Record Earnings at Banknorth in 2001

Portland, Maine, January 22, 2002 - Banknorth Group, Inc. (NASDAQ: BKNG) today announced record operating and net income for 2001. Operating income, which is exclusive of special charges and extraordinary items, for the year ended December 31, 2001 was $247.9 million, or $1.75 per diluted share, up 8 percent on a per diluted share basis from operating earnings in 2000. Net income for 2001 of $238.8 million, or $1.68 per diluted share, was up 27 percent from 2000 net income on a per diluted share basis.

Operating income for the quarter ended December 31, 2001 was also at a record level of $66.8 million, or 45 cents per diluted share, up 5 percent per diluted share from the same quarter a year ago. Net income was $61.6 million, or 42 cents per diluted share, for the fourth quarter of 2001, down slightly from the fourth quarter a year ago, largely because of a $3.9 million post-tax prepayment penalty on the early payoff of borrowings that is anticipated to enhance earnings in future years.

Asset quality remained strong at Banknorth in the face of an economic slowdown in the country and its market regions. Nonperforming loans as a percentage of total loans at December 31, 2001 edged up only slightly to 0.59% as compared to 0.57% at December 31, 2000. Similarly, nonperforming assets as a percentage of total assets at December 31, 2001 were 0.38% as compared to 0.37% at December 31, 2000. As compared to the previous quarter, nonperforming loans as a percentage of total loans remained the same and nonperforming assets as a percentage of total assets improved slightly. The Company's allowance for loan losses to total loans increased to 1.49% at December 31, 2001, up from 1.42% at December 31, 2000 and from 1.45% at September 30, 2001, reflecting increased provisions for loan losses in response to the current economic downturn.

"Our asset quality continues to be strong and our loans and deposits increased with the completion of the acquisitions of Andover Bancorp and MetroWest Bank in Massachusetts during the fourth quarter of 2001," said William J. Ryan, Chairman, President and Chief Executive Officer. "This speaks well of our ability to increase loans and deposits while maintaining strong asset quality both internally and through sound acquisitions."

Primarily as a result of the acquisitions of Andover Bancorp and MetroWest Bank on October 31, 2001, Banknorth Group total assets increased to $21.1 billion at year-end. Operational integration of the Andover Bancorp's banking subsidiaries and MetroWest will be completed during the first quarter of 2002. The Company also consolidated all of its affiliate banks into a single national bank, Banknorth N.A., on January 1, 2002.

Commercial loans, including commercial real estate loans, were 25 percent higher at December 31, 2001 than at December 31 2000 and consumer loans, including home mortgages, were 10 percent higher at December 31, 2001 than December 31, 2000.

The Company's net interest income in 2001 was $680.0 million, 13 percent higher than net interest income of $603.6 million in 2000. For the fourth quarter ended December 31, 2001, net interest income was $188.5 million, 24 percent higher than net interest income of $151.6 million for the same quarter a year ago.

Total deposits were 17 percent higher at December 31, 2001 than at December 31, 2000. Money market and NOW accounts increased by 29 percent in 2001 and noninterest bearing deposits, principally checking accounts, grew by 23 percent.

Noninterest income, principally fee income, increased by 14 percent in 2001, led by 53 percent growth in insurance commissions from the Company's insurance subsidiary, Banknorth Insurance Group, 18 percent growth in investment advisory services income through its investment planning subsidiary, Bancnorth Investment Planning Group, and 11 percent growth in merchant and electronic banking income.

Noninterest expenses, exclusive of special charges primarily related to acquisitions in both years, increased by 9 percent in 2001.

Net charge-offs increased to $13.4 million in the fourth quarter of 2001 from $10 million in the fourth quarter a year ago but nearly 70% of the difference was attributable to charge-offs related to a leasing portfolio at Andover Bank.

The Company repurchased approximately 1.6 million shares during the fourth quarter ended December 31, 2001, bringing total repurchased shares during 2001 to approximately 7.3 million. Since the end of the year, the Company has repurchased about 825,000 additional shares to a combined total of approximately 8.1 million repurchased shares of a 13 million share authorization resulting from two votes of its Board of Directors in 2001.

Operating cash return on average equity for 2001 was 21.73%. Operating cash return on average assets for the year was 1.45%. The Company's net interest margin for 2001 was 3.99%, reflecting a change in calculation methodology to record distributions on the Company's trust preferred securities as interest expense, as compared to 3.60% in 2000. Under the new methodology, the Company's net interest margin for the quarter ended December 31, 2001 was 4.13% as compared to 3.64% for the same quarter a year ago.

Shareholders' equity at December 31, 2001 was $1.79 billion, up 34 percent from $1.33 billion at December 31, 2000. Book value per share at December 31, 2001 was $11.83, as compared to $9.42 at year-end 2000. The Company's total of 308 branches at year-end reflected the acquisitions of Andover Bancorp and MetroWest, which had a total of 33 branches, as well as the closings and consolidations of 10 branches during 2001.

Banknorth Group, Inc. is a $21.1 billion banking and financial services company. Its banking subsidiary, Banknorth NA, conducts banking operations through the following divisions: Peoples Heritage Bank in Maine, Bank of New Hampshire, Banknorth Massachusetts, Banknorth Vermont, Banknorth Connecticut, and Evergreen Bank in upstate New York. The Company and Bank also operate subsidiaries and divisions in money management (Banknorth Investment Management Group), investment services, insurance, mortgage banking (Banknorth Mortgage Group), leasing (Banknorth Leasing), government banking, merchant services and other financial services.

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