BankBoston Announces Agreement to Sell Its Berkshire County Franchise; Banknorth Group, Inc. to Acquire County Operations.

PITTSFIELD, Mass.--(BUSINESS WIRE)--July 1, 1998--BankBoston Executive Vice President Tom Hollister announced today a definitive agreement for the sale of the bank's Berkshire County operations to Banknorth Group, Inc. (NASDAQ:BKNG). Under the terms of the agreement, BankBoston's complete Berkshire County franchise, consisting of retail, consumer, small business and commercial lending will become part of Banknorth's affiliate First Massachusetts Bank, N.A. The Private Bank, trust and investment management business will become part of The Stratevest Group, N.A., Banknorth's trust and investment management subsidiary. The local executive management team, led by Regional President Steven H. Massicotte, and all 110 BankBoston employees in the Berkshires will be retained.

Under the terms of the transaction, Banknorth Group, Inc. will pay a $52 million premium to acquire approximately $285 million in deposits, ten full-service branches, 9 remote electronic banking sites, commercial and consumer loan portfolios, and Private Bank services including a $1 billion investment management portfolio. The transaction is expected to close in the fall following regulatory approvals.

"Our managing for value strategy demands that we focus on those businesses which achieve the best fit with our overall long-term objectives," said Hollister. "We are selling the Berkshire franchise to a well-known and highly regarded institution with deep community banking roots in New England. Under the terms of this sale, Banknorth has agreed to retain all of our Berkshires staff, and to maintain the philanthropic commitment we have made to this region. I am confident that our employees, customers and community partners will continue to be well served by Banknorth."

"As I evaluated our position and the direction we needed to pursue locally that would be best for our employees and customers over the long term, I promoted the idea with BankBoston's management of identifying a new partner for the Berkshire franchise," said Steve Massicotte. "While we have been a profitable operation for BankBoston, our regional demographics and the demands of our customers differ from BankBoston's focus, and our growth dynamics have differed from those of the bank as a whole. Our geographic separation and less urban market lends itself more to a community banking approach, where we can be agile and focused in meeting the specific needs of the region."

"I am confident that Banknorth Group will make an excellent partner for us in developing and growing in this important market," added Massicotte. "They have an excellent reputation in community banking, a business model closely attuned to our customer base, and are committed to supplying the capital resources, as well as the products and services necessary to meet the challenges we face in Berkshire County. Additionally, Banknorth and BankBoston have agreed to work together to continue to provide capital markets, derivatives, international trade and other specialty banking products in the marketplace."

Since its acquisition of Multibank in 1993, BankBoston has created considerable value through investments in technology, personnel, branch and electronic banking networks in the Berkshires. In February, BankBoston announced a series of major capital improvements to its local delivery system including major renovations to the 99 West Street headquarters building, most of which have been completed. The implementation of a new electronic banking facility on North Street, Pittsfield will continue as planned.

Banknorth Group, Inc. is a financial services company headquartered in Burlington, VT. The company offers a full range of banking and financial management services through its seven community banks, Banknorth Mortgage Company, and The Stratevest Group, N.A., a trust and investment management company. Its customers' banking needs are served 24 hours a day through an automated telephone banking system and ATM network, and during business hours through 60 banking offices located in New Hampshire, Massachusetts and Vermont.

William H. Chadwick, President and CEO of Banknorth Group, Inc. said, "BankBoston's Berkshire franchise fits perfectly with our style of community banking. Their strong market presence and experienced banking professionals in the Berkshires add considerable value to our company. Through Steve and the other Berkshire professional bankers, we look forward to joining the community and contributing to its future growth and development."

Both banks intend to move quickly to ensure a smooth transition with minimal disruption to customers, the community and employees. Customers will receive specific information regarding the transition in the coming weeks. Those with immediate questions may call [phone] to speak to a local bank representative.

BankBoston Corporation (NYSE:BKB), with assets of $71.4 billion and some 23,000 employees, is the nation's oldest commercial bank and New England's only global bank. BankBoston is engaged in consumer, small business and corporate banking in New England; delivering sophisticated financial solutions to corporations and governments nationally and internationally; and full-service banking in leading Latin American markets. The Corporation's common and preferred stocks are listed on the New York and Boston stock exchanges.

    CONTACT: BankBoston
              Karen Schwartzman, [phone]
               or
              BankBoston/Berkshires
              Gary M. Schiff, [phone]