**Exhibit        13.0**

**Annual        Report to Stockholders**

----

**Selected        Consolidated Financial and Other        Data**

|                                                 |   | **At                  December 31,** |    |
|------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                 |   | **2005**                                  |    | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                 |   | **(In                  thousands)**       |    |
| **Financial                  Condition Data:**       |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                   |   | $                                         | 355,346 |   | $ | 265,449 |   | $ | 243,956 |   | $ | 227,998 |   | $ | 201,105 |   |
| Securities                  held to maturity    |   |                                      | 5,002   |   |   | 5,168 |   |   | 1,561 |   |   | 1,364 |   |   | 596 |   |
| Securities                  available for sale  |   |                                      | 58,047  |   |   | 31,096 |   |   | 37,166 |   |   | 32,512 |   |   | 20,407 |   |
| Loans                  receivable, net          |   |                                      | 259,427 |   |   | 203,820 |   |   | 180,378 |   |   | 166,046 |   |   | 158,456 |   |
| Cash                  and cash equivalents      |   |                                      | 8,951   |   |   | 7,575 |   |   | 9,775 |   |   | 18,158 |   |   | 12,643 |   |
| Deposits                                        |   |                                      | 240,846 |   |   | 193,366 |   |   | 183,455 |   |   | 173,231 |   |   | 156,662 |   |
| FHLB                  advances                  |   |                                      | 57,059  |   |   | 15,826 |   |   | 34,990 |   |   | 31,119 |   |   | 23,372 |   |
| Total                  capital                  |   |                                      | 50,964  |   |   | 51,571 |   |   | 21,217 |   |   | 19,850 |   |   | 17,497 |   |

|                                                                                            |   | **Year                    Ended December 31,**               |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                                            |   | **2005**                                                     |   | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                                                            |   | **(In                    thousands, except per share data)** |   |
| **Operating                    Data:**                                                          |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                    and dividend income                                            |   | $                                                            | 15,908 |   | $ | 12,713 |   | $ | 12,644 |   | $ | 13,178 |   | $ | 12,631 |   |
| Interest                    expense                                                        |   |                                                         | 4,941  |   |   | 3,559 |   |   | 4,241 |   |   | 5,299 |   |   | 6,178 |   |
| Net                    interest income                                                     |   |                                                         | 10,967 |   |   | 9,154 |   |   | 8,403 |   |   | 7,879 |   |   | 6,453 |   |
| Provision                    for loan losses                                               |   |                                                         | 32     |   |   | - |   |   | 45 |   |   | 231 |   |   | 80 |   |
| Net                    interest income after provision for                    loan losses  |   |                                                         | 10,935 |   |   | 9,154 |   |   | 8,358 |   |   | 7,648 |   |   | 6,373 |   |
| Noninterest                    income                                                      |   |                                                         | 1,517  |   |   | 1,078 |   |   | 1,115 |   |   | 972 |   |   | 743 |   |
| Noninterest                    expense                                                     |   |                                                         | 10,097 |   |   | 9,803 |   |   | 6,845 |   |   | 5,820 |   |   | 5,392 |   |
| Income                    before provision for income                    taxes             |   |                                                         | 2,355  |   |   | 429 |   |   | 2,628 |   |   | 2,800 |   |   | 1,724 |   |
| Provision                    for income taxes                                              |   |                                                         | 450    |   |   | 14 |   |   | 822 |   |   | 880 |   |   | 542 |   |
| Net                    income                                                              |   | $                                                            | 1,905  |   | $ | 415 |   | $ | 1,806 |   | $ | 1,920 |   | $ | 1,182 |   |
| Net                    income per share                                                         |   | $                                                            | 0.26   |   | $ | 0.07 | (1) | $ | - |   | $ | - |   | $ | - |   |

| (1) | Net                  income per share is for the fourth quarter 2004. Before September                  30,                  2004, Naugatuck Valley Financial did not exist and Naugatuck Valley                  Savings operated as a mutual institution and, accordingly, had                  no per                  share data. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                        |   | **At                  or For the Year Ended December 31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|
|                                                                                                                                        |   | **2005**                                                        |   | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                                                                                                        |   |                                                            |   |
| **Performance                  Ratios:**                                                                                                    |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return                  on average assets                                                                                                   |   |                                                            | 0.62   | % |   | 0.16 | % |   | 0.77 | % |   | 0.91 | % |   | 0.65 | % |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return                  on average equity                                                                                                   |   |                                                            | 3.66   |   |   | 1.42 |   |   | 8.59 |   |   | 10.23 |   |   | 6.95 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  rate spread (1)                                                                                                   |   |                                                            | 3.68   |   |   | 3.78 |   |   | 3.77 |   |   | 3.77 |   |   | 3.50 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest margin (2)                                                                                                    |   |                                                            | 3.87   |   |   | 3.85 |   |   | 3.85 |   |   | 3.90 |   |   | 3.71 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest                  expense to average assets                                                                                      |   |                                                            | 3.27   |   |   | 3.81 |   |   | 2.94 |   |   | 2.75 |   |   | 2.96 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Efficiency                  ratio (3)                                                                                                       |   |                                                            | 80.61  |   |   | 95.47 |   |   | 71.62 |   |   | 65.20 |   |   | 74.43 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividend                  payout ratio (4)                                                                                                  |   |                                                            | 61.54  |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  interest-earning assets to average                  interest-bearing liabilities                                   |   |                                                            | 111.20 |   |   | 104.98 |   |   | 103.69 |   |   | 105.20 |   |   | 105.87 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  equity to average assets                                                                                           |   |                                                            | 16.87  |   |   | 11.37 |   |   | 9.02 |   |   | 8.86 |   |   | 9.35 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Capital                  Ratios:**                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  capital to risk-weighted assets                                                                                      |   |                                                            | 17.88  | % |   | 23.61 | % |   | 16.21 | % |   | 15.37 | % |   | 14.74 | % |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 capital to risk-weighted assets                                                                                     |   |                                                            | 17.07  |   |   | 22.52 |   |   | 14.96 |   |   | 14.12 |   |   | 13.47 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 capital to adjusted total assets (5)                                                                                |   |                                                            | 12.93  |   |   | 14.78 |   |   | 8.64 |   |   | 8.30 |   |   | 8.40 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  equity to total assets                                                                                               |   |                                                            | 14.34  |   |   | 19.43 |   |   | 8.70 |   |   | 8.71 |   |   | 8.70 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Asset                  Quality Ratios:**                                                                                                  |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                  for loan losses as a percent of total                  loans                                                     |   |                                                            | 0.72   | % |   | 0.89 | % |   | 0.99 | % |   | 1.19 | % |   | 1.16 | % |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                  for loan losses as a percent of nonperforming                  loans                                             |   |                                                            | 638.78 |   |   | 306.88 |   |   | 199.78 |   |   | 162.91 |   |   | 144.66 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  charge-offs (recoveries) to average loans outstanding                                      during the period |   |                                                            | 0.01   |   |   | (0.01 | ) |   | 0.13 |   |   | 0.05 |   |   | (0.02 | ) |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming                  loans as a percent of total                  loans                                                           |   |                                                            | 0.11   |   |   | 0.29 |   |   | 0.50 |   |   | 0.73 |   |   | 0.80 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming                  assets as a percent of total                  assets                                                         |   |                                                            | 0.10   |   |   | 0.25 |   |   | 0.46 |   |   | 0.58 |   |   | 0.72 |   |
|                                                                                                                                        |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                  Data:**                                                                                                            |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number                  of:                                                                                                                 |   |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Deposit                  accounts                                                                                   |   |                                                            | 25,592 |   |   | 22,599 |   |   | 22,447 |   |   | 22,059 |   |   | 21,823 |   |
|     Full                  service customer service facilities                                                           |   |                                                            | 6      |   |   | 5 |   |   | 5 |   |   | 4 |   |   | 4 |   |

| (1) | Represents                  the difference between the weighted average yield on average                  interest-earning assets and the weighted average cost of interest-bearing                  liabilities. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Represents                  net interest income as a percent of average interest-earning                  assets. |
|-----|-------------------------------------------------------------------------------------------------------------------|

| (3) | Represents                  noninterest expense (less intangible amortization) divided by the                  sum of                  net interest income and noninterest                  income. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) |   | Represents                  dividends declared per share divided by basic net income per                  share. |
|-----|--------|------------------------------------------------------------------------------------------------------------------|

| (5) |   | Data                  for 2003 represents Tier 1 capital to average                  assets. |
|-----|--------|----------------------------------------------------------------------------------------------|

----

**Management’s        Discussion and Analysis of**

**Financial        Condition and Results of Operations**

**Overview**

***Income***
**.**

***Expenses***
**.        **

**Critical        Accounting Policies**

***Allowance        for Loan Losses***
**.**

----

***Deferred        Income Taxes***
**.**

**Operating        Strategy**

***New        products, branch expansion and superior service***

***Asset        and liability management***

----

***Increasing        non-interest income***

***Credit        quality***

***Regulatory        compliance and protection of confidential customer        data***

**Balance        Sheet**

***Loans***
**.**

----

** **

----

|                                                                                                                            |   | **At                  December 31,**        |    |
|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                                                                            |   | **2005**                                    |    | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                                                                                            |   | **Amount**                                  |    | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   |
|                                                                                                                            |   | **(Dollars                  in thousands)** |    |
| Real                  estate loans:                                                                                             |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     One-                  to                  four-family                                                   |   | $                                           | 156,900 |   |   | 59.44 | % | $ | 134,785 |   |   | 64.75 | % | $ | 131,353 |   |   | 70.98 | % | $ | 132,134 |   |   | 77.85 | % | $ | 126,482 |   |   | 78.07 | % |
|     Construction                                                                                            |   |                                        | 24,943  |   |   | 9.45 |   |   | 17,486 |   |   | 8.40 |   |   | 14,094 |   |   | 7.62 |   |   | 6,888 |   |   | 4.06 |   |   | 6,526 |   |   | 4.03 |   |
|     Multi-family                  and commercial      real                  estate |   |                                        | 33,608  |   |   | 12.73 |   |   | 22,559 |   |   | 10.84 |   |   | 14,273 |   |   | 7.71 |   |   | 10,285 |   |   | 6.06 |   |   | 7,172 |   |   | 4.43 |   |
|         Total                  real estate loans                                        |   |                                        | 215,451 |   |   | 81.62 |   |   | 174,830 |   |   | 83.99 |   |   | 159,720 |   |   | 86.31 |   |   | 149,307 |   |   | 87.97 |   |   | 140,180 |   |   | 86.52 |   |
| Commercial                  business loans                                                                                      |   |                                        | 9,728   |   |   | 3.69 |   |   | 4,989 |   |   | 2.40 |   |   | 4,240 |   |   | 2.29 |   |   | 1,693 |   |   | 1.00 |   |   | 875 |   |   | 0.54 |   |
| Consumer                  loans:                                                                                                |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Savings                  accounts                                                                       |   |                                        | 785     |   |   | 0.30 |   |   | 679 |   |   | 0.33 |   |   | 592 |   |   | 0.32 |   |   | 519 |   |   | 0.31 |   |   | 738 |   |   | 0.46 |   |
|     Personal                                                                                                |   |                                        | 212     |   |   | 0.08 |   |   | 217 |   |   | 0.10 |   |   | 139 |   |   | 0.08 |   |   | 153 |   |   | 0.09 |   |   | 116 |   |   | 0.07 |   |
|     Automobile                                                                                              |   |                                        | 160     |   |   | 0.06 |   |   | 98 |   |   | 0.05 |   |   | 143 |   |   | 0.08 |   |   | 181 |   |   | 0.11 |   |   | 291 |   |   | 0.18 |   |
|     Home                  equity                                                                            |   |                                        | 37,628  |   |   | 4.25 |   |   | 27,342 |   |   | 13.13 |   |   | 20,212 |   |   | 10.92 |   |   | 17,873 |   |   | 10.53 |   |   | 19,815 |   |   | 12.23 |   |
|         Total                  consumer loans                                           |   |                                        | 38,785  |   |   | 14.69 |   |   | 28,336 |   |   | 13.61 |   |   | 21,086 |   |   | 11.40 |   |   | 18,726 |   |   | 11.03 |   |   | 20,960 |   |   | 12.94 |   |
|             Total                  loans                            |   |                                        | 263,964 |   |   | 100.00 | % |   | 208,155 |   |   | 100.00 | % |   | 185,046 |   |   | 100.00 | % |   | 169,726 |   |   | 100.00 | % |   | 162,015 |   |   | 100.00 | % |
|                                                                                                                            |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                                                                                                           |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Allowance                  for                  loan losses                                             |   |                                        | 1,878   |   |   |   |   |   | 1,829 |   |   |   |   |   | 1,810 |   |   |   |   |   | 1,994 |   |   |   |   |   | 1,856 |   |   |   |   |
|     Undisbursed                  construction loans                                                         |   |                                        | 2,258   |   |   |   |   |   | 2,094 |   |   |   |   |   | 2,519 |   |   |   |   |   | 1,168 |   |   |   |   |   | 1,071 |   |   |   |   |
|     Deferred                  loan                  origination fees                                        |   |                                        | 401     |   |   |   |   |   | 412 |   |   |   |   |   | 339 |   |   |   |   |   | 518 |   |   |   |   |   | 632 |   |   |   |   |
|             Loans                  receivable, net                  |   | $                                           | 259,427 |   |   |   |   | $ | 203,820 |   |   |   |   | $ | 180,378 |   |   |   |   | $ | 166,046 |   |   |   |   | $ | 158,456 |   |   |   |   |

----

|                                              |   | **At                  December 31, 2005** |    |
|---------------------------------------------------|--------|------------------------------------------------|---------|
|                                              |   | **Real                  Estate****Loans**      |    | **Commercial****Business****Loans** |   | **Consumer****Loans** |   | **Total****Loans** |   |
|                                              |   | **(In                  thousands)**            |    |
| One                  year or less                 |   | $                                              | 34,232  |   | $ | 5,442 |   | $ | 19,686 |   | $ | 59,360 |   |
| More                  than one year to five years |   |                                           | 34,685  |   |   | 2,591 |   |   | 3,399 |   |   | 40,675 |   |
| More                  than five years             |   |                                           | 146,534 |   |   | 1,695 |   |   | 15,700 |   |   | 163,929 |   |
|     Total                     |   | $                                              | 215,451 |   | $ | 9,728 |   | $ | 38,785 |   | $ | 263,964 |   |

|                                                                          |   | **Fixed-Rates**                     |    | **Floating                  or****Adjustable-****Rates** |   | **Total** |   |
|-------------------------------------------------------------------------------|--------|-------------------------------------|---------|----------------------------------------------------------|--------|-----------|--------|
|                                                                          |   | **(In                  thousands)** |    |
| Real                  estate loans:                                           |   |                                |    |                                                     |   |      |   |   |   |   |
|     One-                  to                  four-family |   | $                                   | 122,673 |                                                     | $      | 21,633    |   | $ | 144,306 |   |
|     Construction                                          |   |                                | 5,068   |                                                     |   | 995       |   |   | 6,063 |   |
|     Multi-family                  and commercial          |   |                                | 3,138   |                                                     |   | 27,712    |   |   | 30,850 |   |
| Commercial                  business loans                                    |   |                                | 1,693   |                                                     |   | 2,593     |   |   | 4,286 |   |
| Consumer                  loans                                               |   |                                | 17,160  |                                                     |   | 1,939     |   |   | 19,099 |   |
|         Total                         |   | $                                   | 149,732 |                                                     | $      | 54,872    |   | $ | 204,604 |   |

|                                                                                                            |   | **Year                  Ended December 31,** |    |
|-----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                                                                            |   | **2005**                                     |    | **2004** |   | **2003** |   |
|                                                                                                            |   | **(In                  thousands)**          |    |
|                                                                                                            |   |                                         |    |   |   |   |   |
| Total                  loans at beginning of period                                                             |   | $                                            | 208,155 |   | $ | 185,046 |   | $ | 169,726 |   |
| Loans                  originated:                                                                              |   |                                         |    |   |   |   |   |   |   |   |
|     Real                  estate loans:                                                     |   |                                         |    |   |   |   |   |   |   |   |
|         One-                  to                  four-family           |   |                                         | 42,144  |   |   | 30,002 |   |   | 64,689 |   |
|         Construction                                                    |   |                                         | 27,695  |   |   | 20,598 |   |   | 13,489 |   |
|         Multi-family                  and commercial                    |   |                                         | 23,389  |   |   | 10,865 |   |   | 5,365 |   |
|     Commercial                  business loans                                              |   |                                         | 6,308   |   |   | 3,962 |   |   | 3,196 |   |
|     Consumer                  loans                                                         |   |                                         | 24,664  |   |   | 18,416 |   |   | 14,307 |   |
|             Total                  loans originated |   |                                         | 124,200 |   |   | 83,843 |   |   | 101,046 |   |
| Loans                  purchased                                                                                |   |                                         | — |   |   | — |   |   | — |   |
| Deduct:                                                                                                         |   |                                         |    |   |   |   |   |   |   |   |
|     Real                  estate loan principal repayments                                  |   |                                         | (52,607 | ) |   | (44,622 | ) |   | (67,857 | ) |
|     Loan                  sales                                                             |   |                                         | — |   |   | (1,927 | ) |   | (8,851 | ) |
|     Other                  repayments                                                       |   |                                         | (15,784 | ) |   | (14,185 | ) |   | (9,018 | ) |
| Net                  loan activity                                                                              |   |                                         | 55,809  |   |   | 23,109 |   |   | 15,320 |   |
| Total                  loans at end of period                                                                   |   | $                                            | 263,964 |   | $ | 208,155 |   | $ | 185,046 |   |

