SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-Q

(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934.

    For the quarterly period ended March 31, 2003

    OR

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

For the transition period from ___________________   to ____________________

                        Commission File Number 000-23129

                             NORTHWAY FINANCIAL, INC
                             -----------------------
             (Exact name of registrant as specified in its charter)

         New Hampshire                               04-3368579
         -------------                               ----------
         (State or other jurisdiction of             (I.R.S. Employer
          incorporation or organization)             Identification No.)

         9 Main Street
         Berlin, New Hampshire                       03570
         ---------------------                       -----
         (Address of principal executive offices)    (Zip Code)

                                 (603) 752-1171
                                 --------------
              (Registrant's telephone number, including area code)

                                    No Change
                                    ---------
              (Former name, former address and former fiscal year,
                          if changed since last year)

      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 twelve (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 ninety (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 [ ] NO [X]

      Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date. At April 30, 2003, there were
1,506,574 shares of common stock outstanding, par value $1.00 per share.

                                      INDEX
                            NORTHWAY FINANCIAL, INC.

PART I.  FINANCIAL INFORMATION                                             PAGE

Item 1.
         Condensed Consolidated Financial Statements

         Condensed Consolidated Statements of Income for the Three Months
         Ended March 31, 2003 and 2002 (Unaudited)............................3

         Condensed Consolidated Balance Sheets at March 31, 2003 (Unaudited)
         and December 31, 2002................................................4

         Condensed Consolidated Statements of Cash Flows for the Three Months
         Ended March 31, 2003 and 2002 (Unaudited)............................5

         Notes to Condensed Consolidated Financial Statements (Unaudited).....6

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

Item 3.
         Quantitative and Qualitative Disclosures about Market Risk..........12

Item 4.
         Controls and Procedures.............................................12

PART II. OTHER INFORMATION

Item 1.
         Legal Proceedings...................................................13

Item 2.
         Changes in Securities...............................................13

Item 3.
         Defaults Upon Senior Securities.....................................13

Item 4.
         Submission of Matters to a Vote of Security Holders.................13

Item 5.
         Other Information...................................................13

Item 6.
         Exhibits and Reports on Form 8-K....................................13

Signatures...................................................................14

Certifications...............................................................15


PART 1.  FINANCIAL INFORMATION
------------------------------
Item 1.  Financial Statements.

                            NORTHWAY FINANCIAL, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                              Three Months
                                                             Ended Mar. 31,

(Dollars in thousands, except per share data)              2003          2002
-----------------------------------------------------------------------------
Interest and dividend income:
  Loans                                                     $7,059     $7,104
  Interest on debt securities:
      Taxable                                                  798        581
      Tax-exempt                                                77         64
  Dividends                                                     54         58
  Federal funds sold                                            10         47
  Interest bearing deposits                                      1          -
                                                           ------------------
      Total interest and dividend income                     7,999      7,854
                                                           ------------------

Interest expense:
  Deposits                                                   1,268      1,850
  Borrowed funds                                               666        685
  Guaranteed preferred beneficial interest in junior
       subordinated debentures                                 257          -
                                                           ------------------
       Total interest expense                                2,191      2,535
                                                           ------------------

       Net interest and dividend income                      5,808      5,319
Provision for loan losses                                      225        225
                                                           ------------------
       Net interest and dividend income after
           provision for loan losses                         5,583      5,094
                                                           ------------------


Noninterest income:
  Service charges and fees on deposit accounts                 398        309
  Securities gains, net                                        198        246
  Loan servicing income                                         81        119
  Other                                                        365        278
                                                           ------------------
        Total noninterest income                             1,042        952
                                                           ------------------

Noninterest expense:
  Salaries and employee benefits                             2,699      2,380
  Office occupancy and equipment                               935        763
  Amortization of core deposit intangible                      238        104
  Write-down of equity securities                               78          -
  Other                                                      1,397      1,082
                                                           ------------------
      Total noninterest expense                              5,347      4,329
                                                           ------------------

      Income before income tax expense                       1,278      1,717
Income tax expense                                             467        598
                                                           ------------------

      Net income                                           $   811     $1,119
                                                           ==================

        Comprehensive net income                           $ 1,068     $  750
                                                           ==================

Per share data:
     Earnings per common share                             $  0.54     $ 0.74
     Earnings per common share (assuming dilution)         $  0.54     $ 0.74
     Cash dividends declared                               $  0.17     $ 0.17
Weighted average number of common shares                 1,509,907  1,511,424

The accompanying notes are an integral part of these condensed consolidated
financial statements.


