EXHIBIT 13

                          ANNUAL REPORT TO STOCKHOLDERS



                              ANNUAL REPORT - 2007


                                                                  [LOGO]
                                                               Georgetown
                                                              Bancorp, Inc.

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                                                          THERE IS A DIFFERENCE.

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<page>

MISSION STATEMENT

GEORGETOWN  SAVINGS  BANK IS COMMITTED  TO MAKING A POSITIVE  DIFFERENCE  IN THE
COMMUNITIES WE SERVE.  OUR HIGHEST PRIORITY IS TO PROVIDE  EXCEPTIONAL  PERSONAL
SERVICE,  ACTING WITH HIGH ETHICAL  STANDARDS  AND IN THE BEST  INTERESTS OF OUR
CUSTOMERS,  SHAREHOLDERS  AND BUSINESS  PARTNERS.  WE STRIVE TO HELP EACH OF OUR
CUSTOMERS  ACHIEVE THEIR UNIQUE  FINANCIAL GOALS THROUGH A COMPETITIVE  ARRAY OF
FINANCIAL PRODUCTS AND SERVICES.


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                                                          THERE IS A DIFFERENCE.

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<page>

TABLE OF CONTENTS
-----------------

         Message from the President ................................     4

         Selected Financial Information and Financial Ratios .......     6

         Management's Discussion and Analysis of Financial Condition
              and Results of Operations ............................     7

         Report of Independent Registered Public Accounting Firm ...   F-2

         Consolidated Balance Sheets ...............................   F-3

         Consolidated Statements of Operations .....................   F-4

         Consolidated Statements of Changes in Stockholders' Equity    F-5

         Consolidated Statements of Cash Flows .....................   F-6

         Notes to Consolidated Financial Statements ................   F-8

<page>

MESSAGE FROM THE PRESIDENT

                                                                [PHOTO OMMITTED]

On behalf of the Board of Directors  and all of our  dedicated  employees,  I am
pleased to present the 2007 Annual Report of Georgetown Bancorp, Inc.

This year  marked my 25th year  working at the  Georgetown  Savings  Bank and 28
years in the banking industry overall.  As I reflect on those years, I am struck
by the amount of change that has  occurred  over that time.  In  addition,  I am
reminded  that good times do not last forever  without some form of  intervening
difficulties.  In 1988, when I was named Chief Executive Officer,  we were faced
with one of the worst banking crises in our history.  We came out of that period
a stronger  financial  institution.  Now, as it was then, we are faced with many
challenges  that  will  test  our  resolve  in our  effort  to grow and be a key
contributor to the local economy and I believe we will be stronger for it.

This past year, financial  performance  continued to be hampered by an extremely
difficult operating environment.  A historically persistent flat yield curve and
intense competition for loans and deposits continued to put negative pressure on
our net interest margin and the downturn in the local real estate market has had
a negative impact on loan growth.  The recent sub-prime  lending debacle has put
further  pressure on the real estate  market and the  availability  of credit to
support it.  Fortunately,  we were not involved in sub-prime lending.  Our asset
quality  remains  very high and credit is readily  available  at the  Georgetown
Savings Bank.

While the net  interest  margin  continued to decline,  driven  primarily by the
interest rate environment and competitive landscape, I am pleased to report that
the increase in our fee income outpaced the increase in operating  costs.  Major
contributors  to  this  were  the  successful  implementation  of our  overdraft
privilege program,  which was  enthusiastically  received by our customers,  and
several expense control initiatives instituted during the year. However, because
of continued margin  compression and slower than expected growth, we experienced
a net loss of  $464,000  or $.18 per  share  for the year  ended  June 30,  2007
compared to a net loss of $380,000 or $.14 per share for the year ended June 30,
2006.

<page>

We continue to work  towards our  strategic  goal of  expanding  our  commercial
banking  operation  under our core  strategic  value of being a  community  bank
providing  exceptional personal service. In 2007, we made significant changes in
our loan  operations  area that  enhanced  our ability to achieve our  strategic
objectives.  A new  lending  team was put in place  that has a track  record  of
success in commercial lending. Our seasoned lending team consists of a new Chief
Loan Officer,  a Senior Loan Officer,  and a Senior Credit  Manager who all have
extensive commercial lending experience. Since joining us last November, the new
lending team has brought a wealth of knowledge to our commercial loan operations
and has notably increased commercial loan activity.


In addition to  personnel  changes,  we have  expanded  our  commercial  product
offerings to include Business Internet Banking and Remote Deposit Capture.  Both
products fit nicely with the needs of our commercial banking customers and allow
us to serve a wider geographic area.

Although our focus will continue to be on commercial  loan growth,  core deposit
growth, and expense control, we have not abandoned our role in serving the needs
of the residential  loan customer.  Changes are underway that include the hiring
of a new Residential Loan Production Manager and establishing a team of mortgage
originators  who  will be the  foundation  of our  mortgage  banking  operation,
allowing us to compete aggressively in the residential loan market.

Looking  towards  2008,  we are  faced  with  many of the same  competitive  and
operational  pressures that have persisted for the past two years.  In addition,
operating  costs continue to rise as we absorb  increases in personnel  expense,
increased cost of deposit  insurance,  and other costs associated with increased
regulatory   scrutiny   including,   but  not   limited  to,   compliance   with
Sarbanes-Oxley.  However,  we  continue  to be  optimistic  about the future and
believe that we are well positioned to begin the journey back to profitability.

We are  committed  to our Mission and look  forward to your  continued  support.
Thank you.


Sincerely,

/s/ Robert E. Balletto

Robert E. Balletto
President/Chief Executive Officer


                                                          THERE IS A DIFFERENCE.
<page>
<table>
<caption>

SELECTED FINANCIAL INFORMATION
------------------------------

                                                                                 At June 30,
                                                                             2007           2006
                                                                             ----           ----
                                                                                (In thousands)

                                                                       <c>            <c>
Selected Financial Condition Data:
Total assets                                                              $  165,082     $  169,051
Cash and cash equivalents                                                      5,603          3,977
Loans receivable, net                                                        127,659        128,778
Investment securities                                                         20,872         25,288
Deposits                                                                      97,956         97,709
Borrowings (1)                                                                48,592         51,983
Total stockholders' equity                                                    17,610         18,659

<caption>

                                                                             Years Ended June 30,
                                                                             2007           2006
                                                                             ----           ----
                                                                     (In thousands, except per share data)

                                                                            <c>            <c>
Selected Operating Data:
Interest and dividend income                                              $    8,912     $    8,127
Interest expense                                                               5,084          4,078
                                                                          ----------     ----------
   Net interest income                                                         3,828          4,049
Provision for loan losses                                                        105            108
                                                                          ----------     ----------
    Net interest income after
        provision for loan losses                                              3,723          3,941
Non-interest income                                                              737            454
Non-interest expense                                                           5,167          4,948
                                                                          ----------     ----------
Loss before income taxes                                                        (707)          (553)
Income tax benefit                                                              (243)          (173)
                                                                          ----------     ----------
   Net loss                                                               ($     464)    ($     380)
                                                                          ==========     ==========

Net loss per share:
Basic and diluted                                                         ($    0.18)    ($    0.14)

<caption>

                                                                               At or For the Years
                                                                                  Ended June 30,
                                                                               2007            2006
                                                                               ----            ----

                                                                             <c>            <c>
Selected Financial Ratios and Other Data:

Performance Ratios:
Return on assets (ratio of net loss to average total assets)                   -0.28%         -0.23%
Return on equity (ratio of net loss to average equity)                         -2.55%         -1.98%
Interest rate spread (2)                                                        1.97%          2.20%
Net interest margin (3)                                                         2.46%          2.63%
Efficiency ratio (4)                                                          113.19%        109.88%
Non-interest expense to average total assets                                    3.13%          3.03%
Average interest-earning assets to average interest-bearing liabilities       114.88%        116.29%


Asset Quality Ratios:
Non-performing assets to total assets                                           1.37%          0.67%
Non-performing loans to total loans                                             1.76%          0.87%
Allowance for loan losses to non-performing loans                              47.62%         90.23%
Allowance for loan losses to total loans                                        0.84%          0.78%


Capital Ratios:
Stockholders' equity to total assets at end of period                          10.67%         11.04%
Total capital to risk-weighted assets                                          17.30%         18.10%
Tier 1 capital to risk-weighted assets                                         16.40%         17.20%
Tier 1 capital to average assets                                               10.80%         11.60%

</table>

1.    Includes securities sold under agreement to repurchase.
2.    The  interest  rate  spread   represents   the   difference   between  the
      weighted-average yield on interest-earning assets and the weighted-average
      cost of interest-bearing liabilities for the period.
3.    The net interest  margin  represents  net interest  income as a percent of
      average interest-earning assets for the period.
4.    The efficiency ratio represents non-interest expense divided by the sum of
      net interest income and non-interest income.

<page>

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations


Overview

         Our results of operations  depend primarily on our net interest income.
Net interest income is the difference between the interest income we earn on our
interest-earning  assets,  consisting primarily of loans,  investment securities
and other interest-earning assets (primarily cash equivalents), and the interest
paid  on our  interest-bearing  liabilities,  consisting  primarily  of  savings
accounts, NOW accounts, money market accounts, time deposits and borrowings. Our
results of  operations  also are  affected by our  provisions  for loan  losses,
non-interest  income and  non-interest  expense.  Non-interest  income  consists
primarily of fees and service charges, income from bank-owned life insurance and
miscellaneous other income.  Non-interest expense consists primarily of salaries
and employee benefits,  occupancy and equipment,  data processing,  professional
fees, advertising and other administrative expenses.

         Our results of operations also may be affected significantly by general
and local economic and competitive conditions, changes in market interest rates,
governmental  policies  and  actions of  regulatory  authorities.  Additionally,
because our lending activity is concentrated in loans secured by residential and
commercial  real estate  located in the Essex County,  Massachusetts  region and
southern New Hampshire, downturns in this regional economy could have a negative
impact on our earnings.