----

***Allowance        for Loan Losses and Asset Quality***
**.**

***Passed        Assets***
**.**

***Classified        Assets***
**.**

----

|                               |   | **At                  December 31, 2005** |   | **At                  December 31, 2004** |   |
|------------------------------------|--------|-------------------------------------------|--------|------------------------------------------------|--------|
|                               |   | **(In                  thousands)**       |   |
|                               |   |                                      |   |
| Passed                  assets     |   | $                                         | 1,425  |                                           | $      | 1,343 |   |
| Classified                  assets |   |                                      | 450    |                                           |   | 389 |   |
| Unallocated                        |   |                                      | 3      |                                           |   | 97 |   |
| Total                              |   | $                                         | 1,425  |                                           | $      | 1,829 |   |

** **

----

***Summary        of Loan Loss Experience***
**.**

|                                                                                                          |   | **Year                  Ended December 31,** |    |
|---------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                                                                          |   | **2005**                                     |    | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                                                                          |   | **(Dollars                  in thousands)**  |    |
|                                                                                                          |   |                                         |    |   |   |   |   |   |   |   |   |
| Allowance                  at beginning of period                                                             |   | $                                            | 1,829   |   | $ | 1,810 |   | $ | 1,994 |   | $ | 1,856 |   | $ | 1,749 |   |
| Provision                  for loan losses                                                                    |   |                                         | 32      |   |   | — |   |   | 45 |   |   | 231 |   |   | 80 |   |
| Less:                  Charge offs:                                                                           |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Real                  estate loans                                                    |   |                                         | — |   |   | — |   |   | 265 |   |   | 112 |   |   | 28 |   |
|     Commercial                  business loans                                            |   |                                         | 3       |   |   | 51 |   |   | — |   |   | — |   |   | — |   |
|     Consumer                  loans                                                       |   |                                         | 1       |   |   | 5 |   |   | 2 |   |   | 5 |   |   | 3 |   |
|         Total                  charge-offs                            |   |                                         | 4       |   |   | 56 |   |   | 267 |   |   | 117 |   |   | 31 |   |
|                                                                                                          |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Plus:                  Recoveries:                                                                            |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Real                  estate loans                                                    |   |                                         | 18      |   |   | 43 |   |   | 38 |   |   | 23 |   |   | 57 |   |
|     Commercial                  business loans                                            |   |                                         | 3       |   |   | — |   |   | — |   |   | — |   |   | — |   |
|     Consumer                  loans                                                       |   |                                         | — |   |   | 32 |   |   | — |   |   | 1 |   |   | 1 |   |
|         Total                  recoveries                             |   |                                         | 21      |   |   | 75 |   |   | 38 |   |   | 24 |   |   | 58 |   |
| Net                  charge-offs (recoveries)                                                                 |   |                                         | (17     | ) |   | (19 | ) |   | 229 |   |   | 93 |   |   | (27 | ) |
|                                                                                                          |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Allowance                  at                  end of period                          |   | $                                            | 1,878   |   | $ | 1,829 |   | $ | 1,810 |   | $ | 1,994 |   | $ | 1,856 |   |
|                                                                                                          |   |                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                  to nonperforming loans                                                             |   |                                         | 638.78  | % |   | 306.88 | % |   | 199.78 | % |   | 162.91 | % |   | 144.66 | % |
| Allowance                  to total loans outstanding at                  the end of the period               |   |                                         | 0.72    | % |   | 0.89 | % |   | 0.99 | % |   | 1.19 | % |   | 1.16 | % |
| Net                  charge-offs (recoveries) to average loans                  outstanding during the period |   |                                         | 0.01    | % |   | (0.01 | )% |   | 0.13 | % |   | 0.05 | % |   | (0.02 | )% |

|                                                                              |   | **At                      December 31,**   |   |
|-----------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                              |   | **2005**                                        |   | **2004** |   | **2003** |   |
|                                                                              |   | **Amount**                                      |   | **%                      of****Allowance****to                      Total****Allowance** |   | **%                      of****Loans                      in****Category****to                      Total****Loans** |   | **Amount** |   | **%                      of****Allowance****to                      Total****Allowance** |   | **%                      of****Loans                      in****Category****to                      Total****Loans** |   | **Amount** |   | **%                      of****Allowance****to                      Total****Allowance** |   | **%                      of****Loans                      in****Category****to                      Total****Loans** |   |
|                                                                              |   | **(Dollars                      in thousands)** |   |
| One-                      to four-family                                          |   | $                                               | 724    |   |   | 38.55 | % |   | 59.44 | % | $ | 864 |   |   | 47.25 | % |   | 64.75 | % | $ | 927 |   |   | 51.22 | % |   | 70.98 | % |
| Construction                                                                      |   |                                            | 376    |   |   | 20.02 |   |   | 9.45 |   |   | 142 |   |   | 7.76 |   |   | 8.40 |   |   | 185 |   |   | 10.22 |   |   | 7.62 |   |
| Multi-family                      and commercial real                      estate |   |                                            | 379    |   |   | 20.18 |   |   | 12.73 |   |   | 374 |   |   | 20.45 |   |   | 10.84 |   |   | 321 |   |   | 17.73 |   |   | 7.71 |   |
| Commercial                      business                                          |   |                                            | 113    |   |   | 6.02 |   |   | 3.69 |   |   | 50 |   |   | 2.73 |   |   | 2.40 |   |   | 92 |   |   | 5.08 |   |   | 2.29 |   |
| Consumer                      loans                                               |   |                                            | 283    |   |   | 15.07 |   |   | 14.69 |   |   | 302 |   |   | 16.51 |   |   | 13.61 |   |   | 232 |   |   | 12.82 |   |   | 11.40 |   |
| Unallocated                                                                       |   |                                            | 3      |   |   | 0.16 |   |   | — |   |   | 97 |   |   | 5.30 |   |   | — |   |   | 53 |   |   | 2.93 |   |   | — |   |
|     Total                      allowance for loan losses      |   | $                                               | 1,878  |   |   | 100.00 | % |   | 100.00 | % | $ | 1,829 |   |   | 100.00 | % |   | 100.00 | % | $ | 1,810 |   |   | 100.00 | % |   | 100.00 | % |

----

|                                                                     |   | **At                  December 31,**        |   |
|--------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                     |   | **2002**                                    |   | **2001** |   |
|                                                                     |   | **Amount**                                  |   | **%                  of****Allowance****to                  Total****Allowance** |   | **%                  of****Loans                  in****Category****to                  Total****Loans** |   | **Amount** |   | **%                  of****Allowance****to                  Total****Allowance** |   | **%                  of****Loans                  in****Category****to                  Total****Loans** |   |
|                                                                     |   | **(Dollars                  in thousands)** |   |
|                                                                     |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| One-                  to four-family                                     |   | $                                           | 1,566  |   |   | 78.54 | % |   | 77.85 | % | $ | 1,633 |   |   | 87.98 | % |   | 78.07 | % |
| Construction                                                             |   |                                        | 100    |   |   | 5.02 |   |   | 4.06 |   |   | 44 |   |   | 2.37 |   |   | 4.03 |   |
| Multi-family                  and commercial real estate                 |   |                                        | 148    |   |   | 7.42 |   |   | 6.06 |   |   | 37 |   |   | 1.99 |   |   | 4.43 |   |
| Commercial                  business                                     |   |                                        | 59     |   |   | 2.96 |   |   | 1.00 |   |   | 4 |   |   | 0.22 |   |   | 0.54 |   |
| Consumer                  loans                                          |   |                                        | 78     |   |   | 3.91 |   |   | 11.03 |   |   | 83 |   |   | 4.47 |   |   | 12.93 |   |
| Unallocated                                                              |   |                                        | 43     |   |   | 2.16 |   |   | — |   |   | 55 |   |   | 2.96 |   |   | — |   |
|     Total                  allowance for loan losses |   | $                                           | 1,994  |   |   | 100.00 | % |   | 100.00 | % | $ | 1,856 |   |   | 100.00 | % |   | 100.00 | % |

***Nonperforming        and Classified Assets***
**.**
** **

----

|                                                                             |   | **At                  December 31,**        |    |
|----------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                             |   | **2005**                                    |    | **2004** |   | **2003** |   | **2002** |   | **2001** |   |
|                                                                             |   | **(Dollars                  in thousands)** |    |
| Nonaccrual                  loans:                                               |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     One-                  to                  four-family    |   | $                                           | 165     |   | $ | 474 |   | $ | 500 |   | $ | 1,041 |   | $ | 1,217 |   |
|     Multi-family                  and commercial real estate |   |                                        | 120     |   |   | 119 |   |   | 315 |   |   | 117 |   |   | — |   |
|     Commercial                  business                     |   |                                        | 9       |   |   | 3 |   |   | 15 |   |   | — |   |   | — |   |
|     Consumer                                                 |   |                                        | — |   |   | — |   |   | 76 |   |   | 66 |   |   | 66 |   |
|         Total                            |   |                                        | 294     |   |   | 596 |   |   | 906 |   |   | 1,224 |   |   | 1,283 |   |
|                                                                             |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreclosed                  real estate                                          |   |                                        | 47      |   |   | 68 |   |   | 208 |   |   | 108 |   |   | 160 |   |
|                                                                             |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  nonperforming assets                                      |   | $                                           | 341     |   | $ | 664 |   | $ | 1,114 |   | $ | 1,332 |   | $ | 1,443 |   |
|                                                                             |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  nonperforming loans to total loans                        |   |                                        | 0.11    | % |   | 0.29 | % |   | 0.50 | % |   | 0.73 | % |   | 0.80 | % |
|                                                                             |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  nonperforming loans to total assets                       |   |                                        | 0.08    | % |   | 0.22 | % |   | 0.37 | % |   | 0.54 | % |   | 0.64 | % |
|                                                                             |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  nonperforming assets to total assets                      |   |                                        | 0.10    | % |   | 0.25 | % |   | 0.46 | % |   | 0.58 | % |   | 0.72 | % |

----

|                                                             |   | **At                  December 31,** |    |
|------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                             |   | **2005**                             |    | **2004** |   |
|                                                             |   | **(In                  thousands)**  |    |
|                                                             |   |                                 |    |   |   |
| Special                  mention assets                          |   | $                                    | 5,197   |   | $ | 3,022 |   |
| Substandard                  assets                              |   |                                 | 1,360   |   |   | 2,058 |   |
| Doubtful                  assets                                 |   |                                 | 10      |   |   | — |   |
| Loss                  assets                                     |   |                                 | — |   |   | — |   |
|     Total                  classified assets |   | $                                    | 6,567   |   | $ | 5,080 |   |

***Delinquencies***
**.**

|                                                                      |   | **At                  December 31,**                         |    |
|---------------------------------------------------------------------------|--------|--------------------------------------------------------------|---------|
|                                                                      |   | **2005**                                                     |    | **2004** |   | **2003** |   |
|                                                                      |   | **30-59                  Days****Past                  Due** |    | **60-89                  Days****Past                  Due** |   | **30-59                  Days****Past                  Due** |   | **60-89                  Days****Past                  Due** |   | **30-59                  Days****Past                  Due** |   | **60-89                  Days****Past                  Due** |   |
|                                                                      |   | **(In                  thousands)**                          |    |
|                                                                      |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |
| One-                  to four-family                                      |   | $                                                            | 792     |   | $ | 498 |   | $ | 2,017 |   | $ | 581 |   | $ | 999 |   | $ | 670 |   |
| Multi-family                  and commercial real                  estate |   |                                                         | — |   |   | — |   |   | 510 |   |   | 150 |   |   | 272 |   |   | 62 |   |
| Commercial                  business                                      |   |                                                         | 164     |   |   | — |   |   | 64 |   |   | 15 |   |   | 20 |   |   | — |   |
| Consumer                  loans                                           |   |                                                         | 7       |   |   | — |   |   | 135 |   |   | 12 |   |   | 61 |   |   | 75 |   |
|     Total                                             |   | $                                                            | 963     |   | $ | 498 |   | $ | 2,726 |   | $ | 758 |   | $ | 1,352 |   | $ | 807 |   |

***Securities***
**.**

----

|                                                                                  |   | **At                  December 31,** |   |
|---------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                  |   | **2005**                             |   | **2004** |   | **2003** |   |
|                                                                                  |   | **Amortized****Cost**                |   | **Fair****Value** |   | **Amortized****Cost** |   | **Fair****Value** |   | **Amortized****Cost** |   | **Fair****Value** |   |
|                                                                                  |   | **(In                  thousands)**  |   |
| Available-for-sale                  securities:                                       |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     U.S.                  Government and agency obligations  |   | $                                    | 8,497  |   | $ | 8,369 |   | $ | 15,072 |   | $ | 15,210 |   | $ | 22,861 |   | $ | 23,356 |   |
|     Mortgage-backed                  securities                   |   |                                 | 22,544 |   |   | 22,082 |   |   | 12,249 |   |   | 12,092 |   |   | 7,865 |   |   | 7,748 |   |
|     Collateralized                  mortgage obligations          |   |                                 | 4,199  |   |   | 4,098 |   |   | 3,812 |   |   | 3,794 |   |   | 6,031 |   |   | 6,062 |   |
|     Municipal                  obligations                        |   |                                 | 8,715  |   |   | 8,769 |   |   | — |   |   | — |   |   | — |   |   | — |   |
|     Money                  market preferred obligations           |   |                                 | 6,000  |   |   | 6,000 |   |   | — |   |   | — |   |   | — |   |   | — |   |
|     Corporate                  obligations                        |   |                                 | 1,928  |   |   | 1,923 |   |   | — |   |   | — |   |   | — |   |   | — |   |
|                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity                  securities:                                         |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     U.S.                  Government and agency obligations       |   |                                 | 1,202  |   |   | 1,189 |   |   | 703 |   |   | 708 |   |   | 706 |   |   | 722 |   |
|     Interest-bearing                  balances                    |   |                                 | 3,800  |   |   | 3,800 |   |   | 4,465 |   |   | 4,465 |   |   | 855 |   |   | 855 |   |
|         Total                                 |   | $                                    | 56,885 |   | $ | 56,230 |   | $ | 36,301 |   | $ | 36,269 |   | $ | 38,318 |   | $ | 38,743 |   |

----

|                                                                                               |   | **Less                  Than****One                  Year** |    | **More                  than****One                  Year to****Five                  Years** |   | **More                  than****Five                  Years to****Ten                  Years** |   | **More                  than****Ten                  Years** |    | **Total**             |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|---------|-----------------------|--------|
|                                                                                               |   | **Carrying****Value**                                       |    | **Weighted****Average****Yield**                                                              |   | **Carrying****Value**                                                                          |   | **Weighted****Average****Yield**                             |    | **Carrying****Value** |   | **Weighted****Average****Yield** |   | **Carrying****Value** |   | **Weighted****Average****Yield** |   | **Carrying****Value** |   | **Weighted****Average****Yield** |   |
|                                                                                               |   | **(Dollars                  in thousands)**                 |    |
| Available-for-sale                  securities:                                                    |   |                                                        |    |                                                                                          |   |                                                                                           |   |                                                         |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    U.S. Government and agency    obligations              |   | $                                                           | 6,806   |                                                                                          |   | 4.22                                                                                           | %      | $                                                            | 7,404   |                  |   | 4.13 | % | $ | 965 |   |   | 5.52 | % | $ | — |   |   | — | % | $ | 15,175 |   |   | 4.26 | % |
|                    Mortgage-backed securities                                                 |   |                                                        | — |                                                                                          |   | —                                                                                        |   |                                                         | 1,836   |                  |   | 3.70 |   |   | — |   |   | — |   |   | 20,246 |   |   | 4.44 |   |   | 22,082 |   |   | 4.38 |   |
|                    Collateralized mortgage    obligations                 |   |                                                        | — |                                                                                          |   | —                                                                                        |   |                                                         | — |                  |   | — |   |   | — |   |   | — |   |   | 4,098 |   |   | 4.17 |   |   | 4,098 |   |   | 4.17 |   |
|                    Municipal obligations                                                      |   |                                                        | — |                                                                                          |   | —                                                                                        |   |                                                         | — |                  |   | — |   |   | — |   |   | — |   |   | 8,769 |   |   | 4.77 |   |   | 8,769 |   |   | 4.77 |   |
|                    Money market preferred    obligations                  |   |                                                        | 6,000   |                                                                                          |   | 3.66                                                                                           |   |                                                         | — |                  |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 6,000 |   |   | 3.66 |   |
|                    Corporate obligations                                                      |   |                                                        | — |                                                                                          |   | —                                                                                        |   |                                                         | 192     |                  |   | 5.21 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 1,923 |   |   | 5.21 |   |
|       Total                  available-for-sale securities           |   |                                                        | 12,806  |                                                                                          |   | 3.96                                                                                           |   |                                                         | 11,163  |                  |   | 4.25 |   |   | 965 |   |   | 5.52 |   |   | 33,113 |   |   | 4.49 |   |   | 58,047 |   |   | 4.34 |   |
|                                                                                               |   |                                                        |    |                                                                                          |   |                                                                                           |   |                                                         |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity                  securities:                                                      |   |                                                        |    |                                                                                          |   |                                                                                           |   |                                                         |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    U.S. Government and agency    obligations              |   |                                                        | — |                                                                                          |   |                                                                                           |   |                                                         | 1,202   |                  |   | 4.10 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 1,202 |   |   | 4.10 |   |
| Interest-bearing                  balances                                                         |   |                                                        | 2,470   |                                                                                          |   | 2.34                                                                                           |   |                                                         | 1,330   |                  |   | 3.16 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 3,800 |   |   | 2.63 |   |
|         Total                  held-to-maturity securities |   |                                                        | 2,470   |                                                                                          |   | 2.34                                                                                           |   |                                                         | 2,532   |                  |   | 3.61 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 5,002 |   |   | 2.98 |   |
|         Total                                              |   | $                                                           | 15,276  |                                                                                          |   | 3.70                                                                                           |   | $                                                            | 13,695  |                  |   | 4.13 |   | $ | 965 |   |   | 5.52 |   | $ | 33,113 |   |   | 4.49 |   | $ | 63,049 |   |   | 4.24 |   |
|                                                                                               |   |                                                        |    |                                                                                          |   |                                                                                           |   |                                                         |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