                               NORTHWAY FINANCIAL, INC.
                         CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                           Mar. 31,                   Dec. 31,
(Dollars in thousands)                                                       2003                       2002
--------------------------------------------------------------------------------------------------------------
                                                                                        (Unaudited)
Assets:
                                                                                                 
Cash and due from banks and interest bearing deposits                      $ 17,672                   $ 17,256
Federal funds sold                                                                -                     10,170
Securities available-for-sale                                                77,581                     91,397
Federal Home Loan Bank stock                                                  4,632                      4,632
Federal Reserve Bank stock                                                      365                         80
Loans held-for-sale                                                           1,547                        669

Loans, net before allowance for loan losses                                 458,578                    442,152
   Less: allowance for loan losses                                            4,983                      4,920
                                                                           -----------------------------------
   Loans, net                                                               453,595                    437,232
                                                                           -----------------------------------

Other real estate owned                                                         186                        175
Premises and equipment, net                                                  12,211                     12,503
Core deposit intangible                                                       4,618                      4,857
Goodwill                                                                     10,152                     10,152
Other assets                                                                  7,463                      9,195
                                                                           -----------------------------------
      Total assets                                                         $590,022                   $598,318
                                                                           ===================================

Liabilities and Stockholders' Equity:
Liabilities
   Interest bearing deposits                                               $387,965                   $404,435
   Noninterest bearing deposits                                              68,922                     71,759
   Securities sold under agreements to repurchase                             8,067                      8,251
   Federal funds purchased                                                      575                          -
   Long-term Federal Home Loan Bank advances                                 56,000                     46,000
   Other liabilities                                                          3,708                      3,607
                                                                           -----------------------------------
      Total liabilities                                                     525,237                    534,052
                                                                           -----------------------------------

Guaranteed preferred beneficial interest in junior
  subordinated debentures                                                    20,000                     20,000
                                                                           -----------------------------------

Stockholders' equity
   Preferred stock, $1.00 par value; 1,000,000 shares
     authorized; none issued                                                      -                          -
   Common stock, $1 par value; 9,000,000 shares
     authorized; 1,731,969 issued at March 31, 2003 and
     December 31, 2002 and 1,506,574 outstanding at March
     31, 2003 and 1,516,574 outstanding at December 31, 2002                  1,732                      1,732
   Surplus                                                                    2,088                      2,088
   Retained earnings                                                         48,077                     47,523
   Treasury stock, at cost (225,395 and 215,395 shares, respectively)        (6,003)                    (5,711)
   Accumulated other comprehensive loss, net of tax                          (1,109)                    (1,366)
                                                                           -----------------------------------
      Total stockholders' equity                                             44,785                     44,266
                                                                           -----------------------------------
      Total liabilities and stockholders' equity                           $590,022                   $598,318
                                                                           ===================================

The accompanying notes are an integral part of these condensed consolidated financial statements.



                                       NORTHWAY FINANCIAL, INC.
                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (Unaudited)

                                                                                         For the Three Months
                                                                                            Ended Mar. 31,
(Dollars in thousands)                                                                      2003       2002
-------------------------------------------------------------------------------------------------------------
                                                                                               