         Our  financial  performance  in fiscal 2007  continued to be negatively
affected by the interest rate  environment and high levels of local  competition
for loan and deposit  balances,  primarily  reflected  in the decline of our net
interest margin.  Increased non-interest income,  primarily related to fees from
our new overdraft  privilege program was partially offset by increased operating
costs, which reflected investments in personnel, infrastructure and products. We
were successful in increasing our commercial  business  activities in accordance
with  our  strategic  plan.  It is  anticipated  that  continued  growth  of our
commercial business activities will improve future financial performance.

Critical Accounting Policies

         Critical   accounting  policies  are  those  that  involve  significant
judgments and assumptions by management and that have, or could have, a material
impact  on our  income  or  the  carrying  value  of our  assets.  Our  critical
accounting policies are those related to our allowance for loan losses.

         Allowance for Loan Losses.  The allowance for loan losses is the amount
estimated by management as necessary to cover credit losses inherent in the loan
portfolio at the balance sheet date.  The allowance is  established  through the
provision for loan losses, which is charged against income.

                                       7
<page>

         Management  performs a  quarterly  evaluation  of the  adequacy  of the
allowance for loan losses. We consider a variety of factors in establishing this
estimate  including,   but  not  limited  to,  charge-off  history,  changes  in
management or underwriting  policies,  current economic conditions,  delinquency
statistics,  geographic  and  industry  concentrations,   the  adequacy  of  the
underlying  collateral,  the  financial  strength  of the  borrower,  results of
internal and external loan reviews and other relevant qualitative loan portfolio
risk factors. This evaluation is inherently subjective,  as it requires material
estimates by management that may be susceptible to significant change.

         The  analysis  has  three  components:   specific,   general,   and  an
unallocated  component.  The  specific  component  relates  to  loans  that  are
determined  to be impaired.  Impairment is measured by  determining  the present
value of expected future cash flows or, for collateral-dependent loans, the fair
value of the collateral adjusted for market conditions and selling expenses. The
general  component is determined by segregating  the remaining  loans by type of
loan and  analyzing  all of the  appropriate  qualitative  loan  portfolio  risk
factors.  This  analysis  establishes  general  allowance  percentages  that are
applied to the loan groups to determine  the amount of the general  component of
the allowance for loan losses.

         An  unallocated  component is  maintained to cover  uncertainties  that
could affect management's estimate of probable losses. The unallocated component
of the allowance  reflects the margin of imprecision  inherent in the underlying
assumptions used in the  methodologies  for estimating  losses in the portfolio,
because  regardless  of the  extent of our  analysis  of  customer  performance,
portfolio trends or risk management  processes,  certain inherent but undetected
losses are probable within our loan portfolio.  This is due to several  factors,
including  inherent  delays in  obtaining  information  regarding  a  customer's
financial condition or changes in a customer's unique business  conditions,  the
judgmental nature of individual loan evaluations, collateral assessments and the
interpretation of economic trends.  Volatility of economic or  customer-specific
conditions  affecting the  identification  and  estimation of losses from larger
non-homogeneous credits and the sensitivity of assumptions utilized to establish
allowances for homogeneous groups of loans, loan portfolio  concentrations,  and
other  subjective  considerations  are  among  other  factors.  Because  of  the
imprecision  surrounding  these factors,  we maintain an  unallocated  component
available to be allocated to a specific loan category.

         Actual loan losses may be more than the allowances we have established,
which could have a material negative effect on our financial results.

Comparison of Financial Condition at June 30, 2007 and 2006

         Our total assets decreased by $4.0 million,  or 2.3%, to $165.1 million
at June 30, 2007,  from $169.1  million at June 30, 2006.  The decrease in total
assets  resulted  primarily from  decreases in investment  securities and in net
loans receivable,  partially offset by an increase in cash and cash equivalents.
Investment  securities  available for sale decreased $2.8 million,  or 17.9%, to
$12.7 million at June 30, 2007, from $15.5 million at June 30, 2006.  Investment
securities held to maturity decreased $1.6 million, or 16.7%, to $8.2 million at
June  30,  2007,  from  $9.8  million  at June 30,  2006.  Cash  flows

                                       8
<page>

from the investment  securities portfolio were used to pay down maturing Federal
Home Loan Bank (FHLB) advances, in an effort to improve the net interest margin.
Partially  offsetting  the  investment  securities  decreases  was  a  temporary
increase in cash and cash  equivalents of $1.6 million or 40.9%. The decrease in
net loans  receivable  of $1.1  million,  or .9%, to $127.7  million at June 30,
2007,  was  primarily  due to decreases in  residential  construction  loans and
residential  one-  to  four-family  loans,  partially  offset  by  increases  in
commercial  real estate and commercial  loans.  Residential  construction  loans
decreased  $6.8 million or 81.0%,  to $1.6  million at June 30, 2007,  from $8.4
million  at June 30,  2006.  Residential  one- to  four-family  loans  decreased
$672,000 or .7%, to $94.8  million at June 30, 2007,  from $95.5 million at June
30, 2006.  Commercial  construction  loans increased $3.2 million or 273.1%,  to
$4.4 million at June 30, 2007, from $1.2 million at June 30, 2006.  Multi-family
and  commercial  real estate loans  increased  $2.7  million or 22.4%,  to $14.6
million at June 30, 2007, from $11.9 million at June 30, 2006.  Commercial loans
increased $671,000 or 45.1%, to $2.2 million at June 30, 2007, from $1.5 million
at June  30,  2006.  As a result  of  these  changes,  the  percentage  of total
commercial loans to total loans at June 30, 2007 was 16.4%, compared to 11.2% at
June  30,  2006.  This  change  in the  composition  of our  loan  portfolio  is
reflective of the Company's strategic plan of increasing our commercial business
activities.

         Loan  Portfolio  Composition.   The  following  table  sets  forth  the
composition of our loan portfolio by type of loan as of the dates indicated.

<table>
<caption>
                                                       At June 30,
                              ------------------------------------------------------------
                                          2007                            2006
                              ----------------------------    ----------------------------
                                 Amount         Percent          Amount         Percent
                              ------------    ------------    ------------    ------------
                                                  (Dollars in thousands)

                                  <c>              <c>            <c>              <c>
Residential loans:
    One-to-four family        $     94,806           73.74%   $     95,478           73.66%
    Construction                     1,589            1.24%          8,350            6.44%
    Home equity loans
     and lines of credit            10,304            8.01%         10,614            8.19%
                              ------------    ------------    ------------    ------------
Total residential loans            106,699           82.99%        114,442           88.29%

Commercial loans:
    Multi-family and
     commercial real estate         14,556           11.32%         11,891            9.17%
    Construction                     4,398            3.42%          1,179            0.91%
    Commercial                       2,157            1.68%          1,486            1.15%
                              ------------    ------------    ------------    ------------
Total commercial loans              21,111           16.42%         14,556           11.23%

Consumer and other                     763            0.59%            617            0.48%
                              ------------    ------------    ------------    ------------

Total loans                        128,573          100.00%        129,615          100.00%
                                              ============                    ============

Other items:
Net deferred loan costs                165                             179
Allowance for loan losses           (1,079)                         (1,016)
                              ------------                    ------------

Total loans, net              $    127,659                    $    128,778
                              ============                    ============
</table>

                                       9
<page>

         Total deposits increased $247,000, or .3%, to $98.0 million at June 30,
2007,  from $97.7  million at June 30, 2006.  The increase in deposits  resulted
primarily  from a $4.0  million,  or 52.6%,  increase in NOW accounts and a $1.1
million or 5.2%, increase in money market deposit accounts,  partially offset by
a $3.1 million,  or 20.6%,  decrease in savings accounts,  a $554,000,  or 1.4%,
decrease in term  certificates and a $1.2 million,  or 9.7%,  decrease in demand
deposit  accounts.  The  decrease in term  certificates  included a $2.0 million
decrease in brokered  certificates,  which were replaced with FHLB advances. Our
advances from the FHLB decreased $3.5 million, or 6.8%, to $47.7 million at June
30,  2007,  from  $51.2  million  at June 30,  2006.  Short-term  FHLB  advances
decreased $12.5 million or 55.8% and long-term  advances  increased $9.0 million
or 31.0%, as the Company  continued to extend the maturities of FHLB advances to
take advantage of the flattened yield curve environment.

         Stockholders'  equity decreased $1.0 million, or 5.6%, to $17.6 million
at June 30,  2007,  from  $18.7  million  at June 30,  2006.  The  decrease  was
primarily due to repurchases  of the Company's  stock and the net operating loss
for the period,  partially  offset by the impact of adjusting  the fair value of
available-for-sale  securities due to market  interest rate changes.  As part of
the stock  repurchase  plan  approved on July 31,  2006,  the Company  purchased
85,200  shares  at  an  average  cost  of  $9.49  per  share,   which  decreased
stockholders'  equity by  $808,200.  The decrease in  stockholders'  equity also
reflected the net operating  loss of $464,000 for the fiscal year ended June 30,
2007.  Offsetting  the  decrease  in  stockholders'  equity  was a  decrease  in
accumulated other  comprehensive  loss of $151,000 to $179,000 at June 30, 2007,
from $330,000 at June 30, 2006,  reflecting  $283,000 in net pre-tax  unrealized
losses on securities available for sale for the fiscal year ended June 30, 2007,
compared to $523,000  for the fiscal year ended June 30, 2006.  Also  offsetting
the decrease in stockholders'  equity was a $72,000  adjustment  related to ESOP
expenses.

Comparison of Operating Results for the Years Ended June 30, 2007 and 2006

         General.  The net loss for the  fiscal  year  ended  June 30,  2007 was
$464,000,  compared to a net loss of $380,000 for the fiscal year ended June 30,
2006,  resulting in an $84,000 or 22.1%,  increase in the net loss. The increase
was  primarily  related to a decrease in net interest  income and an increase in
non-interest expenses, partially offset by an increase in non-interest income.