***Bank        Owned Life Insurance***
**.        **

***Deposits***
**.**
** **

|                                           |   | **At                  December 31,** |    |
|------------------------------------------------|--------|--------------------------------------|---------|
|                                           |   | **2005**                             |    | **2004** |   | **2003** |   |
|                                           |   | **(In                  thousands)**  |    |
|                                           |   |                                 |    |   |   |   |   |
| Certificate                  accounts          |   | $                                    | 122,431 |   | $ | 81,200 |   | $ | 86,192 |   |
| Regular                  savings accounts      |   |                                 | 51,375  |   |   | 43,941 |   |   | 40,185 |   |
| Checking                  and NOW accounts     |   |                                 | 46,825  |   |   | 37,003 |   |   | 32,723 |   |
| Money                  market savings accounts |   |                                 | 20,215  |   |   | 31,222 |   |   | 24,355 |   |
|     Total                  |   | $                                    | 240,846 |   | $ | 193,366 |   | $ | 183,455 |   |

| **Maturity                  Period**            |   |  **Certificate****Accounts**         |   |
|-------------------------------------------------|--------|-------------------------------------------|--------|
|                                            |   |  **(In                  thousands)** |   |
|                                            |   |                                 |   |
| Three                  months or less           |   | $                                         | 2,610  |   |
| Over                  three through six months  |   |                                      | 6,104  |   |
| Over                  six through twelve months |   |                                      | 6,442  |   |
| Over                  twelve months             |   |                                      | 16,845 |   |
|     Total                   |   | $                                         | 32,001 |   |

|                          |   | **At                  December 31,** |    |
|-------------------------------|--------|--------------------------------------|---------|
|                          |   | **2005**                             |    | **2004** |   | **2003** |   |
|                          |   | **(In                  thousands)**  |    |
|                          |   |                                 |    |   |   |   |   |
| 0.00                  - 0.99% |   | $                                    | 2,416   |   | $ | 13,094 |   | $ | 15,170 |   |
| 1.00                  - 1.99  |   |                                 | 17,633  |   |   | 31,371 |   |   | 34,215 |   |
| 2.00                  - 2.99  |   |                                 | 16,699  |   |   | 14,704 |   |   | 14,026 |   |
| 3.00                  - 3.99  |   |                                 | 50,729  |   |   | 14,228 |   |   | 12,953 |   |
| 4.00                  - 4.99  |   |                                 | 34,954  |   |   | 6,884 |   |   | 8,546 |   |
| 5.00                  - 5.99  |   |                                 | — |   |   | 919 |   |   | 1,282 |   |
|     Total |   | $                                    | 122,431 |   | $ | 81,200 |   | $ | 86,192 |   |

----

|                          |   | **Amount                  Due**                             |   |                                                                                         |   |                                                                                            |   |
|-------------------------------|--------|-------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|
|                          |   | **Less                  Than****One                  Year** |   | **More                  Than****One                  Year to****Two                  Years** |   | **More                  Than****Two                  Years to****Three                  Years** |   | **More                  Than****Three                  to****Four                  Years** |   | **More                  Than****Four                  Years** |   | **Total** |   | **Percent                  of Total Certificate Accounts** |   |
|                          |   | **(Dollars                  in thousands)**                 |   |                                                                                         |   |
|                          |   |                                                        |   |                                                                                         |   |                                                                                            |   |   |   |   |   |   |   |   |   |
| 0.00                  - 0.99% |   | $                                                           | 2,367  |                                                                                         | $      | 49                                                                                              |   | $ | — |   | $ | — |   | $ | — |   | $ | 2,416 |   |   | 1.97 | % |
| 1.00                  - 1.99  |   |                                                        | 14,386 |                                                                                         |   | 2,985                                                                                           |   |   | 262 |   |   | — |   |   | — |   |   | 17,633 |   |   | 14.40 |   |
| 2.00                  - 2.99  |   |                                                        | 14,249 |                                                                                         |   | 1,533                                                                                           |   |   | 917 |   |   | — |   |   | — |   |   | 16,699 |   |   | 13.64 |   |
| 3.00                  - 3.99  |   |                                                        | 28,306 |                                                                                         |   | 11,660                                                                                          |   |   | 7,707 |   |   | 2,813 |   |   | 243 |   |   | 50,729 |   |   | 41.43 |   |
| 4.00                  - 4.99  |   |                                                        | 3,886  |                                                                                         |   | 20,840                                                                                          |   |   | 4,678 |   |   | 1,262 |   |   | 4,288 |   |   | 34,954 |   |   | 28.55 |   |
|     Total |   | $                                                           | 63,194 |                                                                                         | $      | 37,067                                                                                          |   | $ | 13,564 |   | $ | 4,075 |   | $ | 4,531 |   | $ | 122,431 |   |   | 100.00 | % |

|                                               |   | **Year                  Ended December 31,** |    |
|----------------------------------------------------|--------|----------------------------------------------|---------|
|                                               |   | **2005**                                     |    | **2004** |   | **2003** |   |
|                                               |   | **(In                  thousands)**          |    |
|                                               |   |                                         |    |   |   |   |   |
| Beginning                  balance                 |   | $                                            | 193,366 |   | $ | 183,455 |   | $ | 173,231 |   |
| Increase                  before interest credited |   |                                         | 44,086  |   |   | 7,654 |   |   | 7,376 |   |
| Interest                  credited                 |   |                                         | 3,394   |   |   | 2,257 |   |   | 2,848 |   |
| Net                  increase in savings deposits  |   |                                         | 47,480  |   |   | 9,911 |   |   | 10,224 |   |
| Ending                  balance                    |   | $                                            | 240,846 |   | $ | 193,366 |   | $ | 183,455 |   |

***Borrowings***
**.**

|                                                                                                        |   | **Year                  Ended December 31,** |   |
|-------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                                                        |   | **2005**                                     |   | **2004** |   | **2003** |   |
|                                                                                                        |   | **(Dollars                  in thousands)**  |   |
|                                                                                                        |   |                                         |   |   |   |   |   |
| Maximum                  amount of advances outstanding at                  any month end during the period |   | $                                            | 57,059 |   | $ | 34,643 |   | $ | 34,990 |   |
| Average                  advances outstanding during                  the period                            |   |                                         | 38,530 |   |   | 27,379 |   |   | 27,765 |   |
| Weighted                  average interest rate during                  the period                          |   |                                         | 3.93   | % |   | 4.59 | % |   | 5.02 | % |
| Balance                  outstanding at end of period                                                       |   | $                                            | 57,059 |   | $ | 15,826 |   | $ | 34,990 |   |
| Weighted                  average interest rate at                  end of period                           |   |                                         | 4.20   | % |   | 4.42 | % |   | 4.37 | % |

----

***Capital***
**.**

**Comparison        of Operating Results for the Years Ended December 31, 2005, 2004 and        2003**

|   | ***Overview.****** *** |
|--------|-----------------------------|

|                                      |   | **2005**                                    |   | **2004** |   | **2003** |   | **%****Change****2005/2004** |   | **%****Change****2004/2003** |   |
|-------------------------------------------|--------|---------------------------------------------|--------|----------|--------|----------|--------|------------------------------|--------|------------------------------|--------|
|                                      |   | **(Dollars                  in thousands)** |   |
|                                      |   |                                        |   |     |   |     |   |                         |   |                         |   |
| Net                  income               |   | $                                           | 1,905  |     | $      | 415      |   | $                            | 1,806  |                         |   | 359.04 | % |   | (77.02 | )% |
| Return                  on average assets |   |                                        | 0.62   | %        |   | 0.16     | %      |                         | 0.77   | %                            |   | 287.50 | % |   | (79.22 | )% |
| Return                  on average equity |   |                                        | 3.66   | %        |   | 1.42     | %      |                         | 8.59   | %                            |   | 157.75 | % |   | (83.47 | )% |

***2005        v. 2004.***

***2004        v. 2003.***

***Net        Interest Income.***

***2005        v. 2004.***

***2004        v. 2003.***

----

** **

----

***Average        Balances and Yields***
**.**

|                                                                                                                                                                                                                   |   | **2005**                                      |    | **2004**                                      |   | **2003**           |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|-----------------------------------------------|--------|--------------------|--------|
|                                                                                                                                                                                                                   |   | **Average                    Balance**        |    | **Interest                    and Dividends** |   | **Yield/****Cost** |   | **Average****Balance** |   | **Interest****and****Dividends** |   | **Yield/****Cost** |   | **Average****Balance** |   | **Interest****and****Dividends** |   | **Yield/****Cost** |   |
|                                                                                                                                                                                                                   |   | **(Dollars                    in thousands)** |    |
|                                                                                                                                                                                                                   |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                    assets:                                                                                                                                                                            |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Loans                                                                                                                                                                                          |   | $                                             | 225,804 |                                          | $      | 13,642             |   |   | 6.04 | % | $ | 190,713 |   | $ | 11,240 |   |   | 5.89 | % | $ | 171,796 |   | $ | 11,052 |   |   | 6.43 | % |
|     Fed                    Funds sold                                                                                                                                                              |   |                                          | 1,756   |                                          |   | 56                 |   |   | 3.19 |   |   | 11,726 |   |   | 174 |   |   | 1.48 |   |   | 6,024 |   |   | 64 |   |   | 1.06 |   |
|     Investment                    securities                                                                                                                                                       |   |                                          | 52,987  |                                          |   | 2,102              |   |   | 3.97 |   |   | 33,307 |   |   | 1,245 |   |   | 3.74 |   |   | 39,150 |   |   | 1,480 |   |   | 3.78 |   |
|     Federal                    Home Loan Bank                          stock                                                                                              |   |                                          | 2,481   |                                          |   | 108                |   |   | 4.35 |   |   | 1,950 |   |   | 54 |   |   | 2.77 |   |   | 1,562 |   |   | 48 |   |   | 3.07 |   |
|         Total                    interest-earning assets                                                                                                                       |   |                                          | 283,028 |                                          |   | 15,908             |   |   | 5.62 |   |   | 237,696 |   |   | 12,713 |   |   | 5.35 |   |   | 218,532 |   |   | 12,644 |   |   | 5.79 |   |
| Noninterest-earning                    assets                                                                                                                                                                          |   |                                          | 25,386  |                                          |   |               |   |   |   |   |   | 19,731 |   |   |   |   |   |   |   |   | 14,534 |   |   |   |   |   |   |   |
|         Total                    assets                                                                                                                                        |   | $                                             | 308,414 |                                          |   |               |   |   |   |   | $ | 257,427 |   |   |   |   |   |   |   | $ | 233,066 |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                   |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                   |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                    liabilities:                                                                                                                                                                       |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Certificate                    accounts                                                                                                                                                        |   | $                                             | 99,487  |                                          | $      | 2,772              |   |   | 2.79 |   | $ | 84,890 |   | $ | 1,784 |   |   | 2.10 |   | $ | 89,938 |   | $ | 2,315 |   |   | 2.57 |   |
|     Regular                    savings accounts and                         escrow                                                                                   |   |                                          | 51,326  |                                          |   | 360                |   |   | 0.70 |   |   | 48,929 |   |   | 209 |   |   | 0.43 |   |   | 40,905 |   |   | 229 |   |   | 0.56 |   |
|     Checking                    and                    NOW accounts                                                                                                                                |   |                                          | 39,857  |                                          |   | 46                 |   |   | 0.12 |   |   | 37,620 |   |   | 49 |   |   | 0.13 |   |   | 30,544 |   |   | 81 |   |   | 0.27 |   |
|     Money                    market savings                          accounts                                                                                             |   |                                          | 25,160  |                                          |   | 245                |   |   | 0.97 |   |   | 27,547 |   |   | 261 |   |   | 0.95 |   |   | 21,599 |   |   | 223 |   |   | 1.03 |   |
|         Total                    interest-bearing                              deposits                                           |   |                                          | 215,830 |                                          |   | 3,423              |   |   | 1.59 |   |   | 198,986 |   |   | 2,303 |   |   | 1.16 |   |   | 182,986 |   |   | 2,848 |   |   | 1.56 |   |
|                                                                                                                                                                                                                   |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FHLB                    advances                                                                                                                                                                                       |   |                                          | 38,530  |                                          |   | 1,512              |   |   | 3.92 |   |   | 27,379 |   |   | 1,256 |   |   | 4.59 |   |   | 27,765 |   |   | 1,393 |   |   | 5.02 |   |
| Other                    borrowings                                                                                                                                                                                    |   |                                          | 161     |                                          |   | 6                  |   |   | 3.73 |   |   | 16 |   |   | — |   |   |   |   |   | — |   |   | — |   |   |   |   |
|         Total                    interest-bearing                              liabilities                                        |   |                                          | 254,521 |                                          |   | 4,941              |   |   | 1.94 |   |   | 226,381 |   |   | 3,559 |   |   | 1.57 |   |   | 210,751 |   |   | 4,241 |   |   | 2.01 |   |
|                                                                                                                                                                                                                   |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                    liabilities                                                                                                                                                                     |   |                                          | 1,869   |                                          |   |               |   |   |   |   |   | 1,767 |   |   |   |   |   |   |   |   | 1,285 |   |   |   |   |   |   |   |
|         Total                    liabilities                                                                                                                                   |   |                                          | 256,390 |                                          |   |               |   |   |   |   |   | 228,148 |   |   |   |   |   |   |   |   | 212,036 |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                   |   |                                          |    |                                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital                                                                                                                                                                                                                |   |                                          | 52,024  |                                          |   |               |   |   |   |   |   | 29,279 |   |   |   |   |   |   |   |   | 21,030 |   |   |   |   |   |   |   |
|         Total                    liabilities and capital                                                                                                                       |   | $                                             | 308,414 |                                          |   |               |   |   |   |   | $ | 257,427 |   |   |   |   |   |   |   | $ | 233,066 |   |   |   |   |   |   |   |
|     Net                    interest income                                                                                                                                                         |   |                                          |    |                                          | $      | 10,967             |   |   |   |   |   |   |   | $ | 9,154 |   |   |   |   |   |   |   | $ | 8,403 |   |   |   |   |
|     Interest                    rate                    spread                                                                                                                                     |   |                                          |    |                                          |   |               |   |   | 3.68 | % |   |   |   |   |   |   |   | 3.78 | % |   |   |   |   |   |   |   | 3.77 | % |
|     Net                    interest margin                                                                                                                                                         |   |                                          |    |                                          |   |               |   |   | 3.87 | % |   |   |   |   |   |   |   | 3.85 | % |   |   |   |   |   |   |   | 3.85 | % |
|     Average                    interest-earning assets                          to average interest-bearing                          liabilities |   |                                          |    |                                          |   |               |   |   | 111.20 | % |   |   |   |   |   |   |   | 105.00 | % |   |   |   |   |   |   |   | 103.69 | % |