Cash flows from operating activities:
     Net income                                                                          $   811    $ 1,119
     Adjustments to reconcile net income to net cash provided by operating activities:
     Provision for loan losses                                                               225        225
     Depreciation and amortization                                                           608        395
     Deferred income tax expense                                                               -        187
     Write-down of equity securities                                                          78          -
     Gains on sales of securities available-for-sale, net                                   (198)      (246)
     Loss on disposal and write-down of premises and equipment                                 2          -
     Amortization of premiums and accretion of discounts on securities, net                  131         56
     Increase in unearned income, net                                                         20         12
     Amortization of discount on loans acquired                                               27          -
     Gain on sales of other real estate owned and other personal property, net                 -         (4)
     Net decrease (increase) in loans held-for-sale                                         (878)     1,104
     Net change in other assets and other liabilities                                      1,725      3,671
                                                                                         -------    -------
        Net cash provided by operating activities                                          2,551      6,519
                                                                                         -------    -------
Cash flows from investing activities:
     Proceeds from sales of securities available-for-sale                                  3,169      5,880
     Proceeds from maturities of securities available-for-sale                            19,385      5,684
     Purchase of securities available-for-sale                                            (8,626)   (11,766)
     Loan originations and principal collections, net                                    (16,903)     4,100
     Recoveries of previously charged-off loans                                               44         59
     Proceeds from sales of and payments received on other real estate owned                  10         26
     Proceeds from sales of and payments received on other personal property                 160        161
     Additions to premises and equipment                                                     (79)      (226)
                                                                                         -------    -------
        Net cash provided by (used in) investing activities                               (2,840)     3,918
                                                                                         -------    -------
Cash flows from financing activities:
     Net decrease in deposits                                                            (19,307)   (18,074)
     Advances from FHLB                                                                   10,000          -
     Net increase in federal funds purchased                                                 575          -
     Net decrease in securities sold under agreements to repurchase                         (184)      (222)
     Exercise of stock options                                                                 -         41
     Purchases of treasury stock                                                            (292)         -
     Cash dividends paid                                                                    (257)      (256)
                                                                                         -------    -------
        Net cash used by financing activities                                             (9,465)   (18,511)
                                                                                         -------    -------
Net decrease in cash and cash equivalents                                                 (9,754)    (8,074)
     Cash and cash equivalents at beginning of period                                     27,426     29,641
                                                                                         -------    -------
     Cash and cash equivalents at end of period                                          $17,672    $21,567
                                                                                         =======    =======
Supplemental disclosure of cash flows:
     Interest paid                                                                       $ 2,142    $ 2,761
                                                                                         =======    =======
     Taxes paid                                                                          $    60    $    70
                                                                                         =======    =======
     Loans transferred to other real estate owned                                        $    21    $     -
                                                                                         =======    =======
     Loans transferred to other personal property                                        $   202    $   132
                                                                                         =======    =======

The accompanying notes are an integral part of these condensed consolidated financial statements.



                            NORTHWAY FINANCIAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2003
                                   (Unaudited)

1.      Basis of Presentation.

        The unaudited condensed consolidated financial statements of Northway
Financial, Inc. and its four wholly-owned subsidiaries, The Berlin City Bank,
The Pemigewasset National Bank of Plymouth, the Northway Capital Trust I (an
issuer of trust preferred securities) and the Northway Capital Trust II (also an
issuer of trust preferred securities) (collectively, "the Company") included
herein have been prepared by the Company in accordance with the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP") have been condensed or omitted in accordance with such rules
and regulations. The Company, however, believes that the disclosures are
adequate to make the information presented not misleading. The amounts shown
reflect, in the opinion of management, all adjustments necessary for a fair
presentation of the financial statements for the periods reported.

        The results of operations for the three month periods ended March 31,
2003 and 2002 are not necessarily indicative of the results of operations to be
expected for the full year or any other interim periods. The interim financial
statements are meant to be read in conjunction with the Company's audited
financial statements presented in its Annual Report on Form 10-K for the fiscal
year ended December 31, 2002.

        In preparing financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the dates of the balance sheet and revenues and expenses for
the reported periods. Actual results could differ from these estimates. Material
estimates that are particularly susceptible to change relate to the
determination of the allowance for loan losses.

        The year-end condensed consolidated balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
GAAP.

2.      Stock-Based Compensation

        As of March 31, 2003, the Company has a stock-based employee
compensation plan which is described more fully in its Annual Report on Form
10-K for the fiscal year ended December 31, 2002. The Company accounts for this
plan under the recognition and measurement principles of the Auditing Practice
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. No stock-based employee compensation cost is reflected
in net income, as all options granted under this plan had an exercise price
equal to the market value of the underlying common stock on the date of the
grant. The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of
Statement of Financial


Accounts Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.


