | $ | 9,827    |        |             | $ | 9,828        |        |         | $ | 5,781    |        |  | $ | 6,733  |        |  | $ | 7,075  |        |  | $ | 7,689  |       
|Commercial real estate loans                                                                                  |                                   |   | 27,069       |        |         |   | 19,139   |        |             |   | 22,990       |        |         |   | 17,649   |        |  |   | 16,762 |        |  |   | 20,254 |        |  |   | 20,812 |       
|Commercial business loans and leases                                                                          |                                   |   | 22,857       |        |         |   | 24,577   |        |             |   | 38,562       |        |         |   | 32,693   |        |  |   | 33,014 |        |  |   | 33,573 |        |  |   | 34,481 |       
|Consumer loans and leases                                                                                     |                                   |   | 7,664        |        |         |   | 7,192    |        |             |   | 7,457        |        |         |   | 9,194    |        |  |   | 8,364  |        |  |   | 6,008  |        |  |   | 8,183  |       
|                                                                                                              |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |       
|                                                                                                              | Total nonaccrual loans and leases |   |              | 66,725 |         |   |          | 60,735 |             |   |              | 78,837 |         |   |          | 65,317 |  |   |        | 64,873 |  |   |        | 66,910 |  |   |        | 71,165 | 
|Other nonperforming assets:                                                                                   |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |       
|Other real estate owned, net of related reserves                                                              |                                   |   | 921          |        |         |   | 814      |        |             |   | 541          |        |         |   | 100      |        |  |   | 92     |        |  |   | 1,212  |        |  |   | 1,262  |       
|Repossessions, net of related reserves                                                                        |                                   |   | 2,711        |        |         |   | 2,911    |        |             |   | 3,276        |        |         |   | 3,536    |        |  |   | 3,807  |        |  |   | 1,964  |        |  |   | 2,251  |       
|Securities available for sale                                                                                 |                                   |   |             |        |         |   |         |        |             |   |             |        |         |   |         |        |  |   |       |        |  |   | 2,104  |        |  |   | 2,104  |       
|                                                                                                              |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |       
|                                                                                                              | Total other nonperforming assets  |   |              | 3,632  |         |   |          | 3,725  |             |   |              | 3,817  |         |   |          | 3,636  |  |   |        | 3,899  |  |   |        | 5,280  |  |   |        | 5,617  | 
|                                                                                                              |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |       
|Total nonperforming assets                                                                                    |                                   | $ | 70,357       |        |         | $ | 64,460   |        |             | $ | 82,654       |        |         | $ | 68,953   |        |  | $ | 68,772 |        |  | $ | 72,190 |        |  | $ | 76,782 |       
|                                                                                                              |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |       
|Accruing loans and leases which are 90 days or more overdue                                                   |                                   | $ | 3,163        |        |         | $ | 2,995    |        |             | $ | 3,349        |        |         | $ | 3,373    |        |  | $ | 2,407  |        |  | $ | 2,680  |        |  | $ | 5,430  |       
|                                                                                                              |                                   |   |              |        |         |   |          |        |             |   |              |        |         |   |          |        |  |   |        |        |  |   |        |        |  |   |        |       
|Total nonperforming loans as a percentage of total
loans and leases(1)                                        |                                   |   | 0.42         | %      |         |   | 0.39     | %      |             |   | 0.51         | %      |         |   | 0.46     | %      |  |   | 0.47   | %      |  |   | 0.51   | %      |  |   | 0.56   | %     
|Total nonperforming assets as a percentage of total assets                                                    |                                   |   | 0.27         | %      |         |   | 0.25     | %      |             |   | 0.31         | %      |         |   | 0.29     | %      |  |   | 0.31   | %      |  |   | 0.34   | %      |  |   | 0.37   | %     
|Total nonperforming assets as a percentage of total loans
and leases (1) and total other nonperforming assets |                                   |   | 0.44         | %      |         |   | 0.41     | %      |             |   | 0.53         | %      |         |   | 0.49     | %      |  |   | 0.50   | %      |  |   | 0.55   | %      |  |   | 0.60   | %     



---

|(1) |  | Total loans and leases exclude residential real estate loans held for sale.
|--- |  | ---------------------------------------------------------------------------

Residential real estate loans are generally placed on nonaccrual when they
become 120 days past due or are in the process of foreclosure. All closed-end
consumer loans 90 days or more past due and any equity line in the process of
foreclosure are placed on nonaccrual status. Unsecured consumer loans are
charged-off upon reaching 120 or 180 days past due depending on the type of
loan. We generally place all commercial real estate loans and commercial
business loans and leases which are 90 days or more past due on nonaccrual
status, unless secured by sufficient cash or other assets immediately
convertible to cash. At September 30, 2003, we had $3.2 million of accruing
loans which were 90 days or more delinquent, as compared to $3.4 million at
December 31, 2002 and $2.4 million at September 30, 2002.