         Interest  Income.  Interest income  increased by $785,000,  or 9.7%, to
$8.9 million for the fiscal year ended June 30, 2007,  from $8.1 million for the
fiscal  year ended June 30,  2006.  The  increase in  interest  income  resulted
primarily from an increase in interest income from loans  receivable,  partially
offset by a decrease in interest  and  dividend  income  from  securities  and a
decrease  in  interest  income  from  short-term  investments.  The  increase in
interest  income  reflected  a $1.5  million,  or 1.0%  increase  in the average
balance of  interest-earning  assets to $155.8 million for the fiscal year ended
June 30, 2007,  from $154.2  million for the fiscal year ended June 30, 2006, as
well as a 45 basis  point  increase  in the  average  yield on  interest-earning
assets to 5.72% for the  fiscal  year ended  June 30,  2007,  from 5.27% for the
fiscal year ended June 30, 2006, reflecting an increase in market interest rates
and a change in the loan portfolio composition to higher-yielding commercial and
commercial real estate loans.

                                       10
<page>

          Interest income from loans receivable increased $933,000, or 14.0%, to
$7.6 million for the fiscal year ended June 30, 2007,  from $6.7 million for the
fiscal year ended June 30, 2006.  The increase was due to a $9.4 million or 7.9%
increase  in the  average  balance  of loans  receivable  during  2007 to $128.8
million  from $119.4  million,  as well as an  increase in the average  yield to
5.89% from  5.57%.  The  increase  in the  average  balance of loans  receivable
reflected continued loan demand in our market area. Interest and dividend income
from investment  securities  decreased $74,000, or 5.5%, to $1.3 million for the
fiscal  year ended June 30,  2007,  from $1.4  million for the fiscal year ended
June 30, 2006.  The decrease  resulted from a $5.7 million or 17.9%  decrease in
the average  balance of  investment  securities  to $26.0 million for the fiscal
year ended June 30, 2007,  from $31.7 million for the fiscal year ended June 30,
2006,  partially offset by an increase in the average yield to 4.92% from 4.28%.
The decrease in average balances of investment  securities  reflected cash flows
being used to pay down maturing FHLB advances.  Interest  income from short-term
investments  decreased  $74,000,  or 60.6%, to $48,000 for the fiscal year ended
June 30,  2007,  from  $122,000  for the fiscal  year ended June 30,  2006.  The
decrease  resulted from a $2.2 million or 70.4% decrease in the average  balance
of short-term  investments  to $927,000 for the fiscal year ended June 30, 2007,
from $3.1 million for the fiscal year ended June 30, 2006,  partially  offset by
an increase in the average yield to 5.18% from 3.90%.

         Interest Expense. Interest expense increased $1.0 million, or 24.7%, to
$5.1 million for fiscal 2007, from $4.1 million for fiscal 2006. The increase in
interest expense resulted from an increase in the average cost of liabilities to
3.75% from  3.07% and from a $3.0  million,  or 2.2%,  increase  in the  average
balance of  interest-bearing  liabilities  to $135.6 million for the fiscal year
ended June 30,  2007,  from  $132.6  million  for the fiscal year ended June 30,
2006.

         Interest expense on total deposits increased $703,000, or 36.4%, due to
a 73 basis point  increase in the average  rate paid on such  deposits  and by a
$3.8  million,  or 4.7%,  increase  in the average  balance of  interest-bearing
deposits,  primarily  increases in term certificates,  money market accounts and
NOW accounts. Interest expense on certificates of deposit increased $504,000, or
38.8%,  reflecting  a 60 basis point  increase  in the  average  rate and a $6.8
million,  or 19.4%,  increase in the average balance of such deposits.  Interest
expense on money market deposits increased $121,000, or 21.8%, due to a 76 basis
point increase in the average rate paid on such deposits,  partially offset by a
$1.4 million, or 6.5%, decrease in the average balance of money market accounts.
Interest expense on NOW accounts increased $87,000, or 220.2%, due to a 79 basis
point  increase in the average rate paid on such deposits and by a $2.6 million,
or 43.0%,  increase in the average balance of NOW accounts.  The increase in NOW
account balances  reflected  continued  success of the Company's WOW!  products,
which   offered  a  premium   rate  to  attract  new   customer   relationships.
Additionally, the average balance of savings accounts decreased $4.3 million, or
24.5% to $13.1  million  for the fiscal  year ended  June 30,  2007,  from $17.4
million for the fiscal year ended June 30,  2006.  This  decrease  continued  to
negatively affect interest expense, as the average rate paid for the fiscal year
ended  June 30,  2007 was .34%.  Interest  expense  on FHLB  advances  increased
$302,000,  or 14.1%,  primarily due to a 68 basis point  increase in the average
rate paid on such advances,  which  increased to 4.86% for the fiscal year ended
June 30, 2007, from

                                       11
<page>

4.18% for the fiscal year ended June 30, 2006,  partially  offset by a $860,000,
or 1.7% decrease in the average balance of FHLB advances.

         Net Interest Income. Net interest income decreased  $221,000,  or 5.5%,
to $3.8 million for the fiscal year ended June 30,  2007,  from $4.0 million for
the fiscal year ended June 30, 2006. The decrease was the result of a decline of
our net interest margin and a decrease in average net  interest-earning  assets.
The decline in our net interest  margin  reflected the more rapid  re-pricing of
our interest-bearing liabilities as compared to our interest-earning assets. Our
net interest  margin  decreased to 2.46% during  fiscal 2007,  from 2.63% during
fiscal 2006.  Average net  interest-earning  assets  decreased $1.4 million,  or
6.6%,  to $20.2  million  for the fiscal  year ended June 30,  2007,  from $21.6
million for the fiscal year ended June 30, 2006.

         Provision for Loan Losses.  Management  establishes provisions for loan
losses,  which are charged to operations,  at a level  necessary to absorb known
and inherent losses that are both probable and reasonably  estimable at the date
of the financial  statements.  In evaluating the level of the allowance for loan
losses,  management  analyzes  several  qualitative  loan portfolio risk factors
including  but not limited to,  charge-off  history,  changes in  management  or
underwriting  policies,  current economic  conditions,  delinquency  statistics,
geographic  and  industry   concentrations,   the  adequacy  of  the  underlying
collateral,  the financial  strength of the borrower and results of internal and
external loan reviews. This evaluation is inherently subjective,  as it requires
estimates  that are  susceptible  to  significant  revision as more  information
becomes  available.  After an evaluation  of these  factors,  management  made a
provision of $105,000 for the fiscal year ended June 30, 2007,  as compared to a
$108,000 provision for the fiscal year ended June 30, 2006.  Management used the
same  methodology and generally  similar  assumptions in assessing the allowance
for both years.  The  allowance  for loan losses was $1.1  million,  or 0.84% of
loans  outstanding at June 30, 2007, as compared with $1.0 million,  or 0.78% of
loans  outstanding  at June 30,  2006.  The level of the  allowance  is based on
estimates, and the ultimate losses may vary from the estimates.

         Determining  the amount of the  allowance  for loan losses  necessarily
involves  a high  degree  of  judgment.  Management  reviews  the  level  of the
allowance on a quarterly  basis,  and  establishes the provision for loan losses
based on an analysis of qualitative  loan portfolio risk factors.  Historically,
our loan  portfolio has primarily  consisted of one-to  four-family  residential
mortgage loans.  The composition of our loan portfolio has gradually  changed in
recent years to include more multi-family, commercial real estate and commercial
business  loans. In addition,  our current  business plan calls for increases in
these  loans.  Management's  evaluation  the  allowance  for  loan  losses,  the
composition  of  the  loan  portfolio  and  increased   risk   associated   with
multi-family,  commercial real estate and commercial loans (because they present
larger non-homogeneous credits and because they may be more sensitive to changes
in economic conditions) may result in larger additions to the allowance for loan
losses in future periods.

         While  loan  quality  has  been  stable  in  recent  years,  with  loan
charge-offs  of $62,000  for the fiscal  year ended June 30, 2007 and $8,000 for
the fiscal  year  ended  June 30,  2006,  the risks in the loan  portfolio  have
increased based on the change in loan

                                       12
<page>

composition.  We have allocated the allowance among categories of loan types, as
well  as  classification  status  at  each  period-end  date.   Assumptions  and
allocation  percentages based on loan types and classification  status have been
consistently  applied.  Non-performing loans may be assigned a higher percentage
of allowance allocation.

         Although  we  believe  that we use the best  information  available  to
establish the allowance for loan losses,  future  additions to the allowance may
be necessary,  based on estimates that are  susceptible to change as a result of
changes in economic  conditions  and other factors.  In addition,  the Office of
Thrift Supervision (OTS), as an integral part of its examination  process,  will
periodically review our allowance for loan losses. Such agency may require us to
recognize adjustments to the allowance, based on its judgments about information
available to it at the time of its examination.

         Non-interest Income.  Non-interest income increased $283,000,  or 62.4%
to $737,000 for the fiscal year ended June 30, 2007, as compared to $454,000 for
the fiscal year ended June 30, 2006. The increase was primarily due to increases
in fee income from our overdraft  privilege program,  which began in April 2006,
decreases in losses on investment  securities  sales and increases in fee income
associated with commercial loan pre-payments,  partially offset by a decrease of
income from our financial services program.  Income from our overdraft privilege
program increased $214,000, or 129.9% to $379,000 for the fiscal year ended June
30, 2007,  as compared to $165,000 for the fiscal year ended June 30, 2006.  The
Company had no losses on investment  securities  sales for the fiscal year ended
June 30,  2007,  as compared to $56,000 of losses for the fiscal year ended June
30, 2006. Fee income from commercial loan  pre-payments  increased  $45,000,  or
3,162.1%  to $46,000  for the fiscal  year ended June 30,  2007,  as compared to
$1,000  for the  fiscal  year ended June 30,  2006.  Financial  services  income
decreased $71,000,  or 75.2% to $23,000 for the fiscal year ended June 30, 2007,
as compared to $95,000 for the fiscal year ended June 30, 2006.  The Company has
restructured  the program  and will  operate it on a referral  basis only.  As a
result, it is anticipated that there will not be significant increases in income
from the program.