                                                                                  ($000 Omitted, except per share data)
                                                                                                 Three Months
                                                                                                Ended Mar. 31,
                                                                                             2003         2002

                                                                                                 
Net income                                                       As reported                 $  811       $1,119
Deduct:  Total stock-based employee compensation
  expense determined under fair value based methods
  awards, net of related tax effects                                                             10           10
                                                                                            -------       ------
                                                                 Pro forma                  $   801       $1,109
                                                                                            =======       ======

Earnings per common share                                        As reported                  $0.54        $0.74
                                                                 Pro forma                    $0.53        $0.73

Earnings per common share (assuming dilution)                    As reported                  $0.54        $0.74
                                                                 Pro forma                    $0.53        $0.73


3.       Impact of New Accounting Standards.

        SFAS No. 142, Goodwill and Other Intangible Assets, requires that
goodwill no longer be amortized to earnings, but instead be reviewed for
impairment. The amortization of goodwill ceased upon adoption of the statement,
which for the Company, was January 1, 2002. The effect of the adoption of SFAS
No. 142 on the Company's consolidated financial statements is described below.

      In October 2002, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 147, Acquisitions of Certain Financial Institutions, an
Amendment of SFAS Nos. 72 and 144 and FASB Interpretation No. 9. SFAS No. 72,
Accounting for Certain Acquisitions of Banking or Thrift Institutions and FASB
Interpretation No. 9, Applying APB Opinions No. 16 and 17 When a Savings and
Loan Association or a Similar Institution Is Acquired in a Business Combination
Accounted for by the Purchase Method, provided interpretive guidance on the
application of the purchase method to acquisitions of financial institutions.
Except for transactions between two or more mutual enterprises, SFAS No. 147
removes acquisitions of financial institutions from the scope of both Statement
72 and Interpretation 9 and requires that those transactions be accounted for in
accordance with SFAS No. 141, Business Combinations and No. 142, Goodwill and
Other Intangible Assets. Thus, the requirement in paragraph 5 of Statement 72 to
recognize (and subsequently amortize) any excess of the fair value of
liabilities assumed over the fair value of tangible and identifiable intangible
assets acquired as an unidentifiable intangible asset no longer applies to
acquisitions within the scope of SFAS No. 147. In addition, SFAS No. 147 amends
SFAS No. 144 Accounting for the Impairment or disposal of Long-Lived Assets to
include in its scope long-term customer-relationship intangible assets of
financial institutions such as depositor- and borrower-relationship intangible
assets and credit cardholder intangible assets. Consequently, those intangible
assets are subject to the same undiscounted cash flow recoverability test and
impairment loss recognition and measurement provisions that SFAS No. 144
requires for other long-lived assets that are held and used.

      Paragraph 5 of SFAS No. 147, which relates to the application of the
purchase method of accounting, was effective for acquisitions for which the date
of acquisition is on or after October 1, 2002. The provisions in paragraph 6
related to accounting for the impairment or disposal of certain long-term
customer-relationship intangible assets were effective on October 1, 2002.
Transition provisions for previously recognized unidentifiable intangible assets
in paragraphs 8-14 were effective on October 1, 2002, with earlier application
permitted.

      In accordance with paragraph 9 of SFAS No. 147, the Company has
reclassified, as of September 30, 2002 its recognized unidentifiable intangible
asset related to branch acquisitions. This asset was reclassified as goodwill
("reclassified goodwill"). The amount reclassified was $5,386,000, the carrying
amount as of January 1, 2002. The reclassified goodwill is being accounted for
and reported prospectively as goodwill under SFAS No. 142, with no amortization
expense. Accordingly, the consolidated financial statements for the three-months
ended March 31, 2002 do not reflect amortization in the amount of $60,000 that
would have been recorded if SFAS No. 147 had not been issued.

      In accordance with SFAS No. 147 the Company tested its reclassified
goodwill for impairment as of January 1, 2002 and December 31, 2002. The Company
determined that its goodwill as of those dates was not impaired.

      Also in accordance with paragraph 9 of SFAS No. 147, as of September 30,
2002, the Company reclassified its core deposit intangible ("CDI") asset and
accounted for it as an asset apart from the unidentifiable intangible asset and
not as goodwill. As of December 31, 2002, the Company tested its CDI asset for
impairment and determined that as of that date it was not impaired.

         The effect of the Company's adoption of SFAS No. 147 was to increase
net income for the three-month period ended March 31, 2002 by $36,000.

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operation

         The following discussion and analysis and the related condensed
consolidated financial statements relate to Northway Financial, Inc. and its
four wholly-owned subsidiaries, The Berlin City Bank, The Pemigewasset National
Bank of Plymouth, Northway Capital Trust I and Northway Capital Trust II
(collectively, the "Company").