We may also place loans which are less than 90 days past due on nonaccrual
(and, therefore, nonperforming) status when in our judgment these loans are
likely to present future principal and/or interest repayment problems and
ultimately would be classified as nonperforming.

Over the past seven quarters, nonperforming assets ranged from $64.4 million to
$82.7 million. The increase from December 31, 2002 to March 31, 2003 largely
related to $6.2 million of nonperforming assets, primarily
residential real estate loans, resulting from the
acquisition of American, as reflected in Table 13 below. The decrease from March 31, 2003 to June 30, 2003 was
primarily due to the return of several commercial loans to performing status.
The increase from June 30, 2003 to September 30, 2003 was primarily due to an
increase in nonperforming commercial real estate loans, which was primarily attributable
to one credit relationship which is well secured. This increase is not
believed to be a trend.

The following table presents certain information regarding the nonperforming
assets acquired by us in connection with the indicated acquisitions.

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TABLE 13 - Nonperforming Assets of Acquired Banks at Acquisition Date

|                                     |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |     | 
|------------------------------------ | ------------------------------------ | ---------- | -------- | ---------- | ------ | ---------- | ------- | ---------- | ------- | - | --- | --- |  | - | --- | --- | 
|                                     |                                      |            | American |            | Warren |            | Bancorp |            | Ipswich
|                                     |                                      |            |          |            |        |            |         |            |        
|Acquisition date                     |                                      | 02/14/2003 |          | 12/31/2002 |        | 08/31/2002 |         | 07/26/2002
|Nonaccrual loans and leases:         |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |    
|Residential real estate loans        |                                      | $          | 6,044    |            |        | $          |        |            |         | $ | 125 |     |  | $ |    |    
|Commercial real estate loans         |                                      |            |         |            |        |            | 738     |            |         |   |    |     |  |   |    |    
|Commercial business loans and leases |                                      |            |         |            |        |            | 84      |            |         |   | 580 |     |  |   | 167 |    
|Consumer loans and leases            |                                      |            |         |            |        |            |        |            |         |   | 108 |     |  |   |    |    
|                                     |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |    
|                                     | Total nonperforming loans and leases |            |          | 6,044      |        |            |         | 822        |         |   |     | 813 |  |   |     | 167 | 
|                                     |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |    
|Other nonperforming assets:          |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |    
|Other real estate owned              |                                      |            | 202      |            |        |            |        |            |         |   |    |     |  |   |    |    
|                                     |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |    
|                                     | Total other nonperforming assets     |            |          | 202        |        |            |         |           |         |   |     |    |  |   |     |    | 
|                                     |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |    
|Total nonperforming assets           |                                      | $          | 6,246    |            |        | $          | 822     |            |         | $ | 813 |     |  | $ | 167 |    
|                                     |                                      |            |          |            |        |            |         |            |         |   |     |     |  |   |     |    

Net Charge-offs

Net charge-offs were $8.2 million for the three months ended September 30,
2003, as compared to $10.4 million for the three months ended September 30,
2002. Net charge-offs represented 0.20% and 0.31% of average loans and leases
outstanding for the quarters ended September 30, 2003 and 2002, respectively.
For the nine months ended September 30, 2003 and 2002, net charge-offs were
$26.9 million and $29.5 million, respectively. Net charge-offs represented
0.23% and 0.30% of average loans and leases outstanding for the nine months
ended September 30, 2003 and 2002, respectively.

Potential Problem Loans

In addition to the nonperforming loans discussed above, we also have loans that
are 30 to 89 days delinquent and still accruing. These loans amounted to $135
million at September 30, 2003 compared to $139 million at December 31, 2002.
These loans and related delinquency trends are considered in the evaluation of
the allowance for loan and lease losses and the determination of the provision
for loan and lease losses.

ASSET-LIABILITY MANAGEMENT

The goal of asset-liability management is the prudent control of market risk,
liquidity and capital. Asset-liability management is governed by policies
reviewed and approved annually by our board of directors and monitored
periodically by the Board Risk Management Committee. The board delegates
responsibility for asset-liability management to the Asset Liability Management
Committee (ALCO), which is comprised of members of senior management who set
strategic directives that guide the day-to-day
asset-liability management of our activities. The ALCO also reviews and
approves all major risk, liquidity and capital management programs, except for
product pricing. Product pricing is reviewed and approved by the Pricing
Committee, which is comprised of a subset of ALCO members and the state
presidents of our banking subsidiary.

Market Risk

Market risk is the sensitivity of income to changes in interest rates, foreign
exchange rates, commodity prices and other market-driven rates or prices. We
have no trading operations and thus are only exposed to non-trading market
risk.