         Non-interest Expense. Non-interest expense increased $219,000, or 4.4%,
to $5.2  million  for the  fiscal  year ended June 30,  2007,  compared  to $4.9
million for the fiscal year ended June 30, 2006.  Salaries and employee benefits
decreased $65,000,  or 2.4%,  primarily due a decrease of $114,000,  or 48.4% in
board fees due to board  restructurings  and a  $55,000,  or 84.0%  decrease  in
compensation expense from our financial services program,  partially offset by a
$107,000,  or 5.9% increase in employee  compensation  expense,  which  included
$65,000 in personnel  restructuring  expense and additional  staff added for the
North Andover office, which opened in December 2005. Occupancy expense increased
$75,000,  or 9.3%,  primarily due to the opening of the North Andover  office in
December 2005. Data processing expenses increased $65,000,  or 27.2%,  primarily
due  to  one-time  credits  totaling  $41,000  related  to our  core  processing
conversion, that were recognized during fiscal 2006. Professional fees decreased
$19,000,  or 6.3%,  to  $288,000  for the fiscal  year ended June 30,  2007,  as
compared  to  $307,000  for the fiscal  year ended  June 30,  2006.  Advertising
expenses decreased $11,000,  or 4.9%, to $217,000 for the fiscal year ended June
30, 2007,  as compared to $228,000 for the fiscal year ended June 30, 2006.  Our
other  general and  administrative  expense

                                       13
<page>

increased  $174,000,  or 27.8%,  to $799,000  for the fiscal year ended June 30,
2007, from $625,000 for the prior fiscal year. The increase was primarily due to
an increase in fees  associated  with our  overdraft  privilege  program,  which
totaled  $64,000 for the fiscal year ended June 30, 2007,  as compared to $1,000
for the fiscal year ended June 30, 2006, an increase in  recruitment  expense of
$51,000, or 187.0%,  primarily due to the use of an executive search firm to aid
in the  search  for our  chief  loan  officer  and due to a  $30,000,  or 411.2%
increase in fees  associated  with problem loans,  which totaled $23,000 for the
fiscal year ended June 30,  2007,  as compared to a net  recovery of expenses of
$7,000 for the fiscal year ended June 30, 2006.

          Income Tax  Expense.  The loss before  income  taxes of  $707,000  and
$553,000  for the  fiscal  years  ended  June 30,  2007 and 2006,  respectively,
resulted in an income tax benefit of $243,000  and $173,000 for the fiscal years
ended June 30,  2007 and 2006,  respectively.  The  effective  tax rates for the
fiscal years ended June 30, 2007 and 2006 were 34.4% and 31.3%, respectively.

                                       14
<page>

Average Balance Sheet

         The following table sets forth average  balance sheets,  average yields
and  costs,  and  certain  other  information  for  the  periods  indicated.  No
tax-equivalent  yield  adjustments  were  made,  as the effect  thereof  was not
material.  All average balances are daily average  balances.  Non-accrual  loans
were included in the computation of average balances, but have been reflected in
the table as loans carrying a zero yield. The yields set forth below include the
effect of deferred  fees,  discounts and premiums that are amortized or accreted
to interest income or expense.

<table>
<caption>
                                                                                   Fiscal Years Ended June 30,
                                              At June 30,       ------------------------------------------------------------------
                                                 2007                         2007                                2006
                                        ----------------------  --------------------------------  --------------------------------
                                                     Weighted     Average                           Average
                                        Outstanding   Average   Outstanding              Yield/   Outstanding              Yield/
                                         Balance       Rate       Balance    Interest     Rate      Balance    Interest     Rate
                                        ----------  ----------  ----------  ----------  --------  ----------  ----------  --------

                                        <c>           <c>       <c>          <c>        <c>       <c>          <c>        <c>
                                                                                     (Dollars in thousands)
Interest-earning assets:
  Loans                                    128,738        6.04% $  128,830  $    7,583      5.89% $  119,428  $    6,650      5.57%
  Investment securities (1)                 23,777        4.68%     26,014       1,281      4.92%     31,667       1,355      4.28%
  Short-term investments                     1,653        5.02%        927          48      5.18%      3,129         122      3.90%
                                        ----------              ----------  ----------            ----------  ----------
     Total interest-earning assets         154,168        5.82%    155,771       8,912      5.72%    154,224       8,127      5.27%
  Non-interest-earning assets               10,914                   9,348          --                 9,192          --
                                        ----------              ----------  ----------            ----------  ----------
  Total assets                          $  165,082              $  165,119       8,912            $  163,416       8,127
                                        ==========              ==========  ==========            ==========  ==========

Interest-bearing liabilities:
  Savings deposits                          11,914        0.32% $   13,134          44      0.34% $   17,405          53      0.30%
  NOW accounts                              11,539        1.61%      8,813         127      1.44%      6,164          40      0.65%
  Money market accounts                     22,832        3.68%     20,620         664      3.22%     22,061         543      2.46%
  Certificates of deposit                   40,456        4.42%     41,981       1,801      4.29%     35,150       1,297      3.69%
                                        ----------              ----------  ----------            ----------  ----------
    Total interest-bearing deposits         86,741        3.29%     84,548       2,636      3.12%     80,780       1,933      2.39%
  FHLB advances                             47,723        4.82%     50,234       2,440      4.86%     51,094       2,138      4.18%
  Repurchase agreements                        869        1.00%        817           8      0.98%        751           7      0.93%
                                        ----------              ----------  ----------            ----------  ----------
    Total interest-bearing liabilities  $  135,333        3.82% $  135,599       5,084      3.75% $  132,625       4,078      3.07%
Non-interest-bearing liabilities:
  Demand deposits                           11,215                  11,078                            10,295
  Other non-interest-bearing liabilities       924                     266                             1,288
                                        ----------              ----------                        ----------
Total liabilities                          147,472                 146,943                           144,208
  Stockholders' equity                      17,610                  18,176                            19,208
                                        ----------              ----------                        ----------
     Total liabilities and equity       $  165,082              $  165,119                        $  163,416
                                        ==========              ==========                        ==========

Net interest income                                                         $    3,828                        $    4,049
                                                                            ==========                        ==========
Net interest rate spread (2)                              2.00%                             1.97%                             2.20%
Net interest-earning assets (3)         $   18,835              $   20,172                        $   21,599
                                        ==========              ==========                        ==========
Net interest margin (4)                                                                     2.46%                             2.63%
Average of interest-earning
     assets to interest-bearing
      liabilities                                       113.92%                           114.88%                           116.29%
</table>

------------------------------------------------------------------------
(1)   Consists entirely of taxable investment securities.
(2)   Net interest rate spread  represents the  difference  between the yield on
      average  interest-earning assets and the cost of average  interest-bearing
      liabilities.
(3)   Net interest-earning  assets represents total interest-earning assets less
      total interest-bearing liabilities.
(4)   Net interest  margin  represents  net interest  income  divided by average
      total interest-earning assets.

                                       15
<page>

Rate/Volume Analysis

         The following  table presents the effects of changing rates and volumes
on our net interest income for the periods indicated.  The rate column shows the
effects  attributable  to changes in rate  (changes in rate  multiplied by prior
volume).  The volume column shows the effects  attributable to changes in volume
(changes in volume  multiplied by prior rate). The net column represents the sum
of the prior columns.  For purposes of this table,  changes attributable to both
rate  and   volume,   which   cannot  be   segregated,   have   been   allocated
proportionately, based on the changes due to rate and the changes due to volume.

                                                Fiscal Years Ended June 30,
                                                      2007 vs. 2006
                                         --------------------------------------
                                         Increase (Decrease) Due to
                                         --------------------------
                                           Volume         Rate           Net
                                         ----------    ----------    ----------
                                                     (In thousands)

Interest-earning assets:
  Loans                                  $      524    $      409    $      933
  Investment securities (1)                    (242)          168           (74)
  Short-term investments                        (86)           12           (74)
                                         ----------    ----------    ----------

    Total interest-earning assets               196           589           785


Interest-bearing liabilities:
  Savings deposits                              (13)            4            (9)
  NOW accounts                                   17            70            87
  Money market accounts                         (35)          156           121
  Certificates of deposit                       252           252           504
                                         ----------    ----------    ----------

   Total interest-bearing deposits              221           482           703

  FHLB advances                                 (36)          338           302
  Repurchase agreements                           2            (1)            1
                                         ----------    ----------    ----------

    Total interest-bearing liabilities          187           819         1,006
                                         ----------    ----------    ----------

Change in net interest income            $        9    $     (230)   $     (221)
                                         ==========    ==========    ==========

-----------------------------------------------------------------
      (1) Consists entirely of taxable investment securities.

Management of Market Risk

         General.  The  majority of our assets and  liabilities  are monetary in
nature. Consequently,  our most significant form of market risk is interest rate
risk (IRR).  Our assets,  consisting  primarily of mortgage  loans,  have longer
maturities than our liabilities,  consisting primarily of deposits. As a result,
a  principal  part of our  business  strategy  is to manage  IRR and  reduce the
exposure  of our net  interest  income  to  changes  in market  interest  rates.
Accordingly,   our  Board  of  Directors  has  established  an   Asset/Liability
Management  Committee,  which is responsible  for evaluating the IRR inherent in
our

                                       16
<page>

assets and  liabilities,  for determining the level of risk that is appropriate,
given our business  strategy,  operating  environment,  capital,  liquidity  and
performance  objectives,   and  for  managing  this  risk  consistent  with  the
guidelines  approved by the Board of Directors.  Senior management  monitors the
level of IRR on a regular  basis and the  Asset/Liability  Committee  meets on a
monthly basis to review our asset/liability  policies and position, IRR position
and to discuss and implement IRR strategies.