Forward-Looking Statements


         Certain statements in this Form 10-Q are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements can be identified by the use of the words "expect,"
"believe," "estimate," "will" and other expressions which predict or indicate
future trends and which do not relate to historical matters. Forward-looking
statements may include, but are not limited to, projections of revenue, income
or loss, plans for future operations, including in new markets, and
acquisitions, and plans related to products or services of the Company. Such
forward-looking statements are subject to known and unknown risks, uncertainties
and contingencies, many of which are beyond the control of the Company. The
Company's actual results could differ materially from those projected in the
forward-looking statements as the result of, among other factors, changes in
interest rates, changes in the securities or financial markets, a deterioration
in general economic conditions on a national basis or in the local markets in
which the Company operates, including changes in local business conditions
resulting in rising unemployment and other circumstances which adversely affect
borrowers' ability to service and repay our loans, changes in loan defaults and
charge-off rates, reduction in deposit levels necessitating increased borrowing
to fund loans and investments, the passing of adverse government regulation,
changes in assumptions used in making such forward-looking statements, as well
as those factors set forth in the Company's Annual Report on Form 10-K for the
year ending December 31, 2002, as well as in the Company's other filings with
the Securities & Exchange Commission. These forward-looking statements were
based on information, plans and estimates at the date of this report, and the
Company does not promise to update any forward-looking statements to reflect
changes in underlying assumptions or factors, new information, future events or
other changes.

Financial Condition

         The Company's total assets at March 31, 2003 were $590,022,000 compared
to $598,318,000 at December 31, 2002, a decrease of $8,296,000. Cash and cash
equivalents decreased $9,754,000 to $17,672,000, compared to $27,426,000 at
December 31, 2002, due primarily to a decrease in federal funds sold. In
addition, securities available-for-sale decreased $13,816,000 to $77,581,000 due
primarily to lower US Government Agency and mortgage-backed security balances
partially offset by corporate and municipal security purchases. The decrease in
federal funds sold and securities available for sale was partially offset by the
increase in net loans, including loans held-for-sale, of $17,241,000 to
$455,142,000. The increase in net loans was due to increases in residential
mortgage loans, commercial and commercial real estate loans and indirect
installment loans, partially offset by a decrease in consumer loans.

         Deposits decreased $19,307,000 from December 31, 2002 due to a decrease
in all deposit balances. Long-term Federal Home Loan Bank advances increased
$10,000,000 to $56,000,000 from December 31, 2002 due to three new advances
during the quarter ranging in term from two years to three years and an average
interest rate of 2.53%. Total stockholders' equity increased $519,000 from
$44,266,000 at December 31, 2002 to $44,785,000 at March 31, 2003 due primarily
to an increase in net income of $811,000 and a decrease in accumulated other
comprehensive loss of $257,000 which was partially offset by dividends paid of
$257,000 and an increase in treasury stock of $292,000. At March 31, 2003,
unrealized equity security losses of $759,000 are included in accumulated other
comprehensive loss, net of tax. Management does not consider the underlying
equity securities to be other than temporarily impaired.

         The Company maintains an allowance for loan losses to absorb
charge-offs of loans in the existing portfolio. The allowance is increased when
a loan loss provision is recorded as an expense. When a loan, or portion
thereof, is considered uncollectible, it is charged against this allowance.
Recoveries of amounts previously charged-off are added to the allowance when
collected. At March 31, 2003 the allowance for loan losses was $4,983,000, or
1.09% of total loans, compared to $4,920,000, or 1.11% of total loans at
December 31, 2002. The allowance for loan losses is based on an evaluation by
each bank's management and Board of Directors of current and anticipated
economic conditions, changes in the diversification, size and risk within the
loan portfolio, and other factors. The composition of the allowance for loan
losses for the three-month periods ended March 31, 2003 and 2002 is as follows:

                                                      Three Months
                                                      Ended Mar. 31,
(Dollars in thousands)                               2003       2002
----------------------------------------------------------------------

Balance at beginning of period                      $4,920      $4,642
                                                    ------------------
Charge-offs                                           (206)       (214)
Recoveries                                              44          59
                                                    ------------------
Net charge-offs                                       (162)       (155)
 Provision for loan losses                             225         225
                                                    ------------------
Balance at end of period                            $4,983      $4,712
                                                    ==================

