Record Quarterly EPS at Banknorth Up 7% Over Year-Ago Third Quarter

Portland, Maine, October 22, 2001 - Banknorth Group, Inc. (NASDAQ: BKNG) reported quarterly net income of $62.2 million for the third quarter ended September 30, 2001, up 7 percent on a per diluted share basis to a record 45 cents from 42 cents for the third quarter a year ago. On an operating cash basis, exclusive of special charges, securities restructurings and the amortization of goodwill and deposit premiums, per diluted share earnings were up 7 percent to 48 cents from 45 cents for the third quarter a year ago.

For the nine months ended September 30, 2001, net income was $177.2 million, up 43 percent on a per diluted share basis to $1.27 from 89 cents for the first nine months of 2000. On an operating cash basis, per diluted share earnings were up 9 percent from $1.28 for the first nine months of 2000 to $1.39 for the same period this year.

"While it is always gratifying to report strong earnings," said William J. Ryan, Banknorth Chairman, President and Chief Executive Officer, "it is perhaps even more gratifying in this slowing economy to be able to report continued strong asset quality."

Banknorth's nonperforming loans and nonperforming assets in the third quarter ended September 30, 2001, both in total dollars and as a percentage of total loans and total assets, respectively, declined from the second quarter ended June 30, 2001.

Mr. Ryan credited continuing strong asset quality to "a strong credit culture," a vigorous loan review process, good diversification in the loan portfolio, and a concentration on small business and middle market lending.

"We work very hard to put solid loans on the books," said Mr. Ryan. "We emphasize loans to local companies and not loans outside our markets, the so-called shared national credits where our fate is not in our own hands. We also avoid concentrations in any segment or industry. Currently, we do not have any industry concentrations of 15 percent or greater in our commercial portfolios."

The Company noted, though, that it is not immune to a slowing economy that can affect both asset quality and loan growth.

The Company indicated that slowing loan demand, in the 3 to 7 percent range for commercial and consumer loans in the third quarter as compared to the high single digit low double digit range early in the year, has been offset by a stronger net interest margin. The Company's net interest margin for the quarter ended September 30, 2001 was 4.14%, up from 3.57% for the same quarter a year ago.

Loan growth and a stronger margin resulted in a 14 percent increase in net interest income, from $150.7 million for the quarter ended September 30, 2000 to $172.1 million for the third quarter of this year.

Noninterest income, principally fee income, increased 8 percent from $56.1 million for the third quarter of last year to $60.6 million for the third quarter of 2001. Insurance commissions were up 69 percent, merchant and electronic banking income climbed 17 percent and investment advisory services income increased 11 percent, all for the quarter ended September 30, 2001 as compared to the same quarter a year ago.

Noninterest expenses for the quarter ended September 30, 2001, increased 13 percent as compared to the same quarter a year ago. Salary and employee benefit increases accounted for most of the increase in noninterest expenses, largely because of the timing of accruals for quarterly and annual incentive and bonus plans. However, for the first nine months of the year operating noninterest expenses, excluding special charges, actually increased at only about half the third quarter level, up 7 percent as compared to the first nine months of 2000.

Shareholders' equity at September 30, 2001 was $1.46 billion, up 11 percent from shareholders' equity of $1.31 billion at September 30, 2000. The Company's book value was $10.70 per share at September 30, 2001 as compared to $9.04 at September 30, 2000.

Banknorth Group, Inc., headquartered in Portland Maine, is one of the country's 35 largest commercial banking companies with $18.2 billion in assets. The Company operates banking offices in Connecticut, Maine, Massachusetts, New Hampshire, New York and Vermont. The Company also operates subsidiaries and divisions in money management, investments, insurance brokerage, government banking, mortgage banking, private banking, asset based lending and merchant services.

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Note: This news release may contain forward-looking information for Banknorth Group, Inc. Actual results may vary materially from any forward-looking statements. Factors which could result in material variation from forward looking statements include, but are not limited to, changes in interest rates which could affect net interest income, delays in cost savings measures or a failure to realize anticipated cost savings, competitive factors which could affect non interest income, costs of deposits and interest income, and general economic conditions which could affect the volume of loan originations, the amount of loan losses and levels of noninterest income.