Interest-rate risk, including mortgage prepayment risk, is by far the most
significant non-credit risk to which we are exposed. Interest-rate risk is the
sensitivity of income to changes in interest rates. Changes in interest rates,
as well as fluctuations in the level and duration of assets and liabilities,
affect net interest income, our primary source of revenue. This risk arises
directly from our core banking activities - lending and deposit gathering. In
addition to directly impacting net interest income, changes in the level of
interest rates can also affect (i) the amount of loans

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originated and sold by us, (ii) the ability of borrowers to repay adjustable or
variable rate loans, (iii) the average maturity of loans, (iv) the rate of
amortization of premiums paid on securities and capitalized mortgage servicing
rights, (v) the fair value of our saleable assets, the amount of unrealized
gains and losses on securities available for sale per SFAS No. 115, and the
resultant ability to realize gains and (vi) per SFAS Nos. 133 and 138, the fair
value of derivatives carried on our balance sheet, derivative hedge
effectiveness testing, and the amount of ineffectiveness recognized in
earnings.

The primary objective of interest-rate risk management is to control our
exposure to interest-rate risk both within limits approved by our board and
guidelines established by the ALCO. These limits and guidelines reflect our
tolerance for interest-rate risk over both short-term and long-term horizons.
We attempt to control interest-rate risk by identifying, quantifying and, where
appropriate, hedging our exposure.

We quantify and measure interest-rate exposure using a model to dynamically
simulate net interest income under various interest rate scenarios over a
12-month period. Simulated scenarios include deliberately extreme interest
rate shocks and more gradual interest rate ramps. Key assumptions in these
simulation analyses relate to behavior of interest rates and spreads, increases
or decreases of product balances and the behavior of our deposit and loan
customers. The most material assumptions relate to the prepayment of mortgage
assets (including mortgage loans, mortgage-backed securities and mortgage
servicing rights). The risk of prepayment tends to increase when interest
rates fall. Since future prepayment behavior of loan customers is uncertain,
the resultant interest rate sensitivity of loan assets cannot be determined
exactly. Complicating our efforts to measure interest rate risk is the
uncertainty of the maturity, repricing and/or runoff of some of our assets and
liabilities.

To cope with these uncertainties, we give careful attention to our assumptions.
For example, many of our interest-bearing deposit products (e.g. interest
checking, savings and money market deposits) have no contractual maturity and
based on historical experience have only a limited sensitivity to movements in
market rates. Because we believe we have some control with respect to the
extent and timing of rates paid on non-maturity deposits, certain assumptions
regarding rate changes are built into the model. In the case of prepayment of
mortgage assets, the majority of assumptions are derived from a vendor
supported loan prepayment model that is periodically tested using observed loan
prepayment behavior.

We manage the interest-rate risk inherent in our core banking operations using
non-derivative and derivative instruments. Some non-derivative instruments
sometimes contain embedded options, mainly fixed-rate investment securities and
borrowed funds that can be prepaid or called away. When appropriate, we use
derivative instruments such as interest-rate swaps, interest rate floors,
interest rate caps and interest rate corridor agreements, among other
instruments. Derivatives used for hedging are designated at inception. At
September 30, 2003, our designated hedging activities were limited to forward
commitments of $127.5 million related to hedging our mortgage banking
operations and interest rate swaps of $566.5 million notional amount tied to
fixed rate debt.

Swaps and caps are offered to commercial borrowers through our commercial
borrower derivative hedging program. While these derivatives are designated as
speculative per SFAS No. 133, we believe that our exposure to commercial
customer derivatives is limited because these contracts are matched with a
mirrored fixed-rate swap transaction at inception. The program allows us to
retain variable-rate commercial loans while allowing the commercial borrowers
to synthetically fix the loan rate by entering into a variable-to-fixed
interest rate swap. We entered into $241 million of interest rate swaps with
commercial borrowers during the nine months ended September 30, 2003. and an
equal amount of mirrored transactions with swap dealers. At September 30,
2003, we had $297.9 million of such interest rate swaps outstanding. It is
anticipated that, over time, customer interest rate derivatives will reduce the
interest rate risk inherent in our longer-term, fixed-rate commercial business
and commercial real estate loans.

We manage the interest-rate risk inherent in our mortgage banking operations by
entering into forward sales contracts and, to a lesser extent, by using
purchased mortgage-backed security options. An increase in market interest
rates between the time we commit to terms on a loan and the time we ultimately
sell the loan in the secondary market will have the effect of reducing the gain
(or increasing the loss) we record on the sale. We attempt to mitigate this
risk by entering into forward sales commitments in amounts sufficient to cover
70 to 90% of all

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loans which are currently closed or are anticipated to close. Purchased
mortgage-backed security options are also used to hedge rate-locked loans.