         Nonperforming loans totaled $4,018,000 as of March 31, 2003, compared
to $3,619,000 at December 31, 2002. The ratio of nonperforming loans to loans
net of unearned income was 0.88% as of March 31, 2003 compared to 0.82% at
December 31, 2002. Nonperforming assets, which include nonperforming loans,
other real estate owned and other chattels owned, totaled $4,341,000 as of March
31, 2003, compared to $3,892,000 at December 31, 2002. The ratio of
nonperforming assets to total assets was 0.74% as of March 31, 2003 compared to
0.65% at December 31, 2002.

Results of Operations

         The Company reported net income of $811,000, or $0.54 per common share,
for the three months ended March 31, 2003, compared to $1,119,000, or $0.74 per
common share, for the three months ended March 31, 2002. The decline in net
income for the quarter is due primarily to an increase in operating expenses
related to the 2002 fourth quarter branch acquisitions, staff additions to
support current loan demand, and the implementation of bank-wide reengineering
and new technology initiatives.

         Net interest and dividend income for the first quarter of 2003
increased $489,000 to $5,808,000 compared to $5,319,000 for the first quarter of
2002. This is due primarily to an increase in average earning assets of
$73,660,000 partially offset by a decrease in the net interest margin of 0.26%.

         The provision for loan losses for the first quarter of 2003 remained
unchanged at $225,000 compared to the first quarter of last year.

         Noninterest income for the first quarter of 2003 increased $90,000 to
$1,042,000 compared to $952,000 for the same period last year. Service charges
and fees on deposit accounts increased due to increases in overdraft fee income
and service charge income resulting from the branch acquisitions in the fourth
quarter 2002 as well as increases in income from existing branches. The Company
recorded net securities gains for the first quarter of 2003 of $198,000 compared
to $246,000 for the same period last year. Loan servicing income decreased
$38,000 to $81,000 for the first quarter 2003 compared to $119,000 for the same
period last year. Other noninterest income increased due primarily to increases
in gains on sales of loans partially offset by a decrease in loan extension fees
associated with our skip-a-payment program.

         Noninterest expense increased $1,018,000 to $5,347,000 for the first
quarter of 2003 compared to $4,329,000 for the same period last year. During the
quarter, the Company recorded a $78,000 write-down of equity securities. This
write-down was due to the continued sustained overall weakness in the equity
market as well as significant declines in certain sectors and specific companies
within those sectors whereby the Company determined, through evaluations
described below, that the market values of certain of its marketable equity
securities were other than temporarily impaired. If a decline in the fair value
below the adjusted cost basis of an investment is judged to be other than
temporary, the cost basis of the investment is written down to fair value and
the amount of the write-down is included in noninterest expense.

         As a result of the branch acquisitions in the fourth quarter of 2002,
the Company recognized increases in salaries, lease expense, energy expense and
the amortization of core deposit intangibles. In addition, due to staff
additions to support current loan demand and the implementation of bank-wide
reengineering and new technology initiatives, the Company recognized increases
in salaries, professional fees, and depreciation expense.


Income Tax Expense

         The Company recognized income tax expense of $467,000 and $598,000 for
the three- month periods ended March 31, 2003 and 2002, respectively. The
effective tax rates were 36.5% and 34.8% for those respective periods.


Liquidity

         Liquidity risk management refers to the Company's ability to raise
funds in order to meet existing and anticipated financial obligations. These
obligations to make payment include withdrawal of deposits on demand or at their
contractual maturity, the repayment of borrowings as they mature, funding new
and existing loan commitments as well as new business opportunities. Liquidity
may be provided through amortization, maturity or sale of assets such as loans
and securities available-for-sale, liability sources such as increased deposits,
utilization of the Federal Home Loan Bank ("FHLB") credit facility, purchased or
other borrowed funds, and access to the capital markets. Liquidity targets are
subject to change based on economic and market conditions and are controlled and
monitored by the Company's Asset/Liability Committee.

         At the subsidiary bank level, liquidity is managed by measuring the net
amount of marketable assets, after deducting pledged assets, plus lines of
credit, primarily with the FHLB, that are available to fund liquidity
requirements. Management then measures the adequacy of that aggregate amount
relative to the aggregate amount of liabilities deemed to be sensitive or
volatile. These include core deposits in excess of $100,000, term deposits with
short maturities, and credit commitments outstanding.