----

***Rate/Volume        Analysis***
**.**

|                                                                                                 |   | **2005                  Compared to 2004**                          |    | **2004                  Compared to 2003** |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|---------|--------------------------------------------|--------|
|                                                                                                 |   | **Increase                  (Decrease)****Due                  to** |    |                                       |   | **Increase                  (Decrease)****Due                  to** |   |   |   |
|                                                                                                 |   | **Volume**                                                          |    | **Rate**                                   |   | **Net** |   | **Volume** |   | **Rate** |   | **Net** |   |
|                                                                                                 |   | **(In                  thousands)**                                 |    |
| Interest                  income:                                                                    |   |                                                                |    |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Loans                                                                        |   | $                                                                   | 2,114   |                                       | $      | 288 |   | $ | 2,402 |   | $ | 789 |   | $ | (601 | ) | $ | 188 |   |
|     Fed                  Funds sold                                              |   |                                                                | 340     |                                       |   | (458 | ) |   | (118 | ) |   | 77 |   |   | 33 |   |   | 110 |   |
|     Investment                  securities                                       |   |                                                                | 775     |                                       |   | 82 |   |   | 857 |   |   | (218 | ) |   | (17 | ) |   | (235 | ) |
|     Federal                  Home Loan Bank stock                                |   |                                                                | 17      |                                       |   | 37 |   |   | 54 |   |   | 10 |   |   | (4 | ) |   | 6 |   |
|         Total                  interest income               |   |                                                                | 3,247   |                                       |   | (52 | ) |   | 3,195 |   |   | 658 |   |   | (589 | ) |   | 69 |   |
|                                                                                                 |   |                                                                |    |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Interest                  expense:                                           |   |                                                                |    |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Certificate                  accounts                                        |   |                                                                | 341     |                                       |   | 647 |   |   | 988 |   |   | (124 | ) |   | (407 | ) |   | (531 | ) |
|     Regular                  savings accounts                                    |   |                                                                | 11      |                                       |   | 140 |   |   | 151 |   |   | 28 |   |   | (48 | ) |   | (20 | ) |
|     Checking                  and                  NOW accounts                  |   |                                                                | 3       |                                       |   | (6 | ) |   | (3 | ) |   | 27 |   |   | (59 | ) |   | (32 | ) |
|     Money                  market savings accounts                               |   |                                                                | (24     | )                                          |   | 8 |   |   | (16 | ) |   | 54 |   |   | (16 | ) |   | 38 |   |
|         Total                  deposit expense               |   |                                                                | 332     |                                       |   | 788 |   |   | 1,120 |   |   | (16 | ) |   | (529 | ) |   | (545 | ) |
|     FHLB                  advances                                               |   |                                                                | 397     |                                       |   | (141 | ) |   | 256 |   |   | (19 | ) |   | (118 | ) |   | (137 | ) |
|     Other                  borrowings                                            |   |                                                                | — |                                       |   | 6 |   |   | 6 |   |   | — |   |   | — |   |   | — |   |
|                             Total interest expense |   |                                                                | 729     |                                       |   | 653 |   |   | 1,382 |   |   | (35 | ) |   | (647 | ) |   | (682 | ) |
|     Net                  interest income                                         |   | $                                                                   | 2,518   |                                       | $      | (705 | ) | $ | 1,813 |   | $ | 693 |   | $ | 58 |   | $ | 751 |   |

***Provision        for Loan Losses.***

***2005        v. 2004.***

***2004        v. 2003.***

*“-Allowance        for Loan Losses and Asset Quality.”*

----

***Noninterest        Income***
**.**

|                                                                            |   | **2005**                                          |    | **2004** |   | **2003** |   | **%                  Change****2005/2004** |   | **%                  Change****2004/2003** |   |
|---------------------------------------------------------------------------------|--------|---------------------------------------------------|---------|----------|--------|----------|--------|--------------------------------------------|--------|--------------------------------------------|--------|
|                                                                            |   | **(Dollars                  in thousands)**  |    |
|                                                                            |   |                                              |    |     |   |     |   |                                       |   |                                       |   |
| Fees                  for services                                              |   | $                                                 | 974     |     | $      | 872      |   | $                                          | 851    |                                       |   | 11.70 | % |   | 2.47 | % |
| Income                  from bank owned life insurance                          |   |                                              | 218     |     |   | 201      |   |                                       | 133    |                                       |   | 8.46 |   |   | 51.13 |   |
| Gain                  on sale of mortgages                                      |   |                                              | — |     |   | 5        |   |                                       | 14     |                                       |   | (100.00 | ) |   | (64.29 | ) |
| Gain                  (loss) on sale of investments                             |   |                                              | 47      |     |   | (156     | )      |                                       | 1      |                                       |   | 130.13 |   |   | (15,700.00 | ) |
| Income                  from investment advisory services,                  net |   |                                              | 167     |     |   | 93       |   |                                       | 45     |                                       |   | 79.57 |   |   | 106.67 |   |
| Other                  income                                                   |   |                                              | 111     |     |   | 63       |   |                                       | 71     |                                       |   | 76.19 |   |   | (11.27 | ) |
|     Total                                                   |   | $                                                 | 1,517   |     | $      | 1,078    |   | $                                          | 1,115  |                                       |   | 40.72 | % |   | (3.32)% |  |

***2005        v. 2004.***

***2004        v. 2003.***

***Noninterest        Expense***
**.        **

|                                                                                |   | **2005**                                          |    | **2004** |   | **2003** |   | **%                  Change****2005/2004** |    | **%                  Change****2004/2003** |   |
|-------------------------------------------------------------------------------------|--------|---------------------------------------------------|---------|----------|--------|----------|--------|--------------------------------------------|---------|--------------------------------------------|--------|
|                                                                                |   | **(Dollars                  in thousands)**  |    |
|                                                                                |   |                                              |    |     |   |     |   |                                       |    |                                       |   |
| Compensation,                  taxes and benefits                                   |   | $                                                 | 5,912   |     | $      | 4,636    |   | $                                          | 4,024   |                                       |   | 27.52 | % |   | 15.21 | % |
| Charitable                  contributions                                           |   |                                              | 34      |     |   | 1,587    |   |                                       | 50      |                                       |   | (97.86 | ) |   | 3,074.00 |   |
| Office                  occupancy                                                   |   |                                              | 1,538   |     |   | 1,191    |   |                                       | 1,140   |                                       |   | 29.14 |   |   | 4.47 |   |
| Computer                  processing                                                |   |                                              | 624     |     |   | 547      |   |                                       | 507     |                                       |   | 14.08 |   |   | 7.89 |   |
| Prepayment                  fee on Federal Home Loan Bank                  advances |   |                                              | — |     |   | 498      |   |                                       | — |                                       |   | (100.00 | ) |   | N/A |   |
| Advertising                                                                         |   |                                              | 523     |     |   | 318      |   |                                       | 240     |                                       |   | 64.47 |   |   | 32.50 |   |
| Professional                  fees                                                  |   |                                              | 448     |     |   | 272      |   |                                       | 143     |                                       |   | 64.71 |   |   | 90.21 |   |
| Office                  supplies                                                    |   |                                              | 232     |     |   | 190      |   |                                       | 201     |                                       |   | 22.11 |   |   | (5.47 | ) |
| (Gain)                  Loss on foreclosed real estate, net                         |   |                                              | (35     | )        |   | (57      | )      |                                       | 2       |                                       |   | (38.60 | ) |   | (2,950.00 | ) |
| Other                  expenses                                                     |   |                                              | 821     |     |   | 621      |   |                                       | 538     |                                       |   | 32.21 |   |   | 15.43 |   |
|     Total                                                       |   | $                                                 | 10,097  |     | $      | 9,803    |   | $                                          | 6,845   |                                       |   | 3.00 | % |   | 43.21 | % |

***2005        v. 2004***

----

***2004        v. 2003.***
** **

***Income        Taxes***

***2005        v. 2004.***

***2004        v. 2003.***
** **

**Market        Risk Analysis**

***Qualitative        Aspects of Market Risk***
**.        **

***Quantitative        Aspects of Market Risk.***

----

| **Basis                    Point (“bp”)**                                 |   | **Net                    Portfolio Value**    |   | **Net                    Portfolio Value as % of****Present                    Value of Assets** |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|--------------------------------------------------------------------------------------------------|
| **Change                    in Rates**                                                |   | **$                    Amount**               |   | **$                    Change**                                                                  |   | **%                    Change** |   | **NPV                    Ratio** |   | **Change** |
|                                                                                  |   | **(Dollars                    in thousands)** |   |                                                                                             |   |   |   |   |   |
|                                                                                  |   |                                          |   |                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| 300                    bp                                                        |   | $                                             | 34,847 |                                                                                             |   | $ | (17,063 | ) |   |   | (33 | )% |   |   | 10.39 | %  |   |   | (4.07 | )% |
| 200                                                                                   |   |                                          | 40,579 |                                                                                             |   |   | (11,331 | ) |   |   | (22 | ) |   |   | 11.83 |   |   |   | (2.63 | ) |
| 100                                                                                   |   |                                          | 46,417 |                                                                                             |   |   | (5,493 | ) |   |   | (11 | ) |   |   | 13.22 |   |   |   | (1.24 | ) |
| 0                                                                                     |   |                                          | 51,910 |                                                                                             |   |   | — |   |   |   | — |   |   |   | 14.46 |   |   |   | — |   |
|                              (100)  |   |                                          | 55,471 |                                                                                             |   |   | 3,561 |   |   |   | 7 |   |   |   | 15.20 |   |   |   | 0.74 |   |
|                              (200)  |   |                                          | 54,958 |                                                                                             |   |   | 3,048 |   |   |   | 6 |   |   |   | 14.98 |   |   |   | 0.52 |   |

**Liquidity        and Capital Resources**

----

|                                         |   |  **Payments                  Due by Period** |   |
|----------------------------------------------|--------|---------------------------------------------------|--------|
| **Contractual                  Obligations** |   |  **Total**                                   |   | **Less                  than****1                  year** |   | **1-3                  years** |   | **3-5                  years** |   | **More                  than 5****years** |   |
|                                         |   |  **(In                  thousands)**         |   |
|                                         |   |                                         |   |   |   |   |   |   |   |   |   |
| Long-term                  debt obligations  |   | $                                                 | 57,059 |   | $ | 35,503 |   | $ | 10,955 |   | $ | 8,671 |   | $ | 1,930 |   |
| Operating                  lease obligations |   |                                              | 1,887  |   |   | 149 |   |   | 301 |   |   | 316 |   |   | 1,121 |   |
|     Total                |   | $                                                 | 58,946 |   | $ | 35,652 |   | $ | 11,256 |   | $ | 8,987 |   | $ | 3,051 |   |

----

**Off-Balance        Sheet Arrangements**

**Impact        of Recent Accounting Pronouncements**

* *

----

**Effect        of Inflation and Changing Prices**

----

**Report        of Independent Registered Public Accounting        Firm**

----

**Consolidated        Statements of Financial        Condition**

*(Dollars        in thousands)*

|                                                                                                                        |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                        |   | December                      31, |   |
|                                                                                                                        |   | 2005 |   | 2004 |   |
| **ASSETS**                                                                                                                  |   |   |   |   |   |   |   |
| Cash                      and due from depository institutions                                                              |   | $ | 8,922 |   | $ | 7,552 |   |
| Investment                      in federal funds                                                                            |   |   | 29 |   |   | 23 |   |
| Investment                      securities                                                                                  |   |   | 63,049 |   |   | 36,264 |   |
| Loans                      receivable, net                                                                                  |   |   | 259,427 |   |   | 203,820 |   |
| Accrued                      income receivable                                                                              |   |   | 1,525 |   |   | 1,077 |   |
| Premises                      and equipment, net                                                                            |   |   | 9,087 |   |   | 7,765 |   |
| Bank                      owned life insurance asset                                                                        |   |   | 7,652 |   |   | 4,934 |   |
| Federal                      Home Loan Bank of Boston stock                                                                 |   |   | 3,159 |   |   | 2,180 |   |
| Other                      assets                                                                                           |   |   | 2,496 |   |   | 1,834 |   |
|                                                                                                                        |   |   |   |   |   |   |   |
| **        Total                      assets**                                       |   | $ | 355,346 |   | $ | 265,449 |   |
|                                                                                                                        |   |   |   |   |   |   |   |
| **LIABILITIES                      AND STOCKHOLDERS' EQUITY**                                                               |   |   |   |   |   |   |   |
| Liabilities                                                                                                                 |   |   |   |   |   |   |   |
|     Deposits                                                                                            |   | $ | 240,846 |   | $ | 193,366 |   |
|     Advances                      from                      Federal Home Loan Bank                      |   |   | 57,059 |   |   | 15,826 |   |
|     Mortgagors'                      escrow accounts                                                    |   |   | 3,202 |   |   | 3,058 |   |
|     Other                      liabilities                                                              |   |   | 3,275 |   |   | 1,628 |   |
|                                                                                                                        |   |   |   |   |   |   |   |
|             Total                      liabilities              |   |   | 304,382 |   |   | 213,878 |   |
|                                                                                                                        |   |   |   |   |   |   |   |
| Commitments                      and contingencies                                                                          |   |   |   |   |   |   |   |
|                                                                                                                        |   |   |   |   |   |   |   |
| Stockholders'                      Equity                                                                                   |   |   |   |   |   |   |   |
|     Common                      stock, $.01 par value; 25,000,000 shares authorized;                    |   |   |   |   |   |   |   |
|                            7,604,375 shares issued and outstanding                                 |   |   | 76 |   |   | 76 |   |
|     Preferred                      stock, $.01 par value; 1,000,000 shares authorized;                  |   |   |   |   |   |   |   |
|                            no shares issued or outstanding                                         |   |   | - |   |   | - |   |
|     Paid-in                      capital                                                                |   |   | 33,157 |   |   | 33,089 |   |
|     Retained                      earnings                                                              |   |   | 22,588 |   |   | 21,362 |   |
|     Unearned                      ESOP                      shares (273,291 shares at December 31, 2005 |   |   |   |   |   |   |   |
|                            and 293,180 shares at December 31, 2004)                                |   |   | (2,733 | ) |   | (2,932 | ) |
|     Unearned                      stock                      awards (139,712 shares)                    |   |   | (1,551 | ) |   | - |   |
|     Treasury                      Stock,                      at cost (9,333 shares)                    |   |   | (122 | ) |   | - |   |
|     Accumulated                      other comprehensive income (loss)                                  |   |   | (451 | ) |   | (24 | ) |
|                                                                                                                        |   |   |   |   |   |   |   |
|             Total                      stockholders' equity     |   |   | 50,964 |   |   | 51,571 |   |
|                                                                                                                        |   |   |   |   |   |   |   |
| **        Total                      liabilities and stockholders' equity**         |   | $ | 355,346 |   | $ | 265,449 |   |

----

**Consolidated        Statements of Income**

*(Dollars        in thousands, except earnings per share)*

|                                                                                       |   |
|--------------------------------------------------------------------------------------------|--------|
|                                                                                       |   | For                  the Years Ended December 31, |   |
|                                                                                       |   | 2005 |   | 2004 |   | 2003 |   |
| **Interest                  and dividend income**                                          |   |   |   |   |   |   |   |   |   |   |
| Interest                  on loans                                                         |   | $ | 13,642 |   | $ | 11,240 |   | $ | 11,052 |   |
| Interest                  and dividends on investments and deposits                        |   |   | 2,266 |   |   | 1,473 |   |   | 1,592 |   |
|         Total                  interest income     |   |   | 15,908 |   |   | 12,713 |   |   | 12,644 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Interest                  expense**                                                      |   |   |   |   |   |   |   |   |   |   |
| Interest                  on deposits                                                      |   |   | 3,423 |   |   | 2,303 |   |   | 2,848 |   |
| Interest                  on borrowed funds                                                |   |   | 1,518 |   |   | 1,256 |   |   | 1,393 |   |
|         Total                  interest expense    |   |   | 4,941 |   |   | 3,559 |   |   | 4,241 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Net                  interest income**                                                   |   |   | 10,967 |   |   | 9,154 |   |   | 8,403 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Provision                  for loan losses**                                             |   |   | 32 |   |   | - |   |   | 45 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Net                  interest income after provision for loan losses**                   |   |   | 10,935 |   |   | 9,154 |   |   | 8,358 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                  income**                                                    |   |   |   |   |   |   |   |   |   |   |
| Fees                  for services                                                         |   |   | 974 |   |   | 872 |   |   | 851 |   |
| Income                  from bank owned life insurance                                     |   |   | 218 |   |   | 201 |   |   | 133 |   |
| Income                  from investment advisory services, net                             |   |   | 167 |   |   | 93 |   |   | 45 |   |
| Gain                  (loss) on sale of investments                                        |   |   | 47 |   |   | (156 | ) |   | 1 |   |
| Gain                  on sale of mortgages                                                 |   |   | - |   |   | 5 |   |   | 14 |   |
| Other                  income                                                              |   |   | 111 |   |   | 63 |   |   | 71 |   |
|         Total                  noninterest income  |   |   | 1,517 |   |   | 1,078 |   |   | 1,115 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Noninterest                  expense**                                                   |   |   |   |   |   |   |   |   |   |   |
| Compensation,                  taxes and benefits                                          |   |   | 5,912 |   |   | 4,636 |   |   | 4,024 |   |
| Office                  occupancy                                                          |   |   | 1,538 |   |   | 1,191 |   |   | 1,140 |   |
| Computer                  processing                                                       |   |   | 624 |   |   | 547 |   |   | 507 |   |
| Advertising                                                                                |   |   | 523 |   |   | 318 |   |   | 240 |   |
| Professional                  fees                                                         |   |   | 448 |   |   | 272 |   |   | 143 |   |
| Office                  supplies                                                           |   |   | 232 |   |   | 190 |   |   | 201 |   |
| Contributions                                                                              |   |   | 34 |   |   | 1,587 |   |   | 50 |   |
| Prepayment                  fee on Federal Home Loan Bank advances                         |   |   | - |   |   | 498 |   |   | - |   |
| (Gain)                  loss on foreclosed real estate, net                                |   |   | (35 | ) |   | (57 | ) |   | 2 |   |
| Other                  expenses                                                            |   |   | 821 |   |   | 621 |   |   | 538 |   |
|         Total                  noninterest expense |   |   | 10,097 |   |   | 9,803 |   |   | 6,845 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Income                  before provision for income taxes**                              |   |   | 2,355 |   |   | 429 |   |   | 2,628 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Provision                  for income taxes**                                            |   |   | 450 |   |   | 14 |   |   | 822 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **        Net                  income**            |   | $ | 1,905 |   | $ | 415 |   | $ | 1,806 |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |
| **Earnings                  per share - basic and diluted**                                |   | $ | 0.26 |   |   | N/M |   |   | N/A |   |