The average balances for the three months and nine months ended September 30,
2003 and 2002 of residential mortgage loans held for sale and related hedge
positions are summarized in the table below:

TABLE
14 - Mortgage Loans Held for Sale and Related Hedges

|                                           |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|------------------------------------------ |  | ------------------ | ------- | ----------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                           |  | Three Months Ended |         | Nine Months Ended
|                                           |  | September 30,      |         | September 30,    
|                                           |  |                    |         |                  
|                                           |  | 2003               |         | 2002              |  | 2003 |         | 2002
|                                           |  |                    |         |                   |  |      |         |     
|Residential mortgage loans held for sale   |  | $                  | 101,528 |                   |  | $    | 72,676  |      |  | $ | 90,808  |  |  | $ | 58,647  | 
|Rate-locked loan commitments               |  |                    | 85,551  |                   |  |      | 110,650 |      |  |   | 104,632 |  |  |   | 73,725  | 
|Forward sales contracts                    |  |                    | 178,361 |                   |  |      | 160,092 |      |  |   | 181,739 |  |  |   | 123,307 | 
|Purchased mortgage-backed security options |  |                    |        |                   |  |      | 5,000   |      |  |   | 2,222   |  |  |   | 6,667   | 

Our policy on interest-rate risk simulation specifies that if interest rates
were to shift gradually up or down 2%, estimated net interest income for the
subsequent 12 months should decline by less than 5%. The gradual 2% falling
rate scenario was slightly outside guidelines at December 31, 2002. The ALCO
voted to approve the December 31, 2002 guidelines exception because a gradual
2% decreasing rate scenario was deemed unlikely based on the current level of
interest rates. However, all interest rate risk measures were within compliance
guidelines as of September 30, 2003. The ALCO currently is more focused on the
gradual decreasing 1% rate scenario than on the gradual decreasing 2% scenario
and on strategies that prove beneficial to income should rates decline or the
yield curve flatten.

The following table sets forth the estimated effects on our net interest income
over a 12-month period following the indicated dates in the event of the
indicated increases or decreases in market interest rates.

TABLE
15 - Interest Rate Sensitivity

|                   |  |                 |       |                 |  |                 |       |                 |  |  |      |   |  |  |      |  
|------------------ |  | --------------- | ----- | --------------- |  | --------------- | ----- | --------------- |  |  | ---- | - |  |  | ---- | -
|                   |  | 200 Basis Point |       | 100 Basis Point |  | 100 Basis Point |       | 200 Basis Point
|                   |  | Rate Decrease   |       | Rate Decrease   |  | Rate Increase   |       | Rate Increase  
|                   |  |                 |       |                 |  |                 |       |                
|September 30, 2003 |  |                 | (4.21 | )%              |  |                 | (1.47 | )%              |  |  | 1.02 | % |  |  | 1.52 | %
|December 31, 2002  |  |                 | (6.22 | )%              |  |                 | (2.64 | )%              |  |  | 2.15 | % |  |  | 3.40 | %

The results implied in the above table indicate estimated changes in simulated
net interest income for the subsequent 12 months assuming a gradual shift up or
down in market rates of 100 and 200 basis points across the entire yield curve.
Assuming a downward shift in rates, most deposit accounts have implied
interest rate floors and it is assumed that the related interest expense on
these accounts will not decrease in proportion to the downward shift in rates.
Assuming an upward shift in rates of 200 basis points, the simulated increase
in interest income would be more than the simulated increase in interest
expense because total adjustable earning assets will reprice more quickly than
will total adjustable cost liabilities. It should be emphasized, however, that
the results are dependent on material assumptions such as those discussed
above.

The most significant factors affecting market risk exposure of net interest
income during the nine months ended September 30, 2003 were (i) changes in the
shape of the U.S. Government securities and interest rate swap yield curve,
(ii) changes in the composition of the investment portfolio, including a
deleveraging strategy completed in the second quarter whereby approximately
$901 million in investments yielding approximately 5.05% were sold, (iii)
changes in the composition of mortgage assets and prepayment speeds of mortgage
assets, (iv) reduction of deposit interest expense and (v) changes in the
wholesale borrowings portfolio structure, including $853 million costing

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approximately 4.49% that were prepaid related to the deleveraging program.
Interest rates were about 30 basis points lower across the Treasury curve at
September 30, 2003 compared to interest rates at December 31, 2002. However,
mortgage rate changes during the nine-month period ended September 30, 2003
resulted in significant mortgage loan activity. With higher rates in the third
quarter, projected mortgage loan prepayments are forecasted to slow and prepay
at a slower constant prepayment rate (CPR) than in the third quarter. Because
of historically low rates and increased loan cash inflows, effective duration
estimates for loans and mortgage-backed securities are shorter than normal,
thus increasing asset sensitivity. Asset and liability management actions were
implemented during 2003 to reduce asset sensitivity. Among other things, we
purchased securities which are less susceptible to prepayments, replaced
approximately $700 million of existing borrowings, some of which were callable,
hedged $200 million of fixed rate subordinated debt, $150 million of fixed rate
senior notes and $216.5 million of FHLB fixed rate borrowings, and implemented
the deleveraging strategy discussed above. The above table reflects the net
impact of these changes. We remain asset sensitive and project net interest
income to increase if short and long interest rates move symmetrically higher.