      Additionally, Northway Financial, Inc. requires cash for various operating
needs, including dividends to shareholders, the stock repurchase program,
capital injections to the subsidiary banks, and the payment of general corporate
expenses. The primary sources of liquidity for Northway Financial, Inc. are
dividends from its subsidiary banks.

         Management believes that the Company's current level of liquidity and
funds available from outside sources is sufficient to meet the Company's needs.

Capital

         The Company's Tier 1 and Total Risk Based Capital ratios were 8.47% and
11.81%, respectively, at March 31, 2003. The Company's Tier 1 leverage ratio at
March 31, 2003 was 6.80%. As of March 31, 2003, the capital ratios of the
Company and the subsidiary banks exceeded the minimum capital ratio requirements
of the "well-capitalized" category under the Federal Deposit Insurance
Corporation Improvement Act of 1991.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         Since December 31, 2002, there have been no material changes in the
Company's quantitative and qualitative disclosures about market risk. A fuller
description of the quantitative and qualitative disclosures about market risk
was provided by the Company on pages 11 through 22 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2002.
Item 4. Controls and Procedures

(a)      Evaluation of disclosure controls and procedures.

         As required by new Rule 13a-15 under the Securities Exchange Act of
1934, within the 90 days prior to the date of this report, the Company carried
out an evaluation under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Securities and Exchange Commission's rules and
forms. In connection with the new rules, the Company currently is in the process
of further reviewing and documenting its disclosure controls and procedures,
including its internal controls and procedures for financial reporting, and may
from time to time make changes aimed at enhancing their effectiveness and to
ensure that its systems evolve with its business.

(b)   Changes in internal controls.
         None.


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings - None

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

Item 3.  Defaults upon Senior Securities - None

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

Item 5.  Other Information - None

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

         2.1  Agreement and Plan of Merger, dated as of March 14, 1997, by and
              among Northway Financial, Inc., The Berlin City Bank, Pemi
              Bancorp, Inc. and Pemigewasset National Bank (the "Merger
              Agreement") (incorporated by reference to Exhibit 2.1 to
              Registration Statement No. 333-33033).

         3.1  Amended and Restated Articles of Incorporation of Northway
              Financial, Inc. (incorporated by reference to Exhibit 3.1 to
              Registration Statement No. 333-33033).

         3.2  By-laws of Northway Financial, Inc (incorporated by reference to
              Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
              year ended December 31, 1997).

         4    Form of Certificate representing the Company Common Stock
              (reference is also made to Exhibits 3.1 and 3.2) (incorporated by
              reference to Exhibit 4 to Registration Statement No. 333-33033).

         10.1 Employment Agreement for William J. Woodward (incorporated by
              reference to Exhibit 10.1 to the Company's Annual Report on Form
              10-K for the year ended December 31, 1997).

         10.2 Employment Agreement for Fletcher W. Adams (incorporated by
              reference to Exhibit 10.2 to the Company's Annual Report on Form
              10-K for the year ended December 31, 1997).

         10.3 Amendment to the Employment Agreement for William J. Woodward.
              (incorporated by reference to Exhibit 10.3 to the Company's
              Annual Report on Form 10-K for the year ended December 31, 1998).

         10.4 Amendment to the Employment Agreement for Fletcher W. Adams.
              (incorporated by reference to Exhibit 10.4 to the Company's
              Annual Report on Form 10-K for the year ended December 31, 1998).

         10.5 Northway Financial, Inc. 1999 Stock Option and Grant Plan
              (incorporated by reference to Exhibit 4.1 to Registration
              Statement No. 333-83571 dated July 23,1999).

         10.7 Form of Key Employee Agreement (incorporated by reference to
              Exhibit 10.8 to the Company's Annual Report on Form 10-K for the
              year ended 1999).

         10.8 Form of Collateral Assignment Split Dollar Agreement
              (incorporated by reference to Exhibit 10.7 to the Company's
              Annual Report on Form 10-K for the year ended 2000).

         11   Computation of per share earnings(1)

(1)  Filed herewith.

         (b) Current Report on Form 8-K - None


                                   SIGNATURES

         Pursuant to 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.