         We have sought to manage our IRR in order to minimize  the  exposure of
our earnings and capital to changes in interest rates.  We have  implemented the
following  strategies  to manage our IRR: (i)  offering a variety of  adjustable
rate loan products, including adjustable rate one- to four-family,  multi-family
and non-residential mortgage loans, and short-term consumer loans; (ii) offering
shorter-term fixed rate mortgage loans; (iii) using alternative funding sources,
such as advances from the FHLB;  and (iv) deposit  pricing  strategies and short
duration  investments.  By following  these  strategies,  we believe that we are
better positioned to react to changes in market interest rates.

Net Interest Income  Simulation.  IRR can result from timing  differences in the
maturity/repricing of an institution's assets, liabilities and off-balance sheet
contracts;  the effect of embedded options, such as call or convertible options,
loan prepayments, interest rate caps, and deposit withdrawals; unexpected shifts
of the yield  curve that  affect both the slope and shape of the yield curve and
differences in the behavior of lending and funding rates,  sometimes referred to
as basis risk. Given the potential types and differing  related  characteristics
of IRR, it is important that the Company maintain an appropriate process and set
of measurement  tools,  which enables it to identify and quantify its sources of
IRR.  The  Company's  primary  tool in managing  IRR in this manner is an income
simulation  model. This model measures the net interest income at risk primarily
under three different interest rate scenarios. Specifically, net interest income
is  measured  assuming  market  interest  rates  remain  unchanged,  where rates
increase 200 basis points and where rates decrease 200 basis points from current
market rates over a one-year  time horizon.  The changes in net interest  income
due to changes in market  interest  rates  reflect the rate  sensitivity  of the
Company's interest-bearing assets and liabilities.

The  following  table  presents,  for the year ended June 30, 2007 the estimated
changes in net interest income that would result from changes in market interest
rates over the next twelve-month period.

                  Changes in
                Interest Rates      Net Interest
                (Basis Points)         Income         % Change
                --------------         ------         --------
                              (Dollars in thousands)

                      200              $3,847           -3.8%
                       0               $4,000            0.0%
                     -200              $4,074            1.9%


                                       17
<page>

Certain  shortcomings  are  inherent  in the  methodology  used in the above IRR
measurement.  Modeling changes in net interest income simulation  require making
certain  assumptions  that may or may not  reflect  the  manner in which  actual
yields and costs respond to changes in market  interest  rates.  In this regard,
the net interest income  simulation table presented assumes that the composition
of our interest-sensitive  assets and liabilities existing at the beginning of a
period  remains  constant  over the period  being  measured  and assumes  that a
particular  change in interest  rates is  reflected  uniformly  across the yield
curve   regardless  of  the  duration  or  repricing  of  specific   assets  and
liabilities.  Accordingly,  although the net interest  income  simulation  table
provides an indication of our IRR exposure at a particular  point in time,  such
measurements  are not  intended to and do not provide a precise  forecast of the
effect of changes in market  interest rates on our net interest  income and will
differ from actual results.

Liquidity and Capital Resources

         Liquidity  is  the  ability  to  meet  current  and  future   financial
obligations  of a short-term  nature.  Our primary  sources of funds  consist of
deposit inflows,  loan repayments and maturities and sales of securities.  While
maturities and scheduled  amortization  of loans and securities are  predictable
sources of funds,  deposit flows and mortgage prepayments are greatly influenced
by general interest rates, economic conditions and competition.

         We regularly review the need to adjust our investments in liquid assets
based upon our  assessment  of (1) expected  loan demand,  (2) expected  deposit
flows, (3) yields available on interest-earning deposits and securities, and (4)
the objectives of our asset/liability  management program.  Excess liquid assets
are   invested   generally   in   interest-earning   deposits   and  short-  and
intermediate-term securities.

         Our most  liquid  assets are cash and cash  equivalents.  The levels of
these assets are dependent on our  operating,  financing,  lending and investing
activities  during any given period. At June 30, 2007, cash and cash equivalents
totaled $5.6 million. Securities classified as available-for-sale, which provide
additional  sources of  liquidity,  totaled  $12.7  million at June 30, 2007. In
addition,  at  June  30,  2007,  we  had  the  ability  to  borrow  a  total  of
approximately $67.1 million from the FHLB. On that date, we had $47.7 million in
advances outstanding.

         At June 30, 2007, we had $3.1 million in loan commitments  outstanding.
In  addition  to  commitments  to  originate  loans,  we had  $17.8  million  in
unadvanced  funds to borrowers.  Certificates  of deposit due within one year of
June 30,  2007  totaled  $30.5  million,  or 31.1% of total  deposits.  If these
deposits do not remain  with us, we will be  required  to seek other  sources of
funds,  including other certificates of deposit and FHLB advances.  Depending on
market  conditions,  we may be required to pay higher rates on such  deposits or
other borrowings, than we currently pay on the certificates of deposit due on or
before June 30,  2007.  We believe,  however,  based on past  experience  that a
significant  portion of our certificates of deposit will remain with us. We have
the  ability to attract and retain  deposits by  adjusting  the  interest  rates
offered.

                                       18
<page>

         We have no material  commitments  or demands  that are likely to affect
our  liquidity  other than set forth  below.  In the event loan  demand  were to
increase at a pace greater than expected, or any unforeseen demand or commitment
were to occur, we would access our borrowing capacity with the FHLB.

         Our primary  investing  activities are the origination of loans and the
purchase of securities. In fiscal 2007, we originated $24.3 million of loans and
purchased $499,000 of securities. In fiscal 2006, we originated $44.0 million of
loans and purchased $5.9 million of securities.

         Financing  activities consist primarily of activity in deposit accounts
and FHLB  advances.  We experienced a net increase in total deposits of $247,000
and  $6.6   million  for  the  fiscal  years  ended  June  30,  2007  and  2006,
respectively. Deposit flows are affected by the overall level of interest rates,
the interest  rates and  products  offered by us and our local  competitors  and
other  factors.   We  generally  manage  the  pricing  of  our  deposits  to  be
competitive. FHLB advances reflected net decreases of $3.5 million and increases
of $4.4  million  during  the  fiscal  years  ended  June  30,  2007  and  2006,
respectively.  FHLB  advances have  primarily  been used to fund loan demand and
purchase securities.

         Georgetown  Savings  Bank is  subject  to  various  regulatory  capital
requirements  administered by the OTS,  including a risk-based  capital measure.
The  risk-based  capital  guidelines  include both a definition of capital and a
framework for calculating risk-weighted assets by assigning balance sheet assets
and  off-balance  sheet  items  to broad  risk  categories.  At June  30,  2007,
Georgetown Savings Bank exceeded all of the OTS regulatory capital requirements.
Georgetown  Savings  Bank is  considered  "well  capitalized"  under  regulatory
guidelines.  See Note 12 of the Notes to the consolidated  financial  statements
for additional information.

Impact of Inflation and Changing Prices

The consolidated  financial  statements and related notes of Georgetown Bancorp,
Inc. have been  prepared in  accordance  with  accounting  principles  generally
accepted in the United States of America ("GAAP").  GAAP generally  requires the
measurement of financial  position and operating  results in terms of historical
dollars without  consideration  for changes in the relative  purchasing power of
money over time due to  inflation.  The impact of  inflation is reflected in the
increased cost of our operations.  Unlike industrial  companies,  our assets and
liabilities  are primarily  monetary in nature.  As a result,  changes in market
interest  rates  have a  greater  impact  on  performance  than the  effects  of
inflation.


                                       19
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                   Page

Report of Independent Registered Public Accounting Firm            F-2

Consolidated Balance Sheets                                        F-3

Consolidated Statements of Operations                              F-4

Consolidated Statements of Changes in Stockholders' Equity         F-5

Consolidated Statements of Cash Flows                           F-6 - F-7

Notes to Consolidated Financial Statements                      F-8 - F-40


<page>

[LETTERHEAD OF WOLF & COMPANY, P.C.]


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders
Georgetown Bancorp, Inc.
Georgetown, Massachusetts


We have  audited the  accompanying  consolidated  balance  sheets of  Georgetown
Bancorp,  Inc. and  subsidiaries  as of June 30, 2007 and 2006,  and the related
consolidated statements of operations,  changes in stockholders' equity and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Georgetown Bancorp,
Inc.  and  subsidiaries  as of June 30, 2007 and 2006,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.


/s/ Wolf & Company, P.C.

Boston, Massachusetts
August 9, 2007

<page>
<table>
<caption>

                         GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                                CONSOLIDATED BALANCE SHEETS

                                 At June 30, 2007 and 2006

                                           ASSETS

                                                                       2007          2006
                                                                     ---------    ---------
                                                                         (In thousands)

                                                                      <c>            <c>
Cash and due from banks                                              $   3,950    $   3,257
Short-term investments                                                   1,653          720
                                                                     ---------    ---------
               Total cash and cash equivalents                           5,603        3,977

Securities available for sale, at fair value                            12,690       15,465
Securities held to maturity, at amortized cost                           8,182        9,823
Federal Home Loan Bank stock, at cost                                    2,905        2,905
Loans, net of allowance for loan losses of $1,079,000
    at June 30, 2007 and $1,016,000 at June 30, 2006                   127,659      128,778
Premises and equipment, net                                              4,816        5,230
Accrued interest receivable                                                682          674
Bank-owned life insurance                                                1,416        1,211
Other assets                                                             1,129          988
                                                                     ---------    ---------

               Total assets                                          $ 165,082    $ 169,051
                                                                     =========    =========

                           LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                             $  97,956    $  97,709
Short-term Federal Home Loan Bank advances                               9,850       22,300
Long-term Federal Home Loan Bank advances                               37,873       28,921
Securities sold under agreements to repurchase                             869          762
Mortgagors' escrow accounts                                                317          289
Accrued expenses and other liabilities                                     607          411
                                                                     ---------    ---------
               Total liabilities                                       147,472      150,392
                                                                     ---------    ---------

Commitments and contingencies (Notes 6 and 15)

Stockholders' equity:
Preferred stock, $0.10 par value per share: 1,000,000
    shares authorized; none outstanding                                     --           --
Common stock, $0.10 par value per share: 10,000,000
    shares authorized; 2,777,250 shares issued                             278          278
Additional paid-in capital                                              11,452       11,452
Retained earnings                                                        7,522        7,996
Accumulated other comprehensive loss                                      (179)        (330)
Unearned compensation - ESOP (65,463 and 75,653 shares unallocated
    at June 30, 2007 and 2006, respectively)                              (655)        (737)
Treasury stock, at cost (85,200 shares at June 30, 2007)                  (808)          --
                                                                     ---------    ---------
               Total stockholders' equity                               17,610       18,659
                                                                     ---------    ---------

               Total liabilities and stockholders' equity            $ 165,082    $ 169,051
                                                                     =========    =========

See accompanying notes to consolidated financial statements.