Mortgage servicing rights as of September 30, 2003 had a fair value of
approximately $5.0 million versus a book value of $3.8 million. The book value
of mortgage servicing rights represented 0.71% of the underlying balance of
loans serviced for others at September 30, 2003. New mortgage servicing rights
from originations are sold quarterly. As a result, future earnings exposure to
changes in the value of mortgage servicing rights is not expected to be
material.

Our earnings are not directly and materially impacted by movements in foreign
currency rate or commodity prices. Virtually all transactions are denominated
in the U.S. dollar. Movements in equity prices may have an indirect but modest
impact on earnings by affecting the volume of activity or the amount of fees
from investment-related businesses.

LIQUIDITY

Parent Company

On a parent-only basis at September 30, 2003, our debt service requirements
consisted primarily of $295 million junior subordinated debentures and $150
million of 3.75% senior notes due May 1, 2008. The junior subordinated
debentures were issued to four subsidiaries in connection with their issuance
of capital securities. These obligations mature starting in 2027, have
interest rates ranging from 8% to 10.52% and annual debt service payments of
$25.1 million. The senior notes have annual debt service payments of $5.6
million.

The principal sources of funds for us to meet parent-only obligations are
dividends from our banking subsidiary, which are subject to regulatory
limitations, income from investment securities and borrowings, including draws
on a $110 million unsecured line of credit which is renewable every 364 days
and, if used, carries interest at LIBOR plus 0.625%. At September 30, 2003,
our subsidiary bank had $467.7 million available for dividends that could be
paid without prior regulatory approval. In addition, the parent company had
$202.7 million in cash or cash equivalents at September 30, 2003.

Banking Subsidiary

For our banking subsidiary, Banknorth, NA, liquidity represents the ability to
fund asset growth and accommodate deposit withdrawals and meet other funding
requirements. Liquidity risk is the danger that Banknorth, NA cannot meet
anticipated or unexpected funding requirements or can meet them only at
excessive cost. Liquidity is measured by the ability to raise cash when needed
at a reasonable cost. Many factors affect a banks ability to meet liquidity
needs, including variations in the markets served, its asset-liability mix, its
reputation and credit standing in the market and general economic conditions.

In addition to traditional retail deposits, Banknorth, NA has various other
liquidity sources, including proceeds from maturing securities and loans, the
sale of securities, asset securitizations and borrowed funds such as FHLB
advances, reverse repurchase agreements and brokered deposits.

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We continually monitor and forecast our liquidity position. There are several
interdependent methods which we use for this purpose, including daily review of
federal funds positions, monthly review of balance sheet changes, monthly
review of liquidity ratios, periodic liquidity forecasts and periodic review of
contingent funding plans.
As of September 30, 2003, Banknorth, NA had in the aggregate $4.5 billion of
immediately accessible liquidity, defined as cash that could be raised within
1-3 days through collateralized borrowings or sales of securities. This
represented 25% of retail deposits, as compared to a current policy minimum of
10% of deposits.

Also as of September 30, 2003, Banknorth, NA had in the aggregate potentially
volatile funds of $2.2 billion. These are funds that might flow out of the
bank over a 90-day period in an adverse environment. Management estimates this
figure by applying adverse probabilities to its various credit-sensitive and
economically-sensitive funding sources.

As of September 30, 2003, the ratio of immediately accessible liquidity to
potentially volatile funds was 206%, versus a policy minimum of 100%.

In addition to the liquidity sources discussed above, we believe that our
residential and consumer loan portfolios provide a significant amount of
contingent liquidity that could be accessed in a reasonable time period through
sales or securitizations. We believe we also have significant untapped access
to the national brokered deposit market. These sources are contemplated as
secondary liquidity in our contingent funding plan. We believe that the level
of our liquidity is sufficient to meet current and future funding requirements.

CAPITAL

At September 30, 2003, shareholders equity amounted to $2.5 billion, or 9.62%
of total assets. Tangible equity amounted to $1.3 billion or 5.46% of tangible
assets.

We paid a cash dividend of $0.19 per share on our common stock during the third
quarter of 2003 compared to $0.15 per share in the third quarter of 2002. In
October 2003, our Board authorized a $0.19 per share dividend on our common
stock payable in November 2003. In February 2002, our Board authorized 8
million shares to be repurchased in the open market. During the nine months
ended September 30, 2003, we repurchased 4.4 million shares at an average price
of $23.47. As of September 30, 2003, a total of 2.9 million shares were
available for repurchase under existing repurchase authorizations.