                                      NORTHWAY FINANCIAL, INC.

         May 9, 2003                  BY:/S/William J. Woodward
                                         ------------------------
                                      William J. Woodward
                                       President & CEO
                                      (Principal Executive Officer)

         May 9, 2003                  BY:/S/Richard P. Orsillo
                                         ------------------------
                                      Richard P. Orsillo
                                      Senior Vice President & CFO
                                      (Principal Financial and Accounting
                                      Officer)




                                  CERTIFICATION

I, William J. Woodward, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Northway Financial,
     Inc.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) Designed such disclosure controls and procedures to ensure that material
        information relating to the registrant, including its consolidated
        subsidiaries, is made known to us by others within those entities,
        particularly during the period in which this quarterly report is being
        prepared;

     b) Evaluated the effectiveness of the registrant's disclosure controls and
        procedures as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

     c) Presented in this quarterly report our conclusions about the
        effectiveness of the disclosure controls and procedures based upon our
        evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a) All significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weakness in internal
        controls; and

     b) Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     Date  May 9, 2003                /S/ William J. Woodward
         ------------------           ------------------------------------
                                        William J. Woodward
                                        Chief Executive Officer

                                  CERTIFICATION
I, Richard P. Orsillo, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Northway Financial,
     Inc.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) Designed such disclosure controls and procedures to ensure that material
        information relating to the registrant, including its consolidated
        subsidiaries, is made known to us by others within those entities,
        particularly during the period in which this quarterly report is being
        prepared;

     b) Evaluated the effectiveness of the registrant's disclosure
        controls and procedures as of a date within 90 days prior to the
        filing date of this quarterly report (the "Evaluation Date"); and

     c) Presented in this quarterly report our conclusions about the
        effectiveness of the disclosure controls and procedures based upon our
        evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a) All significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have identified
        for the registrant's auditors any material weakness in internal
        controls; and

     b) Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        controls; and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     Date  May 9, 2003              /S/ Richard P. Orsillo
         ------------------         ---------------------------
                                       Richard P. Orsillo
                                       Chief Financial Officer



                                INDEX OF EXHIBITS

Exhibit Number      Description of Exhibit

     2.1  Agreement and Plan of Merger, dated as of March 14, 1997, by and among
          Northway Financial, Inc., The Berlin City Bank, Pemi Bancorp, Inc. and
          Pemigewasset National Bank (the "Merger Agreement") (incorporated by
          reference to Exhibit 2.1 to Registration Statement No. 333-33033).

     3.1  Amended and Restated Articles of Incorporation of Northway Financial,
          Inc. (incorporated by reference to Exhibit 3.1 to Registration
          Statement No. 333-33033).

     3.2  By-laws of Northway Financial, Inc (incorporated by reference to
          Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year
          ended December 31, 1997).

     4    Form of Certificate representing the Company Common Stock (reference
          is also made to Exhibits 3.1 and 3.2) (incorporated by reference to
          Exhibit 4 to Registration Statement No. 333-33033).

     10.1 Employment Agreement for William J. Woodward (incorporated by
          reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K
          for the year ended December 31, 1997).

     10.2 Employment Agreement for Fletcher W. Adams (incorporated by reference
          to Exhibit 10.2 to the Company's Annual Report on Form 10-K for the
          year ended December 31, 1997).

     10.3 Amendment to the Employment Agreement for William J. Woodward.
          (incorporated by reference to Exhibit 10.3 to the Company's Annual
          Report on Form 10-K for the year ended December 31, 1998).

     10.4 Amendment to the Employment Agreement for Fletcher W. Adams.
          (incorporated by reference to Exhibit 10.4 to the Company's Annual
          Report on Form 10-K for the year ended December 31, 1998).

     10.5 Northway Financial, Inc. 1999 Stock Option and Grant Plan
          (incorporated by reference to Exhibit 4.1 to Registration Statement
          No. 333-83571 dated July 23,1999).

     10.7 Form of Key Employee Agreement (incorporated by reference to Exhibit
          10.8 to the Company's Annual Report on Form 10-K for the year ended
          1999).

     10.8 Form of Collateral Assignment Split Dollar Agreement (incorporated by
          reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K
          for the year ended 2000).

     11   Computation of per share earnings(1)

(1)  Filed herewith.