                                            F-3
</table>
<page>
<table>
<caption>

                     GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF OPERATIONS

                         Years Ended June 30, 2007 and 2006

                                                           2007           2006
                                                        -----------    -----------
                                                              (In thousands)

                                                              <c>           <c>
Interest and dividend income:
    Loans, including fees                               $     7,583    $     6,650
    Investment interest and dividends                         1,281          1,355
    Short-term investments                                       48            122
                                                        -----------    -----------
               Total interest and dividend income             8,912          8,127
                                                        -----------    -----------

Interest expense:
    Deposits                                                  2,636          1,933
    Short-term Federal Home Loan Bank advances                  840          1,084
    Long-term Federal Home Loan Bank advances                 1,600          1,054
    Securities sold under agreements to repurchase                8              7
                                                        -----------    -----------
               Total interest expense                         5,084          4,078
                                                        -----------    -----------

Net interest income                                           3,828          4,049
Provision for loan losses                                       105            108
                                                        -----------    -----------
Net interest income, after provision for loan losses          3,723          3,941
                                                        -----------    -----------

Non-interest income:
    Customer service fees                                       591            439
    Loss on sale of securities available for sale                --            (56)
    Income from bank-owned life insurance                        70             45
    Other                                                        76             26
                                                        -----------    -----------
               Total non-interest income                        737            454
                                                        -----------    -----------

Non-interest expenses:
    Salaries and employee benefits                            2,677          2,742
    Occupancy and equipment expenses                            883            808
    Data processing expenses                                    303            238
    Professional fees                                           288            307
    Advertising expense                                         217            228
    Other general and administrative expenses                   799            625
                                                        -----------    -----------
               Total non-interest expenses                    5,167          4,948
                                                        -----------    -----------

Loss before income taxes                                       (707)          (553)

Income tax benefit                                             (243)          (173)
                                                        -----------    -----------

Net loss                                                $      (464)   $      (380)
                                                        ===========    ===========

Weighted-average number of common shares outstanding:
   Basic and diluted                                      2,640,981      2,699,231

Net loss per share:
   Basic and diluted                                    ($     0.18)   ($     0.14)


See accompanying notes to consolidated financial statements.



                                        F-4
</table>
<page>
<table>
<caption>

                                              GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                                     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                                 Years Ended June 30, 2007 and 2006

                                                                                 Accumulated
                                                         Additional                 Other       Unearned
                                              Common      Paid-in     Retained  Comprehensive Compensation-  Treasury
                                               Stock      Capital     Earnings      Loss          ESOP         Stock        Total
                                             ----------  ----------  ----------   ----------   ----------   ----------   ----------
                                                                                (In thousands)

                                          <c>         <c>         <c>          <c>          <c>          <c>          <c>
Balance at June 30, 2005                     $      278  $   11,452  $    8,383   $      (17)  $     (811)  $       --   $   19,285
                                                                                                                         ----------

Comprehensive loss:
  Net loss                                           --          --        (380)          --           --           --         (380)
  Net unrealized loss on
    securities available for sale, net of
    reclassification adjustments of $56,000
    and related tax effects of $188,000              --          --          --         (313)          --           --         (313)
                                                                                                                         ----------
           Total comprehensive loss                                                                                            (693)
                                                                                                                         ----------

Common stock held by ESOP allocated or
committed to be allocated (7,428 shares)             --          --          (7)          --           74           --           67
                                             ----------  ----------  ----------   ----------   ----------   ----------   ----------

Balance at June 30, 2006                            278      11,452       7,996         (330)        (737)          --       18,659

Comprehensive loss:
  Net loss                                           --          --        (464)          --           --           --         (464)
  Net unrealized gain on securities
    available for sale, net of related
    tax effects of $89,000                           --          --          --          151           --           --          151
                                                                                                                         ----------
           Total comprehensive loss                                                                                            (313)
                                                                                                                         ----------

Common stock held by ESOP allocated or
committed to be allocated (8,190 shares)             --          --         (10)          --           82           --           72

Treasury stock purchased (85,200 shares)             --          --          --           --           --         (808)        (808)
                                             ----------  ----------  ----------   ----------   ----------   ----------   ----------

Balance at June 30, 2007                     $      278  $   11,452  $    7,522   $     (179)  $     (655)  $     (808)  $   17,610
                                             ==========  ==========  ==========   ==========   ==========   ==========   ==========

See accompanying notes to consolidated financial statements.

                                                                 F-5
</table>
<page>
<table>
<caption>

                      GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                          Years Ended June 30, 2007 and 2006

                                                                  2007        2006
                                                                --------    --------
                                                                   (In thousands)

                                                                  <c>         <c>
Cash flows from operating activities:
Net loss                                                        $   (464)   $   (380)
  Adjustments to reconcile net loss to net cash
      used by operating activities:
          Provision for loan losses                                  105         108
          Loss on sale of securities available for sale               --          56
          Accretion of securities, net                               (46)        (44)
          Accretion of deferred loan costs, net                      (37)        (39)
          Depreciation and amortization expense                      460         436
          (Increase) decrease in accrued interest receivable          (8)          6
          Income from bank-owned life insurance                      (70)        (45)
          Deferred tax benefit                                      (183)        (38)
          ESOP compensation expense                                   72          67
          Other, net                                                  14        (151)
                                                                --------    --------
            Net cash used by operating activities                   (157)        (24)
                                                                --------    --------

Cash flows from investing activities:
  Activity in available-for-sale securities:
       Maturities, prepayments and calls                           3,543       3,759
       Purchases                                                    (499)     (5,888)
       Proceeds from sales of securities                              --       2,944
  Maturities, prepayments and calls
      of held-to-maturity securities                               1,658       2,578
  Purchase of Federal Home Loan Bank stock                            --        (379)
  Loan principal repayments (originations), net                    1,051     (14,066)
  Purchase of premises and equipment                                 (46)       (781)
                                                                --------    --------
             Net cash provided (used) by investing activities      5,707     (11,833)
                                                                --------    --------

                                     (continued)

See accompanying notes to consolidated financial statements.


                                         F-6
</table>
<page>
<table>
<caption>

                         GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

                            Years Ended June 30, 2007 and 2006

                                                                       2007        2006
                                                                     --------    --------
                                                                         (In thousands)

                                                                    <c>         <c>
Cash flows from financing activities:
    Net increase in deposits                                              247       6,559
    Net increase (decrease) in securities sold under agreements
        to repurchase                                                     107        (227)
    Net change in Federal Home Loan Bank advances with
        maturities of  three months or less                            (1,100)     (3,900)
    Proceeds from Federal Home Loan Bank advances
        with maturities greater than three months                      20,000      43,650
    Repayments of Federal Home Loan Bank advances
        with maturities greater than three months                     (22,398)    (35,347)
 Treasury stock purchased                                                (808)         --
    Net change in mortgagors' escrow accounts                              28          21
                                                                     --------    --------
                  Net cash (used) provided by financing activities     (3,924)     10,756
                                                                     --------    --------

Net change in cash and cash equivalents                                 1,626      (1,101)

Cash and cash equivalents at beginning of year                          3,977       5,078
                                                                     --------    --------

Cash and cash equivalents at end of year                             $  5,603    $  3,977
                                                                     ========    ========

Supplementary information:
    Interest paid on deposit accounts                                $  2,627    $  1,922
    Interest paid on Federal Home Loan Bank advances                    2,429       2,087
    Interest paid on securities sold under agreement
        to repurchase                                                       8           7
    Income taxes recovered, net of payments                              (185)        (86)

Other non-cash items:
    Split-dollar life insurance policy transferred to
         bank-owned life insurance                                        135          --


See accompanying notes to consolidated financial statements.

                                            F-7
</table>
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Years Ended June 30, 2007 and 2006

1.       CORPORATE STRUCTURE

         Georgetown  Bancorp,  Inc.  (the  "Company")  is a  federally-chartered
         corporation  organized for the purpose of owning all of the outstanding
         capital stock of Georgetown Savings Bank (the "Bank").  The Company was
         organized as a  wholly-owned  subsidiary  of  Georgetown  Bancorp,  MHC
         ("MHC"), which is a federally-chartered mutual holding company.

         On January 5, 2005, the Company  completed a public  offering of 45% of
         the shares of its  outstanding  common  stock to  eligible  depositors,
         employees,  and members of the general  public  (the  "Offering").  The
         remaining  55% of the  Company's  shares of common stock were issued to
         the MHC.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of presentation and consolidation

         The  consolidated  financial  statements  include  the  accounts of the
         Company  and its  wholly-owned  subsidiaries,  the Bank and  Georgetown
         Funding Corporation,  which was established and funded to loan funds to
         the ESOP.  The Bank's  financial  statements  include its  wholly-owned
         subsidiary,  Georgetown  Securities  Corporation,  which engages in the
         buying,   selling  and  holding  of  securities.   Georgetown   Funding
         Corporation   was  dissolved  on  July  6,  2006  and  all  assets  and
         liabilities   were   transferred  to  the  Company.   All   significant
         intercompany   balances  and  transactions   have  been  eliminated  in
         consolidation.

         Nature of operations

         The Company provides a variety of financial services to individuals and
         small businesses in the Essex County, Massachusetts region and southern
         New Hampshire.  Its primary deposit products are checking,  savings and
         term  certificate   accounts  and  its  primary  lending  products  are
         residential and commercial mortgage loans.