Capital guidelines issued by the Federal Reserve Board and the Office of the
Comptroller of Currency of the United States (OCC) respectively require us
and our banking subsidiary to maintain certain ratios, set forth in Table 16.
At September 30, 2003, Banknorth Group, Inc. and Banknorth, NA were deemed to
be well capitalized under the regulations of the Federal Reserve Board and
the OCC, respectively, and in compliance with applicable capital requirements.

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Table 16 - Capital Ratios

|                         |                                                   |  |        |           |                      |  |        |       |       |  |        |           |       |  |  |      |   |  |   |         |  |  |  |      |  
|------------------------ | ------------------------------------------------- |  | ------ | --------- | -------------------- |  | ------ | ----- | ----- |  | ------ | --------- | ----- |  |  | ---- | - |  | - | ------- |  |  |  | ---- | -
|                         |                                                   |  | Actual |           | Capital Requirements |  | Excess
|                         |                                                   |  |        |           |                      |  |       
|                         |                                                   |  | Amount |           | Ratio                |  | Amount |       | Ratio |  | Amount |           | Ratio
|                         |                                                   |  |        |           |                      |  |        |       |       |  |        |           |      
|As of September 30, 2003 |                                                   |  |        |           |                      |  |        |       |       |  |        |           |       |  |  |      |   |  |   |         |  |  |  |     
|Banknorth Group, Inc.    |                                                   |  |        |           |                      |  |        |       |       |  |        |           |       |  |  |      |   |  |   |         |  |  |  |     
|                         | Total capital (to risk weighted assets)           |  | $      | 2,039,658 |                      |  |        | 11.27 | %     |  | $      | 1,447,481 |       |  |  | 8.00 | % |  | $ | 592,177 |  |  |  | 3.27 | %
|                         | Tier 1 capital (to risk weighted assets)          |  |        | 1,613,447 |                      |  |        | 8.92  | %     |  |        | 723,741   |       |  |  | 4.00 | % |  |   | 889,706 |  |  |  | 4.92 | %
|                         | Tier 1 leverage capital ratio (to average assets) |  |        | 1,613,447 |                      |  |        | 6.54  | %     |  |        | 986,638   |       |  |  | 4.00 | % |  |   | 626,809 |  |  |  | 2.54 | %
|Banknorth, NA            |                                                   |  |        |           |                      |  |        |       |       |  |        |           |       |  |  |      |   |  |   |         |  |  |  |     
|                         | Total capital (to risk weighted assets)           |  | $      | 1,969,369 |                      |  |        | 10.91 | %     |  | $      | 1,444,552 |       |  |  | 8.00 | % |  | $ | 524,817 |  |  |  | 2.91 | %
|                         | Tier 1 capital (to risk weighted assets)          |  |        | 1,545,527 |                      |  |        | 8.56  | %     |  |        | 722,276   |       |  |  | 4.00 | % |  |   | 823,251 |  |  |  | 4.56 | %
|                         | Tier 1 leverage capital ratio (to average assets) |  |        | 1,545,527 |                      |  |        | 6.28  | %     |  |        | 984,526   |       |  |  | 4.00 | % |  |   | 561,001 |  |  |  | 2.28 | %
|As of December 31, 2002  |                                                   |  |        |           |                      |  |        |       |       |  |        |           |       |  |  |      |   |  |   |         |  |  |  |     
|Banknorth Group, Inc.    |                                                   |  |        |           |                      |  |        |       |       |  |        |           |       |  |  |      |   |  |   |         |  |  |  |     
|                         | Total capital (to risk weighted assets)           |  | $      | 1,960,869 |                      |  |        | 12.15 | %     |  | $      | 1,291,616 |       |  |  | 8.00 | % |  | $ | 669,253 |  |  |  | 4.15 | %
|                         | Tier 1 capital (to risk weighted assets)          |  |        | 1,558,974 |                      |  |        | 9.66  | %     |  |        | 645,808   |       |  |  | 4.00 | % |  |   | 913,166 |  |  |  | 5.66 | %
|                         | Tier 1 leverage capital ratio (to average assets) |  |        | 1,558,974 |                      |  |        | 7.13  | %     |  |        | 874,180   |       |  |  | 4.00 | % |  |   | 684,794 |  |  |  | 3.13 | %
|Banknorth, NA            |                                                   |  |        |           |                      |  |        |       |       |  |        |           |       |  |  |      |   |  |   |         |  |  |  |     
|                         | Total capital (to risk weighted assets)           |  | $      | 1,822,307 |                      |  |        | 11.31 | %     |  | $      | 1,288,562 |       |  |  | 8.00 | % |  | $ | 533,745 |  |  |  | 3.31 | %
|                         | Tier 1 capital (to risk weighted assets)          |  |        | 1,421,995 |                      |  |        | 8.83  | %     |  |        | 644,281   |       |  |  | 4.00 | % |  |   | 777,714 |  |  |  | 4.83 | %
|                         | Tier 1 leverage capital ratio (to average assets) |  |        | 1,421,995 |                      |  |        | 6.52  | %     |  |        | 871,830   |       |  |  | 4.00 | % |  |   | 550,165 |  |  |  | 2.52 | %

Net risk weighted assets were $18.1 billion and $16.1 billion at September 30,
2003 and December 31, 2002, respectively, for Banknorth Group, Inc. and
Banknorth, NA.