----

**Consolidated        Statements of Changes in Stockholders'        Equity**

*(Dollars        in thousands)*

|                                                                                                              |   |
|-------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                              |   | Common |   | Paid-in |   | Retained |   | Unearned                      ESOP |   | UnearnedStock |   | Treasury |   | AccumulatedOtherComprehensive |   |   |   |
|                                                                                                              |   | Stock |   | Capital |   | Earnings |   | Shares |   | Awards |   | Stock |   | Income                      (Loss) |   | Total |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                      at December 31, 2003**                                                             |   | $ | - |   | $ | - |   | $ | 20,947 |   | $ | - |   | $ | - |   | $ | - |   | $ | 270 |   | $ | 21,217 |   |
| Issuance                      of 7,604,375 shares of common stock related to                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     initial                      public offering, net of costs                                |   |   | 76 |   |   | 33,085 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 33,161 |   |
| 298,091                      shares of common stock acquired by ESOP                                              |   |   | - |   |   | - |   |   | - |   |   | (2,981 | ) |   | - |   |   | - |   |   | - |   |   | (2,981 | ) |
| ESOP                      shares released - 4,911 shares                                                          |   |   | - |   |   | 4 |   |   | - |   |   | 49 |   |   | - |   |   | - |   |   | - |   |   | 53 |   |
| Comprehensive                      income:                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net                      income                                                           |   |   | - |   |   | - |   |   | 415 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   |   |
|     Net                      change in unrealized holding gain on available-for-              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         sale                      securities, net of tax effect           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (294 | ) |   |   |   |
|             Comprehensive                      income |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 121 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                      at December 31, 2004**                                                             |   |   | 76 |   |   | 33,089 |   |   | 21,362 |   |   | (2,932 | ) |   | - |   |   | - |   |   | (24 | ) |   | 51,571 |   |
| ESOP                      shares released - 19,889 shares                                                         |   |   | - |   |   | 19 |   |   | - |   |   | 199 |   |   | - |   |   | - |   |   | - |   |   | 218 |   |
| Dividends                      paid ($0.16 per common share)                                                      |   |   | - |   |   | - |   |   | (500 | ) |   | - |   |   | - |   |   | - |   |   | - |   |   | (500 | ) |
| Stock                      acquired for future stock awards - 9,333 shares                                        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (122 | ) |   | - |   |   | (122 | ) |
| Stock                      based compensation - 139,712 shares                                                    |   |   | - |   |   | 49 |   |   | (179 | ) |   | - |   |   | (1,551 | ) |   | - |   |   | - |   |   | (1,681 | ) |
| Comprehensive                      income:                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net                      income                                                           |   |   | - |   |   | - |   |   | 1,905 |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   |   |
|     Net                      change in unrealized holding gain on available-for-              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         sale                      securities, net of tax effect           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (427 | ) |   |   |   |
|             Comprehensive                      income |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   |   |   |   | 1,478 |   |
|                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                      at December 31, 2005**                                                             |   | $ | 76 |   | $ | 33,157 |   | $ | 22,588 |   | $ | (2,733 | ) |   | (1,551 | ) | $ | (122 | ) | $ | (451 | ) | $ | 50,964 |   |

----

**Consolidated        Statements of Cash        Flows**

*(In        thousands)*

|                                                                                                                                    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                    |   | For                  the Years Ended December 31, |   |
|                                                                                                                                    |   | 2005 |   | 2004 |   | 2003 |   |
| **Cash                  flows from operating activities**                                                                               |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                                                                             |   | $ | 1,905 |   | $ | 415 |   | $ | 1,806 |   |
| Adjustments                  to reconcile net income to cash                                                                            |   |   |   |   |   |   |   |   |   |   |
|     provided                  by                  operating activities:                                             |   |   |   |   |   |   |   |   |   |   |
|         Provision                  for                  loan losses                             |   |   | 32 |   |   | - |   |   | 45 |   |
|         Contribution                  of                  common stock to charitable foundation |   |   | - |   |   | 1,519 |   |   | - |   |
|         Depreciation                  and amortization expense                                  |   |   | 686 |   |   | 642 |   |   | 662 |   |
|         Provision                  for                  deferred tax (benefit)                  |   |   | (177 | ) |   | (464 | ) |   | 171 |   |
|         Net                  gain on sale of real estate owned                                  |   |   | (46 | ) |   | (68 | ) |   | (53 | ) |
|         Gain                  on                  sale of mortgages                             |   |   | - |   |   | (5 | ) |   | (14 | ) |
|         Loans                  originated for sale                                              |   |   | - |   |   | (1,930 | ) |   | (8,851 | ) |
|         Proceeds                  from                  sale of loans                           |   |   | - |   |   | 1,935 |   |   | 8,865 |   |
|         (Gain)                  loss on sale of investments                                     |   |   | (47 | ) |   | 156 |   |   | (1 | ) |
|         Loss                  on                  disposal of premises and equipment            |   |   | 14 |   |   | - |   |   | - |   |
|         Stock-based                  compensation                                               |   |   | 397 |   |   | 53 |   |   | - |   |
|         Increase                  in                  accrued income receivable                 |   |   | (448 | ) |   | (5 | ) |   | (27 | ) |
|         (Decrease)                  increase in deferred loan fees                              |   |   | (11 | ) |   | 73 |   |   | (178 | ) |
|         Increase                  in                  cash surrender value of life insurance    |   |   | (218 | ) |   | (201 | ) |   | (133 | ) |
|         (Increase)                  decrease in other assets                                    |   |   | (319 | ) |   | 2 |   |   | (283 | ) |
|         Increase                  (decrease) in other liabilities                               |   |   | 1,518 |   |   | (33 | ) |   | 420 |   |
| **Net                  cash provided by operating activities**                                                                          |   |   | 3,286 |   |   | 2,089 |   |   | 2,429 |   |
|                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| **Cash                  flows from investing activities**                                                                               |   |   |   |   |   |   |   |   |   |   |
| Proceeds                  from maturities and repayments of                                                                             |   |   |   |   |   |   |   |   |   |   |
|     available-for-sale                  securities                                                                  |   |   | 19,245 |   |   | 9,222 |   |   | 9,907 |   |
| Proceeds                  from sale of available-for-sale securities                                                                    |   |   | 3,742 |   |   | 16,982 |   |   | 4,488 |   |
| Proceeds                  from maturities of held-to-maturity securities                                                                |   |   | 665 |   |   | - |   |   | 450 |   |
| Purchase                  of available-for-sale securities                                                                              |   |   | (50,593 | ) |   | (20,830 | ) |   | (19,838 | ) |
| Purchase                  of held-to-maturity securities                                                                                |   |   | (500 | ) |   | (3,610 | ) |   | (647 | ) |
| Loan                  originations net of principal payments                                                                            |   |   | (55,674 | ) |   | (23,582 | ) |   | (14,504 | ) |
| Purchase                  of Federal Home Loan Bank of Boston stock                                                                     |   |   | (980 | ) |   | (423 | ) |   | (196 | ) |
| Proceeds                  from the sale of foreclosed real estate                                                                       |   |   | 113 |   |   | 277 |   |   | 258 |   |
| Proceeds                  from sale of property and equipment                                                                           |   |   | 11 |   |   | - |   |   | - |   |
| Purchase                  of property and equipment                                                                                     |   |   | (1,943 | ) |   | (2,157 | ) |   | (497 | ) |
| Purchase                  of bank owned life insurance asset                                                                            |   |   | (2,500 | ) |   | - |   |   | (4,600 | ) |
| **Net                  cash used by investing activities**                                                                              |   |   | (88,414 | ) |   | (24,121 | ) |   | (25,179 | ) |
|                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                  |   | For                  the Years Ended December 31, |   |
|                                                                                                                                                  |   | 2005 |   | 2004 |   | 2003 |   |
| **Cash                  flows from financing activities**                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Net                  change in time deposits                                                                                                          |   |   | 41,231 |   |   | (4,992 | ) |   | (3,091 | ) |
| Net                  change in other deposit accounts                                                                                                 |   |   | 6,249 |   |   | 14,903 |   |   | 13,316 |   |
| Advances                  from Federal Home Loan Bank                                                                                                 |   |   | 62,193 |   |   | 19,650 |   |   | 13,903 |   |
| Repayment                  of Advances from Federal Home Loan Bank                                                                                    |   |   | (20,960 | ) |   | (38,814 | ) |   | (10,032 | ) |
| Net                  change in mortgagors' escrow accounts                                                                                            |   |   | 143 |   |   | 424 |   |   | 271 |   |
| Common                  stock repurchased                                                                                                             |   |   | (1,852 | ) |   | - |   |   | - |   |
| Cash                  dividends to common shareholders                                                                                                |   |   | (500 | ) |   | - |   |   | - |   |
| Proceeds                  from issuance of common stock                                                                                               |   |   | - |   |   | 32,601 |   |   | - |   |
| Cost                  of issuance of common stock                                                                                                     |   |   | - |   |   | (959 | ) |   | - |   |
| Payments                  to acquire common stock for ESOP                                                                                            |   |   | - |   |   | (2,981 | ) |   | - |   |
| **Net                  cash provided by financing activities**                                                                                        |   |   | 86,504 |   |   | 19,832 |   |   | 14,367 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| Increase                  (Decrease) in cash and cash equivalents                                                                                     |   |   | 1,376 |   |   | (2,200 | ) |   | (8,383 | ) |
| Cash                  and cash equivalents at beginning of year                                                                                       |   |   | 7,575 |   |   | 9,775 |   |   | 18,158 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **        Cash                  and cash equivalents at end of year**                                         |   | $ | 8,951 |   | $ | 7,575 |   | $ | 9,775 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| ***Supplemental                  disclosures***                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|         Non-cash                  investing activities:                                                       |   |   |   |   |   |   |   |   |   |   |
|             Transfer                  of                  loans to foreclosed real estate |   | $ | 47 |   | $ | 67 |   | $ | 305 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|         Cash                  paid during the year for:                                                       |   |   |   |   |   |   |   |   |   |   |
|             Interest                                                                      |   | $ | 4,939 |   | $ | 3,562 |   | $ | 4,243 |   |
|             Income                  taxes                                                 |   |   | 683 |   |   | 454 |   |   | 701 |   |

----

**Notes        to Consolidated Financial Statements**

**1. Nature        of Operations**

**2. Summary        of Significant Accounting        Policies**

| *Use                  of estimates*In                  preparing the financial statements, management is required to make                  estimates and assumptions that affect the reported amounts of assets                  and                  liabilities as of the date of the balance sheet, and income and                  expenses                  for the period. Actual results could differ from those                  estimates.Material                  estimates that are particularly |   |  susceptible                  to significant change in the near-term relate to the determination                  of the                  reserve for losses on loans and the valuation of real estate acquired                  in                  connection with foreclosure or in satisfaction of loans. While                  management                  uses available information to recognize losses on loans and foreclosed                  real estate, future additions to the allowance may be necessary                  based                  on |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

**Notes      to Consolidated Financial Statements**

| changes                in economic conditions, particularly in Connecticut.  *Principles                of consolidation*The                consolidated financial statements include the accounts of the Company,                the                Bank and the Bank’s wholly-owned subsidiary, Naugatuck Valley Mortgage                Servicing Corporation. All significant intercompany accounts and                transactions have been eliminated in consolidation. *Investment                securities*Investments                are accounted for in accordance with the intent of management at                the time                of purchase. If management has the intent and the Company has the                ability                at the time of purchase to hold debt securities until maturity, they                are                classified as held-to-maturity. These securities are carried at historical                cost adjusted for the amortization of premiums and accretion of discounts,                which are recognized as adjustments to interest income.Securities                to be held for indefinite periods of time are classified as                available-for-sale and are carried at fair value with unrealized                gains and                losses reported as a separate component of capital net of estimated                income                taxes.  The                Company has no securities held for trading.Gains                or losses on the sales of securities are recognized at trade date                utilizing the specific identification method.  *Loans                receivable and allowance for loan losses*Loans                receivable are stated at unpaid principal balance less loans in process,                deferred loan fees, and allowances for loan losses.Uncollected                interest on loans receivable is accrued as earned based on rates                applied                to  |   | principal                amounts outstanding. Recognition of income on the accrual basis is                discontinued when there is sufficient question as to the collectibility                of                the interest. In these cases, the interest previously accrued to                income is                reversed, and the loans are placed on the cash basis.Loan                origination fees and certain direct loan origination costs are being                deferred and the net amount amortized on a level-yield basis as an                adjustment to the related loan yield over its contractual life.                Unamortized net fees are recognized upon early repayment of the                loans.The                allowance for loan losses is established by a provision charged to                earnings and is maintained at a level considered adequate to provide                for                potential loan losses based on management's evaluation of known and                inherent risks in the loan portfolio. When a loan or portion of a                loan is                considered uncollectible, it is charged against the allowance for                loan                losses. Recoveries of loans previously charged-off are credited to                the                allowance when collected.Management                makes regular evaluations of the loan portfolio to determine the                adequacy                of the level of the allowance for loan losses. Numerous factors are                considered in the evaluation, including a review of certain borrowers'                current financial status and credit standing, available collateral,                loss                experience in relation to outstanding loans, the overall loan portfolio                quality, management's judgment regarding prevailing and anticipated                economic conditions, and other relevant factors.In                addition, various regulatory agencies, as an integral part of their                examination process, periodically review the Bank's allowance for                loan                losses. Such agencies may require the Bank to recognize additions                to the                allowance based on their judgments about information available to                them at                the time of their examination.      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes        to Consolidated Financial        Statements**

**2.    Summary      of      Significant Accounting Policies -*(Continued)***

| *Loan                sales and mortgage-servicing rights* Residential                mortgage loans originated and held for sale are classified separately                in                the consolidated statement of financial condition and reported at                the                lower of amortized cost or market value (based on secondary market                prices). There were no loans held for sale at December 31, 2005 and                2004.                Gains or losses on the sale of loans are determined using the specific                identification method. The                Bank sells residential mortgage loans with servicing rights retained.                At                the time of the sale, the Bank determines the value of the retained                servicing rights, which represents the present value of the differential                between the contractual servicing fee and adequate compensation,                defined                as the fee a sub-servicer would require to assume the role of servicer,                after considering the estimated effects of prepayments. If material,                a                portion of the gain on the sale of the loan is recognized as due                to the                value of the servicing rights, and a servicing asset is recorded.                The Bank                has had no loan sales which have resulted in the recording of a servicing                asset, due to the immaterial differential between the contractual                servicing fee (25 basis points) and adequate compensation, as described                above. *Foreclosed                real estate*Real                estate properties acquired through loan foreclosure and other partial                or                total satisfaction of problem loans are carried at the lower of fair                value                or the related loan balance at the date of foreclosure.Valuations                are periodically performed by management and an allowance for losses                is                established if the carrying value of a property subsequently exceeds                its                fair value less |   | estimated                disposal costs. Losses arising at the time of acquisition of such                properties are charged against the allowance for loan losses. Subsequent                write-downs in the carrying value and expenses incurred to maintain                the                properties are charged to expense. *Premises                and equipment*Premises                and equipment are stated at cost less accumulated depreciation computed                on                the straight-line method at rates based on estimated useful                lives.Expenditures                for replacements or major improvements are capitalized. Expenditures                for                normal maintenance and repairs are charged to expense as incurred.                Upon                the sale or retirement of premises and equipment, the cost and accumulated                depreciation are removed from their respective accounts and any gain                or                loss is included in income.  *Bank                owned life insurance asset*The                cash surrender value of bank owned life insurance relates to policies                on                employees of the Bank for which the Bank is the beneficiary. Increases                in                cash surrender value are included in non-interest income in the                consolidated income statements. *Income                from investment advisory services, net*In                conjunction with a third party, an employee of the Bank is licensed                to                sell non-deposit investment products, including mutual funds, annuities                and other insurance products. The Bank records, as non-interest income,                revenues earned from product sales in accordance with the terms of                revenue                sharing agreements with the third party, net of certain marketing                and                other   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes      to Consolidated Financial Statements**

| expenses                shared with the third party. The Bank currently employs the individual                authorized to sell these products and pays most of the direct costs                related to the sales activities. These costs are charged to expense                as                incurred, and are classified primarily in compensation and benefits                expense.  *Income                taxes*The                Company accounts for certain income and expense items differently                for                financial reporting purposes than for income tax purposes. Provisions                for                deferred taxes are being made in recognition of these temporary                differences. *Earnings                per share*When                presented, basic earnings per share is computed by dividing income                available to common stockholders by the weighted-average number of                common                shares outstanding for the period. Because the formation of the Company                was completed on September 30, 2004, per share earnings data is not                meaningful for 2004. The Company did not have any shares outstanding                in                2003. *Computation                of fair values*The                calculation of fair value estimates of financial instruments is dependent                upon certain subjective assumptions and involves significant                uncertainties. Changes in assumptions could significantly affect                the                estimates. These estimates do not reflect any possible tax ramifications,                estimated transaction costs or any premium or discount that could                result                from offering the Company's entire holdings of a particular financial                instrument. The                following methods and assumptions were utilized by the Company in                estimating the fair values of its on-balance sheet financial instruments: |   | *Cash                and cash equivalents**** ***-                The carrying amounts reported in the statement of financial condition                approximate these assets' fair value. *Investment                securities -*Fair                values for investment securities are based on quoted market prices                where                available. If quoted market prices are not available, fair values                are                based on market prices for comparable instruments. *Loans                receivable*                -                For variable rate loans that reprice frequently and without significant                change in credit risk, fair values are based on carrying values.                The fair                value of other loans are estimated using discounted cash flow analyses                using interest rates currently being offered for loans with similar                terms                to borrowers of similar credit quality. The fair value of nonaccrual                loans                was estimated using the estimated fair values of the underlying                collateral. *Deposits                liabilities*                -                The fair values of non-interest-bearing demand and savings deposits                are,                by definition, equal to the amount payable on demand at the reporting                date, i.e., their carrying amounts. Fair values for time certificates                of                deposit are estimated using a discounted cash flow technique that                applies                interest rates currently being offered to a schedule of aggregated                expected monthly maturities on time deposits. *Advances                from Federal Home Loan Bank ("FHLB")*                -                Fair values are estimated using discounted cash flow analyses based                on the                Bank's current incremental borrowing rates for similar types of borrowing                arrangements.*Mortgagors’                escrow accounts*                -                The carrying amounts reported in the statement of financial condition                approximate the fair value of the mortgagors’ escrow                accounts. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