         Segment reporting

         Generally,  financial  information  is  required  to be reported on the
         basis that it is used internally for evaluating segment performance and
         deciding how to allocate  resources to segments.  Management  evaluates
         the Company's  performance  and allocates  resources  based on a single
         segment  concept.  Accordingly,  there  are  no  separately  identified
         operating  segments  for  which  discrete   financial   information  is
         available.  The Company does not derive  revenues  from, or have assets
         located in,  foreign  countries,  nor does it derive  revenues from any
         single  customer that  represents  10% or more of the  Company's  total
         revenues.

                                      F-8
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Use of estimates

         In preparing  consolidated  financial  statements  in  conformity  with
         accounting  principles  generally  accepted  in the  United  States  of
         America,  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 reported  amounts of revenues and expenses during
         the reporting period. Actual results could differ from those estimates.
         A material  estimate that is  particularly  susceptible  to significant
         change in the near term relates to the  determination  of the allowance
         for loan losses.

         Cash and cash equivalents

         Cash and cash equivalents include cash, amounts due from banks, federal
         funds sold and other short-term investments, all of which mature within
         90 days, and are carried at cost.

         Reclassifications

         Certain amounts in the 2006 consolidated financial statements have been
         reclassified to conform to the 2007 presentation.

         Securities

         Debt  securities that management has the positive intent and ability to
         hold to maturity are  classified as "held to maturity" and reflected at
         amortized  cost.  Securities  classified  as  "available  for sale" are
         reflected at fair value, with unrealized gains and losses excluded from
         earnings and reported in other  comprehensive  income/loss,  net of tax
         effects.

         Purchase  premiums  and  discounts  are  amortized  to  earnings by the
         interest method over the contractual  life of the securities.  Declines
         in the fair value of securities  below their cost that are deemed to be
         other than temporary are reflected in earnings as realized  losses.  In
         estimating other-than-temporary impairment losses, management considers
         (1) the  length of time and the extent to which the fair value has been
         less than cost, (2) the financial  condition and near-term prospects of
         the issuer, and (3) the intent and ability of the Company to retain its
         investment  in the issuer for a period of time  sufficient to allow for
         any  anticipated  recovery in fair  value.  Gains and losses on sale of
         securities  are on the trade  date and  determined  using the  specific
         identification method.

         Loans

         The loan portfolio consists of mortgage,  commercial and consumer loans
         to  the  Company's   customers,   principally   in  the  Essex  County,
         Massachusetts  region and  southern New  Hampshire.  The ability of the
         Company's  debtors to honor their  contracts is dependent upon the real
         estate and general economic conditions in this area.

                                      F-9
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Loans (concluded)

         Loans  that  management  has the  intent  and  ability  to hold for the
         foreseeable  future or until maturity or pay-off are generally reported
         at  their  outstanding  unpaid  principal  balances  adjusted  for  the
         allowance  for loan losses and any deferred fees or costs on originated
         loans. Interest income is accrued on the unpaid principal balance. Loan
         origination costs, net of origination fees, are deferred and recognized
         as an adjustment of the related loan yield using the interest method.

         The  accrual  of  interest  on  loans,  including  impaired  loans,  is
         generally  recognized on a simple interest basis and is discontinued at
         the  time the loan is 90 days  past  due,  unless  the  credit  is well
         secured and in process of  collection.  Past due status is based on the
         contractual  terms of the  loans.  Loans are placed on  non-accrual  or
         charged-off  at an earlier date if  collection of principal or interest
         is considered doubtful.

         All  interest  accrued but not  collected  for loans that are placed on
         non-accrual or charged-off is reversed  against  interest  income.  The
         interest  on  these  loans  is  accounted  for  on  the  cash-basis  or
         cost-recovery method, until qualifying for return to accrual. Loans are
         returned to accrual status when all the principal and interest  amounts
         contractually   due  are  brought   current  and  future  payments  are
         reasonably assured.

         Allowance for loan losses

         The allowance for loan losses is established as losses are estimated to
         have occurred  through a provision for loan losses charged to earnings.
         Loan losses are charged against the allowance when management  believes
         the  uncollectibility  of  a  loan  balance  is  confirmed.  Subsequent
         recoveries, if any, are credited to the allowance.

         The  allowance  for loan  losses is  evaluated  on a  regular  basis by
         management  and is  based  upon  management's  periodic  review  of the
         collectibility of the loans in light of known and inherent risks in the
         nature and volume of the loan  portfolio,  adverse  situations that may
         affect  the  borrower's  ability  to  repay,  estimated  value  of  any
         underlying   collateral  and  prevailing  economic   conditions.   This
         evaluation is inherently  subjective as it requires  estimates that are
         susceptible  to  significant   revision  as  more  information  becomes
         available.

                                      F-10
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Allowance for loan losses (concluded)

         The allowance consists of specific, general and unallocated components.
         The  specific  component  relates  to  loans  that  are  classified  as
         impaired.  For such loans that are classified as impaired, an allowance
         is established when the observable market price of the impaired loan is
         lower than the  carrying  value of that  loan.  The  general  component
         covers  non-classified loans and is based on historical loss experience
         adjusted  for  qualitative   factors.   An  unallocated   component  is
         maintained  to  cover  uncertainties  that  could  affect  management's
         estimate of probable losses. The unallocated component of the allowance
         reflects  the  margin  of   imprecision   inherent  in  the  underlying
         assumptions  used in the  methodologies  for  estimating  specific  and
         general losses in the portfolio.

         A loan is considered  impaired when,  based on current  information and
         events,  it is probable  that the Company will be unable to collect the
         scheduled  payments of principal or interest  when due according to the
         contractual  terms  of  the  loan  agreement.   Factors  considered  by
         management in determining impairment include payment status, collateral
         value,  and the  probability  of  collecting  scheduled  principal  and
         interest payments when due. Loans that experience insignificant payment
         delays and payment shortfalls generally are not classified as impaired.
         Impairment is measured on a loan by loan basis by the fair value of the
         existing collateral.

         Large  groups of smaller  balance  homogeneous  loans are  collectively
         evaluated for impairment.  Accordingly, the Company does not separately
         identify individual consumer loans for impairment disclosures.

         Premises and equipment

         Land  is  carried  at  cost.  Buildings,   leasehold  improvements  and
         equipment  are  stated  at  cost  less  accumulated   depreciation  and
         amortization.  Depreciation and amortization is computed principally on
         the straight-line  method over the estimated useful lives of the assets
         or the expected terms of the leases, if shorter. Expected terms include
         lease option periods to the extent that the exercise of such options is
         reasonably assured.

         Bank-owned life insurance

         Income from  bank-owned  life  insurance is recognized in  non-interest
         income based upon increase in the cash surrender value of the policies.

                                      F-11
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Transfers of financial assets

         Transfers of financial assets are accounted for as sales,  when control
         over the assets has been surrendered.  Control over transferred  assets
         is deemed to be surrendered when (1) the assets have been isolated from
         the Company,  (2) the transferee  obtains the right (free of conditions
         that  constrain  it from taking  advantage  of that right) to pledge or
         exchange the transferred  assets, and (3) the Company does not maintain
         effective  control over the transferred  assets through an agreement to
         repurchase them before their maturity.

         Income taxes

         Deferred tax assets and liabilities are reflected at currently  enacted
         income tax rates  applicable  to the period in which the  deferred  tax
         assets or  liabilities  are  expected to be  realized  or  settled.  As
         changes  in tax laws or rates are  enacted,  deferred  tax  assets  and
         liabilities are adjusted  accordingly  through the provision for income
         taxes.  The Company's base amount of its federal income tax reserve for
         loan losses is a permanent difference for which there is no recognition
         of  a  deferred  tax  liability.   However,  the  loan  loss  allowance
         maintained for financial  reporting purposes is a temporary  difference
         with allowable  recognition of a related  deferred tax asset,  if it is
         deemed realizable.

         Advertising costs

         Advertising costs are expensed when incurred.

         Employee Stock Ownership Plan ("ESOP")

         Compensation  expense is  recognized  based on the fair value of shares
         committed  to be  released  to the  ESOP  participants.  The  value  of
         unallocated  shares to be  allocated  to ESOP  participants  for future
         services not yet performed is reflected as a reduction of stockholders'
         equity.

         Earnings per share

         Basic  earnings  (loss) per share  represents  income (loss)  available
         (attributable) to common stockholders  divided by the  weighted-average
         number of common shares outstanding during the period. Diluted earnings
         per share reflects  additional common shares (common stock equivalents)
         that would have been  outstanding if dilutive  potential  common shares
         had been issued, as well as any adjustment to income or loss that would
         result from the  assumed  issuance.  The  Company  has no common  stock
         equivalents.

                                      F-12
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Comprehensive income (loss)

         Accounting   principles  generally  require  that  recognized  revenue,
         expenses,  gains and losses be included in operating results.  Although
         certain changes in assets and liabilities, such as unrealized gains and
         losses on  available-for-sale  securities,  are  reported as a separate
         component  of the  stockholders'  equity  section  of the  consolidated
         balance  sheet,  such items,  along with net income,  are components of
         comprehensive income (loss).

         The  components  of other  comprehensive  income (loss) and related tax
         effects are as follows:

                                                  Years Ended June 30,
                                                  --------------------
                                                    2007        2006
                                                  --------    --------
                                                     (In thousands)
         Unrealized holding gains (losses)
           on available-for-sale securities       $    240    $   (557)
         Reclassification adjustment for losses
             realized in income                         --          56
                                                  --------    --------
         Net unrealized gains (losses)                 240        (501)
         Tax effect                                    (89)        188
                                                  --------    --------

         Net-of-tax amount                        $    151    $   (313)
                                                  ========    ========

         Recent accounting pronouncements

         In July 2006, the Financial  Accounting Standards Board ("FASB") issued
         Financial  Accounting  Standards  Interpretation No. 48, Accounting for
         Uncertainty in Income Taxes ("FIN 48"). FIN 48 clarifies the accounting
         for  uncertainty  in income taxes  recognized in an entity's  financial
         statements in accordance  with FASB  Statement No. 109,  Accounting for
         Income Taxes. FIN 48 prescribes a recognition threshold and measurement
         attribute for the financial statement  recognition and measurement of a
         tax position taken or expected to be taken in a tax return. FIN 48 also
         provides  guidance  on  derecognition,   classification,  interest  and
         penalties,  accounting in interim periods, disclosures and transitions.
         FIN 48 is  effective  for the  Company's  2008  fiscal  year and is not
         expected  to  have a  material  impact  on the  Company's  consolidated
         financial statements.