At September 30, 2003 and December 31, 2002, we had outstanding $295.1 million
of capital securities issued by subsidiary trusts. The following table sets
forth our capital trust securities which are classified as long-term debt.

TABLE 17 - Capital Trust Securities

|                                 |  |          |           |        |  |      |         |        |  |          |       |   |  |  |           | 
|-------------------------------- |  | -------- | --------- | ------ |  | ---- | ------- | ------ |  | -------- | ----- | - |  |  | --------- | 
|                                 |  | Issuance |           |        |  |      |         | Stated |  | Maturity
|Name                             |  | Date     |           | Amount |  | Rate |         | Date  
|                                 |  |          |           |        |  |      |         |       
|Peoples Heritage Capital Trust I |  |          | 1/31/1997 |        |  | $    | 61,556  |        |  |          | 9.06  | % |  |  | 2/1/2027  | 
|Banknorth Capital Trust I        |  |          | 5/1/1997  |        |  |      | 30,000  |        |  |          | 10.52 | % |  |  | 5/1/2027  | 
|Ipswich Statutory Trust I        |  |          | 2/22/2001 |        |  |      | 3,500   |        |  |          | 10.20 | % |  |  | 2/22/2031 | 
|Banknorth Capital Trust II       |  |          | 2/22/2002 |        |  |      | 200,000 |        |  |          | 8.00  | % |  |  | 4/1/2032  | 
|                                 |  |          |           |        |  |      |         |        |  |          |       |   |  |  |           | 
|                                 |  |          |           |        |  | $    | 295,056 |        |  |          |       |   |  |  |           | 
|                                 |  |          |           |        |  |      |         |        |  |          |       |   |  |  |           | 

The regulatory capital treatment of capital securities issued by subsidiary
trusts of bank holding companies is currently under review by the banking
regulators with respect to FIN 46. The capital securities are currently
included in the Tier 1 capital of Banknorth and, at September 30, 2003,
amounted to 18.3% of its Tier 1 capital. Depending on the future determination
of banking regulators, capital securities issued by certain subsidiary trusts
may no longer qualify for Tier 1 capital treatment, but instead may qualify for
Tier 2 capital treatment. Outstanding capital securities may or may not be
grandfathered by the Federal Reserve Board for treatment as Tier 1 capital for
regulatory purposes. On July 2, 2003, the Federal Reserve Board issued a
Supervision and Regulation Letter requiring that bank holding companies
continue to follow the current instructions for reporting capital securities in
their regulatory reports. The effect of the letter is that we will continue to
report our capital securities in Tier 1 capital until further notice from the
Federal Reserve Board. As noted above, at September 30, 2003, Banknorth was
classified as well capitalized for regulatory purposes, the highest
classification. We believe that Banknorths classification would have remained
well-capitalized were the capital securities issued by subsidiary trusts
included in its Tier 2 capital and not in Tier 1 capital. If our trust capital
securities were no longer allowed to be included in Tier 1 capital as a result
of accounting and regulatory developments, we would be permitted to redeem the
capital securities, which bear interest from 8.00% to 10.52%, without penalty.
If capital securities issued by subsidiary

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trusts were not granted Tier 2 status, we believe that Banknorth would remain
in compliance with existing minimum capital requirements.

At September 30, 2003 and December 31, 2002, we also had $200 million of 7.625%
subordinated notes due in 2011 issued by our banking subsidiary, which qualify
as Tier 2 capital for regulatory purposes.

Banking regulators have also established guidelines as to the level of
investments in bank owned life insurance (BOLI). These guidelines are
expressed in terms of a percentage of Tier 1 capital plus loan loss reserves.
Our guideline (which is consistent with regulatory guidelines) is that BOLI
should not exceed 25% of our Tier 1 capital plus loan loss reserves, which we
monitor monthly. The ratio of BOLI to Tier 1 capital plus loan loss reserves
was 26.2% at September 30, 2003 and 21.5% at December 31, 2002. This increase
was the result of the $85.6 million of BOLI acquired in the merger with
American on February 14, 2003. We currently do not anticipate any additional
purchases or sales of BOLI.