----

**Notes          to Consolidated Financial          Statements**

**2.    Summary        of        Significant Accounting Policies -*(Continued)***

| *Recent                Accounting Pronouncements*In                December 2004, the Financial Accounting Standards Board revised Statement                of Financial Accounting Standards No. 123, "Accounting for Stock-Based                Compensation" ("SFAS 123R"). This Statement eliminates the alternative                intrinsic value method of accounting, in accordance with the Accounting                Principles Board Opinion No. 25, "Accounting for Stock Issued to                Employees" for recognizing the cost of employee services received                in                share-based payment transactions, thereby reflecting the economic                consequences of those transactions in the financial statements. SFAS                123R                requires all entities to follow the same accounting standard and                account                for such transactions using the fair-value-based method. This Statement                does not address the accounting for employee stock ownership plans..                The                Company has elected to comply with SFAS 123R beginning with the period                ended September 30, 2005. See “Note 10 - Equity Incentive Plan”, for                details on the impact of SFAS 123R on the Company's financial statements.                In                May 2005, the Financial Accounting Standards Board issued Statement                of                Financial Accounting Standard No. 154, "Accounting Changes and Error                Corrections" ("SFAS 154"). This Statement replaces Accounting Principles                Board Opinion No. 20 ("APB 20"), "Accounting Changes" and Statement                of                Financial Accounting Standard No. 3, "Reporting Accounting Changes                in                Interim Financial |   | Statements,"                and changes the requirements for the accounting for and reporting                of a                change in accounting principle. In accordance with the prior guidance                of                APB 20, most voluntary changes in an accounting principle required                recognizing the cumulative effect of a change in accounting principle                in                net income in the period of change. SFAS 154 requires retrospective                application to prior periods' financial statements for the direct                effects                of a change in accounting principle, unless it is impracticable to                determine either the period-specific effects of the cumulative effect                of                the change. Indirect effects of a change in accounting principle                should be                recognized in the period of accounting change. SFAS 154 carries forward                the guidance of APB 20 relating to the reporting for correction of                an                error in previously issued financial statements, change in accounting                estimate and the justification requirement for a change in accounting                principle on the basis of preferability. Provisions of this statement                are                effective for accounting changes made in the fiscal years beginning                after                December 15, 2005. At this time, the Company is uncertain how the                application of SFAS 154 will impact prior period financial statements                for                the implementation of future accounting pronouncements. *Reclassification*The                financial statements for the prior years have been reclassified to                conform                with changes in the current financial statement                presentation. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

----

**Notes      to Consolidated Financial Statements**

**3.        Investment Securities**

|                                                                                             |   | 2005     |   | 2004                          |   |
|--------------------------------------------------------------------------------------------------|--------|----------|--------|-------------------------------|--------|
|                                                                                             |   | Carrying |   | Estimated                     |   | Carrying |   | Estimated |   |
| *(In                  thousands)*                                                                |   | Amount   |   | Market                  Value |   | Amount |   | Market                  Value |   |
| Available-for-sale                  securities                                                   |   | $        | 58,047 |                          | $      | 58,047 |   | $ | 31,096 |   | $ | 31,096 |   |
| Held-to-maturity                  securities                                                     |   |     | 5,002  |                          |   | 4,989 |   |   | 5,168 |   |   | 5,173 |   |
| **        Total                  investment securities** |   | $        | 63,049 |                          | $      | 63,036 |   | $ | 36,264 |   | $ | 36,269 |   |
|                                                                                             |   |     |   |                          |   |   |   |   |   |   |   |   |   |

|                                                                                                                                                                                     |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                     |   | Amortized |   | Gross                    Unrealized |   | Estimated |   |
| *(In                    thousands)*                                                                                                                                                      |   | Cost                    Basis |   | Gain |   | Loss |   | Market                    Value |   |
| **Available-for-sale                    securities:**                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                    government and agency obligations                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Less                    than one year                                                                                                                            |   | $ | 6,847 |   | $ | 8 |   | $ | (49 | ) | $ | 6,806 |   |
|     From                    one through five years                                                                                                                   |   |   | 7,497 |   |   | 2 |   |   | (95 | ) |   | 7,404 |   |
|     From                    five through ten years                                                                                                                   |   |   | 1,000 |   |   | - |   |   | (35 | ) |   | 965 |   |
|                                                                                                                                                                                     |   |   | 15,344 |   |   | 10 |   |   | (179 | ) |   | 15,175 |   |
| Municipal                    obligations                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     After                    ten years                                                                                                                               |   |   | 8,715 |   |   | 61 |   |   | (7 | ) |   | 8,769 |   |
| Corporate                    bonds                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     From                    one through five years                                                                                                                   |   |   | 1,928 |   |   | - |   |   | (5 | ) |   | 1,923 |   |
| Mortgage-backed                    securities                                                                                                                                            |   |   | 22,544 |   |   | 1 |   |   | (463 | ) |   | 22,082 |   |
| Collateralized                    mortgage obligations                                                                                                                                   |   |   | 4,199 |   |   | - |   |   | (101 | ) |   | 4,098 |   |
|                         Total                    debt securities |   |   | 52,730 |   |   | 72 |   |   | (755 | ) |   | 52,047 |   |
| Money                    market preferred stocks                                                                                                                                         |   |   | 6,000 |   |   | - |   |   | - |   |   | 6,000 |   |
|                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                    available-for-sale securities                                                                                   |   | $ | 58,730 |   | $ | 72 |   | $ | (755 | ) | $ | 58,047 |   |
|                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Held-to-maturity                    securities:**                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                    government and agency obligations                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     From                    one through five years                                                                                                                   |   | $ | 1,202 |   | $ | 1 |   | $ | (14 | ) | $ | 1,189 |   |
| Interest                    bearing balances                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     From                    one through five years                                                                                                                   |   |   | 3,800 |   |   | - |   |   | - |   |   | 3,800 |   |
|                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                    held-to-maturity securities                                                                                     |   | $ | 5,002 |   | $ | 1 |   | $ | (14 | ) | $ | 4,989 |   |
|                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**Notes to Consolidated Financial Statements**

**3.        Investment Securities *-        (Continued)***

|                                                                                                          |   |
|---------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                          |   | Securities                  in Continuous Unrealized |   |
|                                                                                                          |   | Loss                  Position Less Than 12 Months |   |
|                                                                                                          |   | Number                  of |   | Market |   | Unrealized |   |
| *(Dollars                  in thousands)*                                                                     |   | Securities |   | Value |   | Loss |   |
|                                                                                                          |   |   |   |   |   |   |   |
| U.S.                  government and agency obligations                                                       |   |   | 9 |   | $ | 5,107 |   | $ | (42 | ) |
| Municipal                  obligations                                                                        |   |   | 6 |   |   | 2,199 |   |   | (7 | ) |
| Corporate                  bonds                                                                              |   |   | 2 |   |   | 1,923 |   |   | (6 | ) |
| Mortgage-backed                  securities                                                                   |   |   | 13 |   |   | 15,652 |   |   | (242 | ) |
|         Total                  securities in unrealized loss position |   |   | 30 |   | $ | 24,881 |   | $ | (297 | ) |

|                                                                                                          |   |
|---------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                          |   | Securities                  in Continuous Unrealized |   |
|                                                                                                          |   | Loss                  Position 12 or More Consecutive Months |   |
|                                                                                                          |   | Number                  of |   | Market |   | Unrealized |   |
| *(Dollars                  in thousands)*                                                                     |   | Securities |   | Value |   | Loss |   |
|                                                                                                          |   |   |   |   |   |   |   |
| U.S.                  government and agency obligations                                                       |   |   | 10 |   | $ | 6,894 |   | $ | (150 | ) |
| Mortgage-backed                  securities                                                                   |   |   | 11 |   |   | 9,539 |   |   | (322 | ) |
|         Total                  securities in unrealized loss position |   |   | 21 |   | $ | 16,433 |   | $ | (472 | ) |

----

**Notes      to Consolidated Financial Statements**

|                                                                                                 |   |
|------------------------------------------------------------------------------------------------------|--------|
|                                                                                                 |   | Amortized |   | Gross                  Unrealized |   | Estimated |   |
| *(In                  thousands)*                                                                    |   | Cost                  Basis |   | Gain |   | Loss |   | Market                  Value |   |
| **Available-for-sale                  securities:**                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  government and agency obligations                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     From                  one through five years                                 |   | $ | 14,072 |   | $ | 193 |   | $ | (36 | ) | $ | 14,229 |   |
|     From                  five through ten years                                 |   |   | 1,000 |   |   | - |   |   | (19 | ) |   | 981 |   |
| Mortgage-backed                  securities                                                          |   |   | 12,249 |   |   | 6 |   |   | (163 | ) |   | 12,092 |   |
| Collateralized                  mortgage obligations                                                 |   |   | 3,812 |   |   | 13 |   |   | (31 | ) |   | 3,794 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                  available-for-sale securities |   | $ | 31,133 |   | $ | 212 |   | $ | (249 | ) | $ | 31,096 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Held-to-maturity                  securities:**                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  government and agency obligations                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     From                  one through five years                                 |   | $ | 703 |   | $ | 9 |   | $ | (4 | ) | $ | 708 |   |
| Interest                  bearing balances                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     From                  one through five years                                 |   |   | 4,465 |   |   | - |   |   | - |   |   | 4,465 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total                  held-to-maturity securities   |   | $ | 5,168 |   | $ | 9 |   | $ | (4 | ) | $ | 5,173 |   |

**4.        Loans Receivable**

|                                                                                                                 |   |
|----------------------------------------------------------------------------------------------------------------------|--------|
| *(Dollars                    in thousands)*                                                                          |   | 2005 |   | 2004 |   |
|                                                                                                                 |   |   |   |   |   |
| Loans                    secured by first mortgages on real estate:                                                  |   |   |   |   |   |   |   |
| Conventional:                                                                                                        |   |   |   |   |   |   |   |
|     Fixed                    rate mortgage loans                                                 |   | $ | 127,924 |   | $ | 108,786 |   |
|     Adjustable                    rate                    mortgage loans                         |   |   | 28,245 |   |   | 23,439 |   |
|     Construction                    loans                                                        |   |   | 6,063 |   |   | 6,547 |   |
| Commercial                    loans                                                                                  |   |   | 62,946 |   |   | 41,047 |   |
| Loans                    on savings accounts                                                                         |   |   | 785 |   |   | 679 |   |
| Personal,                    auto and property improvement loans                                                     |   |   | 38,001 |   |   | 27,657 |   |
|                                                                                                                 |   |   | 263,964 |   |   | 208,155 |   |
| Less:                       Allowance for loan losses                                                 |   |   | 1,878 |   |   | 1,829 |   |
|         Undisbursed                    construction loans                    |   |   | 2,258 |   |   | 2,094 |   |
|         Deferred                    loan                    origination fees |   |   | 401 |   |   | 412 |   |
|                                                                                                                 |   |   |   |   |   |   |   |
| **    Loans                    receivable, net**                                                 |   | $ | 259,427 |   | $ | 203,820 |   |
|                                                                                                                 |   |   |   |   |   |   |   |
| **    Weighted                    average yield**                                                |   |   | 6.07 | % |   | 5.71 | % |

----

**Notes to Consolidated Financial Statements**

**4.        Loans Receivable **
***-        (Continued)***

| Fixed                    Rate            |   |
|----------------------------------------------------|--------|
| Term                    to Maturity                |   |  2005 |   | 2004 |   |
|                                               |   |   *(In                    thousands)* |   |
| Less                    than 1 year                |   | $ | 5,907 |   | $ | 4,040 |   |
| 1                    -                    3 years  |   |   | 1,683 |   |   | 817 |   |
| 3                    -                    5 years  |   |   | 1,970 |   |   | 2,449 |   |
| 5                    -                    10 years |   |   | 19,222 |   |   | 16,955 |   |
| 10                    - 20 years                   |   |   | 52,887 |   |   | 49,928 |   |
| Over                    20 years                   |   |   | 73,970 |   |   | 55,612 |   |
| Total                    loans at fixed rates      |   | $ | 155,639 |   | $ | 129,801 |   |

| Adjustable                  Rate       |   |
|--------------------------------------------------|--------|
| Rate                  Adjustment                 |   |  2005 |   | 2004 |   |
|                                             |   | *(In                  thousands)*   |   |
| Less                  than 1 year                |   | $ | 53,453 |   | $ | 49,944 |   |
| 1                  -                  3 years    |   |   | 15,792 |   |   | 7,875 |   |
| 3                  -                  5 years    |   |   | 21,230 |   |   | 8,597 |   |
| 5                  -                  10 years   |   |   | 16,990 |   |   | 11,938 |   |
| Over                  10 years                   |   |   | 860 |   |   | - |   |
| Total                  loans at adjustable rates |   | $ | 108,325 |   | $ | 78,354 |   |

----

**Notes      to Consolidated Financial Statements**

|                                                                                          |   |
|-----------------------------------------------------------------------------------------------|--------|
| *(In                    thousands)*                                                           |   | 2005 |   | 2004 |   | 2003 |   |
|                                                                                          |   |   |   |   |   |   |   |
|     Balance                    at beginning of year                       |   | $ | 1,829 |   | $ | 1,810 |   | $ | 1,994 |   |
|     Provision                    for                    loan losses       |   |   | 32 |   |   | - |   |   | 45 |   |
|     Loans                    written off                                  |   |   | (4 | ) |   | (56 | ) |   | (267 | ) |
|     Recoveries                    of                    loans written off |   |   | 21 |   |   | 75 |   |   | 38 |   |
|     Balance                    at end of year                             |   | $ | 1,878 |   | $ | 1,829 |   | $ | 1,810 |   |

**5.        Premises and Equipment**

|                                                                                                                  |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|
| *(In                    thousands)*                                                                                   |   |  2005 |   | 2004 |   |
|     Banking                    offices and branch buildings                                       |   | $ | 6,819 |   | $ | 5,916 |   |
|     Furniture                    and                    equipment                                 |   |   | 2,535 |   |   | 2,170 |   |
|     Land                                                                                          |   |   | 1,538 |   |   | 1,538 |   |
|     Leasehold                    improvements                                                     |   |   | 1,067 |   |   | 604 |   |
|                                                                                                                  |   |   | 11,959 |   |   | 10,228 |   |
|     Accumulated                    depreciation and amortization                                  |   |   | (2,872 | ) |   | (2,463 | ) |
| **        Premises                    and                    equipment, net** |   | $ | 9,087 |   | $ | 7,765 |   |

----

**Notes to Consolidated Financial Statements**

**5.        Premises and Equipment **
***-        (Continued)***

|                                        |   |
|---------------------------------------------|--------|
| *(In                  thousands)*           |   |  Income |   | Expense |   |
|                                        |   |    |   |   |   |
| 2006                                        |   | $ | 26 |   | $ | 149 |   |
| 2007                                        |   |   | - |   |   | 150 |   |
| 2008                                        |   |   | - |   |   | 151 |   |
| 2009                                        |   |   | - |   |   | 153 |   |
| 2010                                        |   |   | - |   |   | 163 |   |
| Thereafter                                  |   |   | - |   |   | 1,121 |   |
| Total                  future minimum rents |   | $ | 26 |   | $ | 1,887 |   |

**6.        Deposits**

|                                                                                  |
|---------------------------------------------------------------------------------------|
|                                                                                  |   | 2005 |   | 2004 |
|                                                                                  |   |   |   | Weighted |   |   |   | Weighted  |
|                                                                                  |   |   |   | Average |   |   |   | Average |
| *(Dollars                    in thousands)*                                           |   | Amount |   | Cost |   | Amount |   |  Cost |
| Certificate                    accounts                                               |   | $ | 122,431 |   |   | 3.38 | % |   | $ | 81,200 |   |   | 2.24 | % |
| Regular                    savings accounts                                           |   |   | 51,375 |   |   | 0.85 | % |   |   | 43,941 |   |   | 0.35 | % |
| Checking                    and NOW accounts                                          |   |   | 46,825 |   |   | 0.10 | % |   |   | 37,003 |   |   | 0.15 | % |
| Money                    market savings accounts                                      |   |   | 20,215 |   |   | 0.88 | % |   |   | 31,222 |   |   | 1.05 | % |
| **        Total                    deposits** |   | $ | 240,846 |   |   | 1.99 | % |   | $ | 193,366 |   |   | 1.22 | % |

----

**Notes          to Consolidated Financial Statements**

|                                                                                            |   |
|-------------------------------------------------------------------------------------------------|--------|
| *(In                      thousands)*                                                           |   |  2005 |   | 2004 |   |
|                                                                                            |   |    |   |   |   |
| Certificate                      accounts maturing in:                                          |   |   |   |   |   |   |   |
|     Under                      12 months                                    |   | $ | 63,194 |   | $ | 49,379 |   |
|     12                      to                      24 months               |   |   | 37,067 |   |   | 13,243 |   |
|     24                      to                      36 months               |   |   | 13,564 |   |   | 6,805 |   |
|     Over                      36                      months                |   |   | 8,606 |   |   | 11,773 |   |
|         Total                      certificate accounts |   | $ | 122,431 |   | $ | 81,200 |   |

**7.            Advances from Federal Home Loan Bank**

|                                          |
|-----------------------------------------------|
| *(Dollars                      in thousands)* |   | 2005 |   | 2004 |
|                                          |   |   |   | Weighted |   |   |   | Weighted |
|                                          |   | Amount |   | Average |   | Amount |   | Average |
| Year                      of Maturity         |   | Due |   |  Cost |   | Due |   |  Cost |
| 2005                                          |   | $ | - |   |   | - |   |   | $ | 3,724 |   |   | 5.84 | % |
| 2006                                          |   |   | 35,503 |   |   | 4.27 | % |   |   | 2,818 |   |   | 4.31 | % |
| 2007                                          |   |   | 5,034 |   |   | 3.92 | % |   |   | 3,349 |   |   | 3.82 | % |
| 2008                                          |   |   | 5,921 |   |   | 4.06 | % |   |   | 1,384 |   |   | 3.65 | % |
| 2009                                          |   |   | 6,468 |   |   | 4.19 | % |   |   | 1,918 |   |   | 3.89 | % |
| 2010                                          |   |   | 2,203 |   |   | 4.32 | % |   |   | 703 |   |   | 4.01 | % |
| 2011                                          |   |   | 657 |   |   | 4.09 | % |   |   | 657 |   |   | 4.09 | % |
| 2012                                          |   |   | 684 |   |   | 4.09 | % |   |   | 684 |   |   | 4.09 | % |
| 2013                                          |   |   | 579 |   |   | 4.13 | % |   |   | 579 |   |   | 4.13 | % |
| 2014                                          |   |   | 10 |   |   | 3.94 | % |   |   | 10 |   |   | 3.94 | % |
| **Total                      advances**       |   | $ | 57,059 |   |   | 4.20 | % |   | $ | 15,826 |   |   | 4.42 | % |

----

**Notes        to Consolidated Financial Statements**

**8.          Pension and Other Post-Retirement Benefits**

*Pension          Plan*

*Defined          Contribution Plan*

*Directors          Retirement Plan*

*Healthcare          Benefits*

----

**Notes        to Consolidated Financial Statements**

*Obligation          and Funded Status*

|                                                                                               |   |
|----------------------------------------------------------------------------------------------------|--------|
|                                                                                               |   | Directors                      Retirement Plan |   | Healthcare                      Benefit Plan |   |
| *(In                      thousands)*                                                              |   | 2005 |   | 2004 |   | 2005 |   | 2004 |   |
|                                                                                               |   |   |   |   |   |   |   |   |   |
| Measurement                      date                                                              |   |   | 12/31/2005 |   |   | 12/31/2004 |   |   | 12/31/2005 |   |   | 12/31/2004 |   |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Projected                      benefit obligation                                                  |   | $ | (388 | ) | $ | (300 | ) | $ | (425 | ) | $ | (419 | ) |
| Fair                      value of plan assets                                                     |   |   | - |   |   | - |   |   | - |   |   | - |   |
|     Funded                      status                                         |   | $ | (388 | ) | $ | (300 | ) | $ | (425 | ) | $ | (419 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accrued                      benefit cost recognized in the                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     statement                      of                      financial condition |   | $ | (204 | ) | $ | (228 | ) | $ | (425 | ) | $ | (419 | ) |

*Net            Periodic Benefit Cost and Contributions*

|                                                  |   |
|-------------------------------------------------------|--------|
|                                                  |   | Directors                      Retirement Plan |   | Healthcare                      Benefit Plan |   |
| *(In                      thousands)*                 |   | 2005 |   | 2004 |   | 2005 |   | 2004 |   |
|                                                  |   |   |   |   |   |   |   |   |   |
| Net                      periodic benefit cost        |   | $ | 55 |   | $ | 24 |   | $ | 6 |   | $ | 5 |   |
| Employer                      contributions           |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Plan                      participants' contributions |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Benefits                      paid during the year    |   |   | 79 |   |   | 106 |   |   | 19 |   |   | 16 |   |

----

**Notes          to Consolidated Financial Statements**

**8.            Pension and Other Post-Retirement Benefits **
***-            (Continued)***

*Assumptions            and Effects*

|                                                      |
|-----------------------------------------------------------|
|                                                      |   | Directors                      Retirement Plan |   | Healthcare                      Benefit Plan |
| *Weighted-average                      assumptions:*      |   | 2005 | 2004 |   | 2005 | 2004 |
|                                                      |   |   |   |   |   |   |   |   |   |   |
| Discount                      rate                        |   |   | 5.75 | % |   | 7.00 | % |   |   | 5.75 | % |   | 5.75 | % |
| Rate                      of compensation increase        |   |   | 2.00 | % |   | 4.25 | % |   |   | - |   |   | - |   |
| Medical                      trend rate next year         |   |   | - |   |   | - |   |   |   | 5.00 | % |   | 7.00 | % |
| Ultimate                      medical trend rate          |   |   | - |   |   | - |   |   |   | 5.00 | % |   | 5.00 | % |
| Year                      ultimate trend rate is achieved |   |   | - |   |   | - |   |   |   | 2006 |   |   | 2006 |   |

**9.            Employee Stock Ownership Plan**

----

**Notes          to Consolidated Financial Statements**

**10.            Equity Incentive Plan**

----

**Notes          to Consolidated Financial Statements**

**10.            Equity Incentive Plan - (**
***Continued)***

|                                         |         |
|----------------------------------------------|--------------|
| Dividend                      yield:         | 1.44%        |
| Expected                      volatility:    | 11.47%  |
| Risk-free                      rate:         | 4.18%        |
| Expected                      term in years: | 6.5          |

**11.            Income Taxes** 

| Retained                      earnings at December 31, 2005 includes approximately $1,417,000                      for which                      no provision for Federal income tax has been made. This amount                      represents                      aggregate allocations of income to bad debt deductions for                      tax purposes                      only. Reduction of amounts so allocated for purposes other                      than tax bad                      debt losses will create income for tax purposes only, which                      will be                      subjected to the then current corporate income tax rate.The                      Bank’s wholly-owned subsidiary, the Naugatuck Valley Mortgage Servicing                      Corporation, qualifies and operates as a Connecticut passive                      investment                      company pursuant to legislation. Because the subsidiary earns                      income from                      passive investments which is exempt from Connecticut Corporation                      Business                      Tax and its dividends to the Bank are exempt |   | from                      state tax, the Bank no longer expects to incur state income                      tax                      expense.Deferred                      income taxes reflect the impact of "temporary differences"                      between the                      amount of assets and liabilities for financial reporting purposes                      and such                      amounts as measured by tax laws and regulations. Principal                      items making up                      the deferred income tax provision include a carry forward of                      charitable                      contributions, the provision for loan losses, accelerated tax                      depreciation                      and deferred mortgage fee income. The Company records a valuation                      allowance against deferred tax assets if, based on the weight                      of available                      evidence, it is more likely than not, that some or all of the                      deferred tax                      assets will not be realized. The Company believes that all                      deferred tax                      assets will be realized in the future and that no valuation                      allowance is                      necessary. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

**Notes          to Consolidated Financial Statements**

|                                                                                                                           |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|
| *(In                          thousands)*                                                                                      |   | 2005 |   | 2004 |   |
|                                                                                                                           |   |   |   |   |   |
| Current                          tax receivable                                                                                |   | $ | 57 |   | $ | 1 |   |
|                                                                                                                           |   |   |   |   |   |   |   |
| Deferred                          tax receivable                                                                               |   |   |   |   |   |   |   |
|     Charitable                          contributions carryforward                                         |   | $ | 428 |   | $ | 465 |   |
|     Reserve                          for loan losses                                                       |   |   | 552 |   |   | 382 |   |
|     Post-retirement                          benefits                                                      |   |   | 214 |   |   | 220 |   |
|     Deferred                          income                                                               |   |   | 138 |   |   | 142 |   |
|     Available-for-sale                          securities                                                 |   |   | 232 |   |   | 12 |   |
|             Total                          deferred tax receivable |   |   | 1,564 |   |   | 1,221 |   |
|                                                                                                                           |   |   |   |   |   |   |   |
| Deferred                          tax payable                                                                                  |   |   |   |   |   |   |   |
|     Depreciation                                                                                           |   | $ | (104 | ) | $ | (153 | ) |
|     Other                          items                                                                   |   |   | (21 | ) |   | (26 | ) |
|             Total                          deferred tax payable    |   |   | (125 | ) |   | (179 | ) |
|                                                                                                                           |   |   |   |   |   |   |   |
|     Net                          deferred tax receivable                                                   |   | $ | 1,439 |   | $ | 1,042 |   |

|                                                                                                                     |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|
| *(In                      thousands)*                                                                                    |   | 2005 |   | 2004 |   | 2003 |   |
| Current                      income tax expense                                                                          |   | $ | 627 |   | $ | 478 |   | $ | 651 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Deferred                      income tax expense (benefit), due to:                                                      |   |   |   |   |   |   |   |   |   |   |
|     Charitable                      contributions                                                    |   |   | 37 |   |   | (465 | ) |   | - |   |
|     Reserve                      for loan losses                                                     |   |   | (170 | ) |   | (42 | ) |   | (26 | ) |
|     Deferred                      income                                                             |   |   | 4 |   |   | (25 | ) |   | 60 |   |
|     Post                      retirement benefits                                                    |   |   | 6 |   |   | 26 |   |   | 8 |   |
|     Depreciation                                                                                     |   |   | (49 | ) |   | 43 |   |   | 131 |   |
|     Other                      items                                                                 |   |   | (5 | ) |   | (1 | ) |   | (2 | ) |
|         Total                      deferred income tax expense (benefit)         |   |   | (177 | ) |   | (464 | ) |   | 171 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| **        Provision                      for                      income taxes** |   | $ | 450 |   | $ | 14 |   | $ | 822 |   |

----

**Notes to Consolidated Financial Statements**

**11.            Income Taxes **
***-            (Continued)***

|                                                                                                                     |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                     |   | Year                        Ended December 31, |   |
| *(Dollars                        in thousands)*                                                                          |   | 2005 |   | 2004 |   | 2003 |   |
| Income                        tax expense at statutory rate of 34%                                                       |   | $ | 801 |   | $ | 146 |   | $ | 894 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Increase                        (decrease) in income tax expense resulting from:                                         |   |   |   |   |   |   |   |   |   |   |
|     Income                        exempt from income tax                                             |   |   | (193 | ) |   | (68 | ) |   | (46 | ) |
|     Changes                        in tax bad debt base year reserves                                |   |   | (160 | ) |   | (65 | ) |   | (28 | ) |
|     Other                        items, net                                                          |   |   | 2 |   |   | 1 |   |   | 2 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
|         Provision                        for                        income taxes |   | $ | 450 |   | $ | 14 |   | $ | 822 |   |
|                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Effective                        rate of income tax expense                                                              |   |   | 19.1 | % |   | 3.3 | % |   | 31.3 | % |

**12.            Consolidated Statement of Comprehensive            Income**

|                                                                                         |   |
|----------------------------------------------------------------------------------------------|--------|
|                                                                                         |   | For                        the Years Ended December 31, |   |
| *(In                        thousands)*                                                      |   | 2005 |   | 2004 |   | 2003 |   |
|                                                                                         |   |   |   |   |   |   |   |
| **Net                        income**                                                        |   | $ | 1,905 |   | $ | 415 |   | $ | 1,806 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Other                        comprehensive loss:**                                         |   |   |   |   |   |   |   |   |   |   |
| Unrealized                        loss on securities available-for-sale                      |   |   | (600 | ) |   | (601 | ) |   | (664 | ) |
| Reclassification                        adjustment for (gains) losses                        |   |   |   |   |   |   |   |   |   |   |
|     realized                        in net                        income |   |   | (47 | ) |   | 156 |   |   | (1 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Other                        comprehensive loss before tax effect**                        |   |   | (647 | ) |   | (445 | ) |   | (665 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Income                        tax benefit related to items of other                          |   |   |   |   |   |   |   |   |   |   |
|     comprehensive                        loss                            |   |   | (220 | ) |   | (151 | ) |   | (226 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Other                        comprehensive loss net of tax benefit**                       |   |   | (427 | ) |   | (294 | ) |   | (439 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **    Total                        comprehensive income**                |   | $ | 1,478 |   | $ | 121 |   | $ | 1,367 |   |

----

**Notes          to Consolidated Financial Statements**

**13.            Regulatory Capital**

|                                                                       |
|----------------------------------------------------------------------------|
|                                                                       |   | 2005 |   | 2004 |
| *(Dollars                        in thousands)*                            |   | Amount | Ratio |   | Amount | Ratio |
|                                                                       |   |   |   |   |   |   |   |   |   |   |
| Tier                        I Capital (to Adjusted Total Assets)           |   | $ | 39,885 |   |   | 11.42 | % |   | $ | 37,937 |   |   | 14.78 | % |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                        I Risk-Based Capital (to Risk-Weighted Assets) |   |   | 39,885 |   |   | 17.07 | % |   |   | 37,937 |   |   | 22.52 | % |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        Risk-Based Capital (to Risk-Weighted Assets)  |   |   | 41,763 |   |   | 17.88 | % |   |   | 39,766 |   |   | 23.61 | % |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tangible                        Equity Capital (to Tangible Assets)        |   |   | 39,885 |   |   | 11.42 | % |   |   | 37,937 |   |   | 14.78 | % |

----

**Notes to Consolidated Financial Statements**

**13.            Regulatory Capital **
***-            (Continued)***

|                                                                                                                                |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                |   | December                          31, |   |
| *(In                          thousands)*                                                                                           |   | 2005 |   | 2004 |   |
| Total                          capital as calculated under generally accepted                                                       |   |   |   |   |   |   |   |
|     accounting                          principles (GAAP Capital)                                               |   | $ | 39,795 |   | $ | 38,256 |   |
| Adjustments                          to reconcile Total GAAP Capital to Regulatory Capital:                                         |   |   |   |   |   |   |   |
|         Intangible                          assets                                          |   |   | (222 | ) |   | (256 | ) |
|         Accumulated                          other comprehensive income                     |   |   |   |   |   |   |   |
|             from                          available-for-sale securities |   |   | 312 |   |   | (63 | ) |
| Tier                          I Risk-Based Capital                                                                                  |   |   | 39,885 |   |   | 37,937 |   |
|         Includible                          portion of allowance for loan losses            |   |   | 1,878 |   |   | 1,829 |   |
|                                                                                                                                |   |   |   |   |   |   |   |
| Total                          Risk-Based Capital                                                                                   |   | $ | 41,763 |   | $ | 39,766 |   |

**14.            Earnings per Share**

|                                                                                                            |   |   |      |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|-----------|
|                                                                                                            |   | 2005   |      | 2004 |   |
| Net                        income and income available to common stockholders                                   |   | $      | 1,905,000 |   | $ | 415,000 |   |
|                                                                                                            |   |   |      |   |   |   |   |
| Weighted-average                        shares outstanding during the period                                    |   |   |      |   |   |   |   |
|     Basic                                                                                   |   |   | 7,311,249 |   |   | N/M |   |
|     Effect                        of dilutive stock options and restrictive stock awards    |   |   | 5,707     |   |   | N/M |   |
|                                                                                                            |   |   |      |   |   |   |   |
|     Diluted                                                                                 |   |   | 7,316,956 |   |   |   |   |
|                                                                                                            |   |   |      |   |   |   |   |
| Net                        income per common share:                                                             |   |   |      |   |   |   |   |
| **        Basic                        and Diluted Earnings per share** |   | $      | 0.26      |   |   | N/M |   |
|                                                                                                            |   |   |      |   |   |   |   |