CRITICAL ACCOUNTING POLICIES

Our accounting and reporting policies comply with accounting principles
generally accepted in the United States of America and conform to general
practices within the banking industry. The preparation of financials
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions. The financial position and
results of operations can be affected by these estimates and assumptions, which
are integral to understanding reported results. Management has discussed the
development and the selection of critical accounting policies with the Audit
Committee of our board of directors. As discussed in our 2002 Annual Report on
Form 10-K, we have identified the following critical accounting policies:
allowance for loan and lease losses, accounting for acquisitions and review of
goodwill and other intangible assets, and accounting for pension plans. We
consider these policies as our critical accounting policies due to the
potential impact on our results of operations and the carrying value of certain
of our assets based on any changes in judgments and assumptions required to be
made by us in the application of these policies. Our policies have not changed
since December 31, 2002.

IMPACT OF NEW ACCOUNTING STANDARDS

For information on the impact of new accounting standards, see Note 11 to the
unaudited Consolidated Financial Statements.

FORWARD LOOKING STATEMENTS

Certain statements contained herein are not based on historical facts and are
forward-looking statements within the meaning of Section 21A of the
Securities Exchange Act of 1934. Forward-looking statements, which are based
on various assumptions (some of which are beyond our control), may be
identified by reference to a future period or periods, or by the use of
forward-looking terminology, such as may, will, believe, expect,
estimate, anticipate, continue or similar terms or variations on those
terms or the negative of those terms. Forward-looking statements are subject to
various factors which could cause actual results to differ materially from
these estimates. These factors include, but are not limited to, changes in
general economic conditions, interest rates, deposit flows, loan demand,
competition, legislation or regulation and accounting principles, policies or
guidelines, as well as other economic, competitive, governmental, regulatory
and technological factors affecting our operations. In addition, acquisitions
may result in large one-time charges to income, may not produce revenue
enhancements or cost savings at levels or within time frames originally
anticipated and may result in unforeseen integration difficulties. We do not
undertake, and specifically disclaim any obligation, to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect the occurrence of events or circumstances after the date of such
statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information contained in the section captioned Managements Discussion and
Analysis  Asset-Liability Management is incorporated herein by reference.




Item 4. Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report.
Based on such evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures are designed
to ensure that information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SECs rules and regulations and are operating in an effective manner.

No change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred
during the most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.




Part II - Other Information




Item 1. Legal Proceedings

We are involved in routine legal proceedings occurring in the ordinary course
of business which in the aggregate are believed by management to be immaterial
to our financial condition and 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  not applicable.




Item 5. Other Information

Our Bylaws were revised to conform to the changes in the Maine Business
Corporation Act and are included as Exhibit 3 (ii).




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

| |  |     |  |                                                                                                                              
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------
| |  | (a) |  | The following exhibits are filed as part of this report.                                                                     
|
| |  |     |  | Exhibit 3 (ii) Bylaws.                                                                                                       
|
| |  |     |  | Exhibit 31.1 Certification of Chief Executive Officer under Rules 13a-14 and 15d-14.                                         
|
| |  |     |  | Exhibit 31.2 Certification of Chief Financial Officer under Rules 13a-14 and 15d-14.                                         
|
| |  |     |  | Exhibit 32.1 Certification of Chief Executive Officer Under 18 U.S.C. § 1350.                                                
|
| |  |     |  | Exhibit 32.2 Certification of Chief Financial Officer Under 18 U.S.C. § 1350.                                                
| |  |     |  |                                                                                                                              
| |  | (b) |  | We filed a Current Report on Form 8-K or 8-K/A on July 21,
2003, September 2, 2003, September 5, 2003 and September 16, 2003.

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SIGNATURES

Pursuant to the requirements 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.

|                       |  |                       |  |                                                                                                                    | 
|---------------------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------ | 
|                       |  | BANKNORTH GROUP, INC. | 
|                       |  |                       |  |                                                                                                                    | 
|Date: November 4, 2003 |  | By:                   |  | /s/ William J. Ryan                                                                                                | 
|                       |  |                       |  |                                                                                                                    | 
|                       |  |                       |  | William J. Ryan
Chairman, President and
Chief Executive Officer                                                    | 
|                       |  |                       |  |                                                                                                                    | 
|Date: November 4, 2003 |  | By:                   |  | /s/ Stephen J. Boyle                                                                                               | 
|                       |  |                       |  |                                                                                                                    | 
|                       |  |                       |  | Stephen J. Boyle
Executive Vice President and
Chief Financial Officer
(principal financial and accounting officer) | 

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EXHIBIT INDEX

Exhibit 3 (ii) Bylaws.

Exhibit 31.1 Certification of Chief Executive Officer under Rules 13a-14 and 15d-14.

Exhibit 31.2 Certification of Chief Financial Officer under Rules 13a-14 and 15d-14.

Exhibit 32.1 Certification of Chief Executive Officer, dated November 4, 2003.

Exhibit 32.2 Certification of Chief Financial Officer, dated November 4, 2003.

46