----

**Notes          to Consolidated Financial Statements**

**15.            Financial Instruments**

|                                                                                        |   |
|---------------------------------------------------------------------------------------------|--------|
| *(In                        thousands)*                                                     |   | 2005 |   | 2004 |   |
| Commitments                        to extend credit:                                        |   |   |   |   |   |   |   |
|     Loan                        commitments                             |   | $ | 7,578 |   | $ | 4,694 |   |
|     Unused                        lines of credit                       |   |   | 18,363 |   |   | 14,463 |   |
|     Amounts                        due mortgagors on construction loans |   |   | 15,025 |   |   | 14,491 |   |
|     Amounts                        due on commercial loans              |   |   | 3,434 |   |   | 1,485 |   |
| Commercial                        letters of credit                                         |   |   | 1,969 |   |   | 2,185 |   |

----

**Notes to Consolidated Financial Statements**

**15.            Financial Instruments - **
***(Continued)***

|                                                                         |   |
|------------------------------------------------------------------------------|--------|
|                                                                         |   | December                      31, |   |
|                                                                         |   | 2005 |   | 2004 |   |
|                                                                         |   | Carrying |   | Estimated |   | Carrying |   | Estimated |   |
| *(In                      thousands)*                                        |   | Amount |   | Fair                      Value |   | Amount |   | Fair                      Value |   |
| Financial                      assets                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Cash                      and cash equivalents       |   | $ | 8,951 |   | $ | 8,951 |   | $ | 7,575 |   | $ | 7,575 |   |
|     Investment                      securities           |   |   | 63,049 |   |   | 63,036 |   |   | 36,264 |   |   | 36,269 |   |
|     Loans                      receivable, net           |   |   | 259,427 |   |   | 256,278 |   |   | 203,820 |   |   | 205,659 |   |
|     Accrued                      income receivable       |   |   | 1,525 |   |   | 1,525 |   |   | 1,077 |   |   | 1,077 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial                      Liabilities                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Deposits                                             |   | $ | 240,846 |   | $ | 239,514 |   | $ | 193,366 |   | $ | 193,018 |   |
|     Federal                      Home Loan Bank advances |   |   | 57,059 |   |   | 56,449 |   |   | 15,826 |   |   | 15,612 |   |
|     Mortgagors'                      escrow accounts     |   |   | 3,202 |   |   | 3,202 |   |   | 3,058 |   |   | 3,058 |   |

----

**Notes          to Consolidated Financial Statements**

**16.            Selected Quarterly Consolidated Financial Information            (unaudited)**

|                                                                                                |   |  For                          the Year Ended December 31,                          2005 |   |
|-----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|
|                                                                                                |   |  Fourth                                                                                 |   | Third |   | Second |   | First |   |
| *(In                          thousands)*                                                           |   |  Quarter                                                                                |   | Quarter |   | Quarter |   | Quarter |   |
|                                                                                                |   |                                                                                    |   |   |   |   |   |   |   |
| Interest                          and dividend income                                               |   | $                                                                                            | 4,545  |   | $ | 4,124 |   | $ | 3,807 |   | $ | 3,432 |   |
| Interest                          expense                                                           |   |                                                                                         | 1,668  |   |   | 1,367 |   |   | 1,093 |   |   | 813 |   |
|     Net                          interest income                                |   |                                                                                         | 2,877  |   |   | 2,757 |   |   | 2,714 |   |   | 2,619 |   |
| Provision                          for loan losses                                                  |   |                                                                                         | -      |   |   | - |   |   | 17 |   |   | 15 |   |
| Net                          interest income after                                                  |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |
|     provision                          for                          loan losses |   |                                                                                         | 2,877  |   |   | 2,757 |   |   | 2,697 |   |   | 2,604 |   |
| Noninterest                          income                                                         |   |                                                                                         | 425    |   |   | 372 |   |   | 384 |   |   | 336 |   |
| Noninterest                          expense                                                        |   |                                                                                         | 2,604  |   |   | 2,594 |   |   | 2,523 |   |   | 2,376 |   |
| Income                          before provision for                                                |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |
|     income                          tax (benefit)                               |   |                                                                                         | 698    |   |   | 535 |   |   | 558 |   |   | 564 |   |
| Provision                          for income tax (benefit)                                         |   |                                                                                         | 151    |   |   | (2 | ) |   | 140 |   |   | 161 |   |
| **        Net                          income**             |   | $                                                                                            | 547    |   | $ | 537 |   | $ | 418 |   | $ | 403 |   |

|                                                                                             |   |  For                        the Year Ended December 31, 2004 |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                                                                             |   |  Fourth                                                      |   | Third |   | Second |   | First |   |
| *(In                        thousands)*                                                          |   |  Quarter                                                     |   | Quarter |   | Quarter |   | Quarter |   |
|                                                                                             |   |                                                         |   |   |   |   |   |   |   |
| Interest                        and dividend income                                              |   | $                                                                 | 3,365  |   | $ | 3,265 |   | $ | 3,057 |   | $ | 3,026 |   |
| Interest                        expense                                                          |   |                                                              | 765    |   |   | 942 |   |   | 916 |   |   | 936 |   |
|     Net                        interest income                               |   |                                                              | 2,600  |   |   | 2,323 |   |   | 2,141 |   |   | 2,090 |   |
| Provision                        for loan losses                                                 |   |                                                              | -      |   |   | - |   |   | - |   |   | - |   |
| Net                        interest income after                                                 |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |
|     provision                        for                        loan losses  |   |                                                              | 2,600  |   |   | 2,323 |   |   | 2,141 |   |   | 2,090 |   |
| Noninterest                        income                                                        |   |                                                              | 290    |   |   | 149 |   |   | 306 |   |   | 333 |   |
| Noninterest                        expense                                                       |   |                                                              | 2,168  |   |   | 3,891 |   |   | 1,865 |   |   | 1,879 |   |
| Income                        (loss) before provision                                            |   |                                                              |   |   |   |   |   |   |   |   |   |   |   |
|     (benefit)                        for                        income taxes |   |                                                              | 722    |   |   | (1,419 | ) |   | 582 |   |   | 544 |   |
| Provision                        (benefit) for income taxes                                      |   |                                                              | 192    |   |   | (526 | ) |   | 182 |   |   | 166 |   |
| **        Net                        income (loss)**     |   | $                                                                 | 530    |   | $ | (893 | ) | $ | 400 |   | $ | 378 |   |

----

**Notes to Consolidated Financial Statements**

**17.            Parent Company Only Financial Statements**

**Statement            of Financial Condition**

|                                                                                                                                        |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                        |   | December                      31, |   |
| *(In                      thousands)*                                                                                                       |   | 2005 |   | 2004 |   |
| **ASSETS**                                                                                                                                  |   |   |   |   |   |   |   |
| Cash                      on deposit with Naugatuck Valley Savings and Loan                                                                 |   | $ | 1,581 |   | $ | 1,738 |   |
| Investment                      in subsidiary, Naugatuck Valley Savings and Loan                                                            |   |   | 39,794 |   |   | 38,256 |   |
| Investment                      securities                                                                                                  |   |   | 9,194 |   |   | 10,880 |   |
| Loan                      to ESOP                                                                                                           |   |   | 2,804 |   |   | 2,947 |   |
| Deferred                      income taxes                                                                                                  |   |   | 551 |   |   | 510 |   |
| Other                      assets                                                                                                           |   |   | 51 |   |   | 221 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |
| **            Total                      assets**                               |   | $ | 53,975 |   | $ | 54,552 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |
| **LIABILITIES                      AND STOCKHOLDERS' EQUITY**                                                                               |   |   |   |   |   |   |   |
| Liabilities                      - due to subsidiary                                                                                        |   | $ | 3,011 |   | $ | 2,981 |   |
| Stockholders'                      equity                                                                                                   |   |   | 50,964 |   |   | 51,571 |   |
|                                                                                                                                        |   |   |   |   |   |   |   |
| **            Total                      liabilities and stockholders' equity** |   | $ | 53,975 |   | $ | 54,552 |   |

**Statement            of Operations**

|                                                                                                                        |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|
| *(In                            thousands)*                                                                                 |   | 2005 |   | 2004 |   |
|                                                                                                                        |   |   |   |   |   |
| Interest                            income                                                                                  |   | $ | 506 |   | $ | 90 |   |
|                                                                                                                        |   |   |   |   |   |   |   |
| Other                            expense                                                                                    |   |   |   |   |   |   |   |
|     Charitable                            contribution                                                  |   |   | - |   |   | 1,521 |   |
|     Other                            expenses                                                           |   |   | 444 |   |   | 26 |   |
|         Total                            other expense                              |   |   | 444 |   |   | 1,547 |   |
| Income                            (loss) before income tax (benefit) and equity in                                          |   |   |   |   |   |   |   |
|     undistributed                            net income of subsidiary                                   |   |   | 62 |   |   | (1,457 | ) |
| Income                            tax (benefit)                                                                             |   |   | 21 |   |   | (495 | ) |
| Income                            (loss) before equity in undistributed net income of                            subsidiary |   |   | 41 |   |   | (962 | ) |
| Equity                            in undistributed net income of subsidiary                                                 |   |   | 1,864 |   |   | 488 |   |
|                                                                                                                        |   |   |   |   |   |   |   |
| **            Net                            income (loss)**    |   | $ | 1,905 |   | $ | (474 | ) |

----

**Notes          to Consolidated Financial Statements**

**17.            Parent Company Only Financial Statements **
***-            (Continued)***

**Statement            of Cash flows**

| *(In                        thousands)*                                                                                                           |   | 2005   |   | 2004   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
|                                                                                                                                              |   |   |   |   |   |
| **Net                        cash provided (used) by operating activities**                                                                       |   | $      | 243    |   | $      | (39 | ) |
|                                                                                                                                              |   |   |   |   |   |   |   |
| **Cash                        flows from investing activities**                                                                                   |   |   |   |   |   |   |   |
| Purchase                        of available-for-sale securities                                                                                  |   |   | -      |   |   | (11,014 | ) |
| Paydowns                        and maturities of available-for-sale securities                                                                   |   |   | 1,591  |   |   | - |   |
| Loan                        to ESOP                                                                                                               |   |   | -      |   |   | (2,981 | ) |
| Principal                        payments received from ESOP                                                                                      |   |   | 143    |   |   |   |   |
| Investment                        in subsidiary, Naugatuck Valley Savings and Loan                                                                |   |   | -      |   |   | (15,870 | ) |
| **Net                        cash provided (used) by investing activities**                                                                       |   |   | 1,734  |   |   | (29,865 | ) |
|                                                                                                                                              |   |   |   |   |   |   |   |
| **Cash                        flows from financing activities**                                                                                   |   |   |   |   |   |   |   |
| Common                        stock repurchased                                                                                                   |   |   | (1,851 | )      |   | - |   |
| Cash                        dividends to common shareholders                                                                                      |   |   | (500   | )      |   | - |   |
| Release                        of ESOP shares                                                                                                     |   |   | 217    |   |   | - |   |
| Proceeds                        from issuance of common stock                                                                                     |   |   | -      |   |   | 32,601 |   |
| Cost                        of issuance of common stock                                                                                           |   |   | -      |   |   | (959 | ) |
| **Net                        cash (used) provided by financing activities**                                                                       |   |   | (2,134 | )      |   | 31,642 |   |
|                                                                                                                                              |   |   |   |   |   |   |   |
| (Decrease)                        increase in cash and cash equivalents                                                                           |   |   | (157   | )      |   | 1,738 |   |
| Cash                        and cash equivalents at beginning of year                                                                             |   |   | 1,738  |   |   | - |   |
|                                                                                                                                              |   |   |   |   |   |   |   |
| **        Cash                        and cash equivalents at end of year**                               |   | $      | 1,581  |   | $      | 1,738 |   |
|                                                                                                                                              |   |   |   |   |   |   |   |
| Supplemental                        Disclosures:                                                                                                  |   |   |   |   |   |   |   |
|         Non-cash                        investing activities:                                             |   |   |   |   |   |   |   |
|             Loan                        to                        acquire ESOP shares |   | $      | -      |   | $      | 2,981 |   |
|             Capital                        contributed on acquisition of subsidiary   |   |   | -      |   |   | 22,010 |   |
|                                                                                                                                              |   |   |   |   |   |   |   |
| Cash                        paid during the year for:                                                                                             |   |   |   |   |   |   |   |
|             Interest                                                                  |   | $      | -      |   | $      | - |   |
|             Income                        taxes                                       |   |   | -      |   |   | - |   |

----

**Directors          and Executive Officers**

**Directors          of Naugatuck Valley Financial Corporation,**

**Naugatuck          Valley Mutual Holding Company**

**and          Naugatuck Valley Savings and Loan**

| **Carlos                    S. Batista***Vice                    President - Bristol Babcock, Inc.*                                                                                                                                                                                                                                         | **Michael                    S. Plude, CPA***Managing                    Partner - Kaskie, Plude & Pacowta, LLC*                                                                                                                                                                                      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                      |
| **Richard                    M. Famiglietti***Owner                    - CM Property Management*                                                                                                                                                                                                                                            | **John                    C. Roman***President                    and Chief Executive Officer*-                    *Naugatuck                    Valley Financial Corporation, Naugatuck Valley Mutual Holding                    Company and                    Naugatuck Valley Savings and Loan*       |
|                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                      |
| **Ronald                    D. Lengyel***Chairman                    of the Board - Naugatuck Valley**Financial                    Corporation, Naugatuck Valley Mutual**Holding                    Company and Naugatuck Valley**Savings                    and Loan* *Director                    - Connecticut Water Service, Inc.* | **Camilo                    P. Vieira***Consultant*-*CM Property Management*                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                      |
| **James                    A. Mengacci***Owner*-*James A. Mengacci Associates LLC*                                                                                                                                                                                                                                                     | **Jane                    H. Walsh***Senior                    Vice President*-                    *Naugatuck                    Valley**Financial                    Corporation, Naugatuck Valley Mutual**Holding                    Company and Naugatuck Valley Savings**and                    Loan* |

**Executive          Officers of**

**Naugatuck          Valley Financial Corporation,**

**Naugatuck          Valley Mutual Holding Company**

**and          Naugatuck Valley Savings and Loan**

| **John                    C. Roman***President                    and Chief Executive Officer* | **William                    C. Nimons***Senior                    Vice President*                 |
|------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|
|                                                                                           |                                                                                               |
| **Dominic                    J. Alegi, Jr.***Executive                    Vice President*      | **Mark                    S. Graveline***Senior                    Vice President*                 |
|                                                                                           |                                                                                               |
| **Jane                    H. Walsh***Senior                    Vice President*                 | **Lee                    R. Schlesinger** *V**ice                    President and Treasurer* |

----

**Investor          and Corporate Information**

**Annual          Meeting**

**Stock          Listing**

**Price          Range of Common Stock**

|                                |   | **Dividends** |   | **High** |   | **Low** |   |
|-------------------------------------|--------|---------------|--------|----------|--------|---------|--------|
| 2004:                               |   |          |   |     |   |    |   |   |   |   |
| Fourth                      Quarter |   | $             | 0.00   |     | $      | 11.34   |   | $ | 10.26 |   |
|                                |   |          |   |     |   |    |   |   |   |   |
| 2005:                               |   |          |   |     |   |    |   |   |   |   |
| First                      Quarter  |   | $             | 0.04   |     | $      | 11.85   |   | $ | 10.32 |   |
| Second                      Quarter |   |          | 0.04   |     |   | 10.84   |   |   | 9.80 |   |
| Third                      Quarter  |   |          | 0.04   |     |   | 13.09   |   |   | 10.45 |   |
| Fourth                      Quarter |   |          | 0.04   |     |   | 13.00   |   |   | 10.20 |   |

**Stockholder          and General Inquiries**

**Annual          and Other Reports**

| **Independent                    Registered Public Accounting Firm** | **Transfer                    Agent**             |
|----------------------------------------------------------------------|---------------------------------------------------|
|                                                                 |                                              |
| Whittlesey                    & Hadley, P.C.                     | Registrar                    and Transfer Company |
| 147                    Charter Oak Avenue                            | 10                    Commerce Drive              |
| Hartford,                    Connecticut 06106                       | Cranford,                    New Jersey 07016     |

**Corporate          Counsel**

----

**Office          Locations**

| **Main                    Office**                                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                             |
| 333                    Church StreetNaugatuck,                    Connecticut 06770                                              |
|                                                                                                                             |
| **Branch                    Offices**                                                                                            |
|                                                                                                                             |
| 1009                    New Haven RoadNaugatuck,                    Connecticut 06770                                            |
|                                                                                                                             |
| 127                    South Main StreetBeacon                    Falls, Connecticut 06403                                       |
|                                                                                                                             |
| 49                    Pershing DriveDerby,                    Connecticut 06418                                                  |
|                                                                                                                             |
| 249                    West StreetSeymour,                    Connecticut 06483                                                  |
|                                                                                                                             |
| 504                    Bridgeport AvenueShelton,                    Connecticut 06484                                            |
|                                                                                                                             |
| 15                    Quaker Farms RoadSouthbury,                    Connecticut 06488*(Opening                    Summer 2006)* |