         In  September  2006,  the FASB issued  Statement  No.  157,  Fair Value
         Measurements.   This  Statement  defines  fair  value,   establishes  a
         framework  for  measuring  fair  value  in  accordance  with  generally
         accepted  accounting  principles,  and expands  disclosures  about fair
         value measurements. This Statement is effective for the Company on July
         1, 2008 and is not expected to have a material  impact on the Company's
         consolidated financial statements.

                                      F-13
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Recent accounting pronouncements (continued)

         In September 2006, the Securities and Exchange  Commission issued Staff
         Accounting  Bulletin  ("SAB")  No.  108,  which  provides  interpretive
         guidance on how the effects of the  carryover or reversal of prior year
         misstatements  should be considered in quantifying a potential  current
         year  misstatement.  Prior  to  which,  companies  might  evaluate  the
         materiality  of  financial-statement  misstatements  using  either  the
         income  statement or balance sheet approach,  with the income statement
         approach focusing on new  misstatements  added in the current year, and
         the  balance  sheet  approach  focusing  on the  cumulative  amount  of
         misstatement  present in a company's balance sheet.  Misstatements that
         would be  material  under one  approach  could be viewed as  immaterial
         under another approach, and not be corrected. SAB 108 now requires that
         companies view financial  statement  misstatements  as material if they
         are material  according to either the income statement or balance sheet
         approach.  SAB 108 is applicable to all financial  statements issued by
         the Company for the year ended June 30, 2007.

         In September  2006, the Emerging  Issues Task Force ("EITF")  reached a
         consensus on Issue No. 06-4,  "Accounting for Deferred Compensation and
         Postretirement   Benefit  Aspects  of  Endorsement   Split-Dollar  Life
         Insurance   Arrangements."   This  issue   addresses   accounting   for
         split-dollar life insurance arrangements whereby the employer purchases
         a policy to insure the life of an employee,  and separately enters into
         an agreement to split the policy benefits  between the employer and the
         employee.  This EITF states that the obligation arises as a result of a
         substantive agreement with an employee to provide future postretirement
         benefits.  Under EITF 06-4, the obligation is not settled upon entering
         into an insurance  arrangement.  Since the obligation is not settled, a
         liability   should  be  recognized  in   accordance   with   applicable
         authoritative  guidance.  EITF 06-4 is effective for the Company's 2009
         fiscal  year  and is not  expected  to have a  material  impact  on the
         Company's consolidated financial statements.

         In February  2007,  the FASB issued  Statement  No. 159, The Fair Value
         Option for Financial Assets and Financial  Liabilities,  which provides
         companies  with an option  to  report  selected  financial  assets  and
         liabilities  at  fair  value.   Statement  No.  159  also   establishes
         presentation  and  disclosure   requirements   designed  to  facilitate
         comparisons   between  companies  that  choose  different   measurement
         attributes for similar types of assets and liabilities.  This Statement
         is  effective  for the  Company on July 1, 2008 and is not  expected to
         have  a  material  impact  on  the  Company's   consolidated  financial
         statements.

                                      F-14
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)

         Recent accounting pronouncements (concluded)

         In March  2007,  the EITF  reached  a  consensus  on Issue  No.  06-10,
         Accounting  for  Collateral  Assignment   Split-Dollar  Life  Insurance
         Arrangements.  Under this EITF, effective for the Company's 2009 fiscal
         year,   the  Company  is  required   to   recognize  a  liability   for
         postretirement  benefits related to collateral assignment  split-dollar
         life insurance arrangements,  and may choose to retroactively apply the
         accounting change to all periods presented,  or to cumulatively  adjust
         the  financial  statements as of the beginning of the year of adoption.
         This  statement  is not  expected  to  have a  material  impact  on the
         Company's consolidated financial statements.

3.       RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS

         The Company is required  to maintain  average  balances on hand or with
         the Federal  Reserve  Bank.  At June 30, 2007 and 2006,  these  reserve
         balances amounted to $1,183,000 and $1,110,000, respectively.

4.       SHORT-TERM INVESTMENTS

         A  summary  of  short-term  investments,  included  in  cash  and  cash
         equivalents, is as follows:

                                          At June 30,
                                      -------------------
                                        2007       2006
                                      --------   --------
                                         (In thousands)

         FHLB Ideal Way               $      6   $      6
         FHLB overnight funds              200         --
         Federal funds sold              1,359        668
         Shay Asset Management Fund         88         46
                                      --------   --------

                                      $  1,653   $    720
                                      ========   ========

                                      F-15
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


5.       SECURITIES

         A summary of securities is as follows:
<table>
<caption>
                                                            Gross        Gross
                                             Amortized    Unrealized   Unrealized       Fair
                                                Cost        Gains        Losses        Value
                                             ----------   ----------   ----------    ----------
                                                              (In thousands)

                                          <c>          <c>          <c>           <c>
         At June 30, 2007
         ----------------
         Securities available for sale
         -----------------------------

             Government-sponsored
                 enterprises                 $    3,000   $       --   $      (22)   $    2,978
             Mortgage-backed securities           9,973            2         (263)        9,712
                                             ----------   ----------   ----------    ----------

                    Total securities
                        available for sale   $   12,973   $        2   $     (285)   $   12,690
                                             ==========   ==========   ==========    ==========

         Securities held to maturity
         ---------------------------

             Government-sponsored
                 enterprises                 $      500   $       --   $       (1)   $      499
             Mortgage-backed securities           7,682            3         (216)        7,469
                                             ----------   ----------   ----------    ----------

                    Total securities
                        held to maturity     $    8,182   $        3   $     (217)   $    7,968
                                             ==========   ==========   ==========    ==========
         At June 30, 2006
         ----------------
         Securities available for sale
         -----------------------------

             Government-sponsored
                 enterprises                 $    4,000   $       --   $      (79)   $    3,921
             Mortgage-backed securities          11,988            1         (445)       11,544
                                             ----------   ----------   ----------    ----------

                    Total securities
                        available for sale   $   15,988   $        1   $     (524)   $   15,465
                                             ==========   ==========   ==========    ==========

         Securities held to maturity
         ---------------------------

             Government-sponsored
                 enterprises                 $      500   $       --   $      (12)   $      488
             Mortgage-backed securities           9,323            2         (360)        8,965
                                             ----------   ----------   ----------    ----------

                    Total securities
                        held to maturity     $    9,823   $        2   $     (372)   $    9,453
                                             ==========   ==========   ==========    ==========
</table>

                                      F-16
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SECURITIES (continued)

         The  amortized  cost and  estimated  fair value of debt  securities  by
         contractual  maturity  at  June  30,  2007  is  as  follows.   Expected
         maturities will differ from contractual  maturities because issuers may
         have the right to call or prepay  obligations  with or without  call or
         prepayment penalties.

                                  Available for Sale         Held to Maturity
                               -----------------------   -----------------------
                               Amortized      Fair       Amortized       Fair
                                  Cost        Value         Cost        Value
                               ----------   ----------   ----------   ----------
                                                (In thousands)
         Within 1 year         $    2,000   $    1,989   $      500   $      499
         After 1 year through
             5 years                1,000          989           --           --
                               ----------   ----------   ----------   ----------
                                    3,000        2,978          500          499
         Mortgage-backed
             securities             9,973        9,712        7,682        7,469
                               ----------   ----------   ----------   ----------

                               $   12,973   $   12,690   $    8,182   $    7,968
                               ==========   ==========   ==========   ==========

         There were no sales of securities available for sale for the year ended
         June 30, 2007. For the year ended June 30, 2006, proceeds from the sale
         of securities  available for sale amounted to $2,944,000  with realized
         losses of $56,000.


                                      F-17
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SECURITIES (continued)

         Information  pertaining  to  securities  with gross  unrealized  losses
         aggregated  by investment  category and length of time that  individual
         securities have been in a continuous loss position, is as follows:
<table>
<caption>
                                                 Less Than Twelve Months  Greater Than Twelve Months
                                                 -----------------------  --------------------------
                                                   Gross                     Gross
                                                 Unrealized      Fair      Unrealized     Fair
                                                   Losses       Value        Losses       Value
                                                 ----------   ----------   ----------   ----------
                                                                  (In thousands)

                                                       <c>        <c>          <c>        <c>
         At June 30, 2007:
         -----------------

         Securities available for sale
         -----------------------------

             Government-sponsored
                 enterprises                     $        1   $      499   $       21   $    2,479
             Mortgage-backed securities                  --           --          263        9,354
                                                 ----------   ----------   ----------   ----------
                    Total securities available
                        for sale                          1          499          284       11,833
                                                 ----------   ----------   ----------   ----------

         Securities held to maturity
         ---------------------------

             Government-sponsored
                 enterprises                             --           --            1          499
             Mortgage-backed securities                   2          219          214        6,959
                                                 ----------   ----------   ----------   ----------
                    Total securities held
                        to maturity                       2          219          215        7,458
                                                 ----------   ----------   ----------   ----------

                    Total temporarily impaired
                        securities               $        3   $      718   $      499   $   19,291
                                                 ==========   ==========   ==========   ==========
</table>

                                      F-18
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         SECURITIES (concluded)

<table>
<caption>
                                                 Less Than Twelve Months  Greater Than Twelve Months
                                                 -----------------------  --------------------------
                                                   Gross                     Gross
                                                 Unrealized      Fair      Unrealized     Fair
                                                   Losses       Value        Losses       Value
                                                 ----------   ----------   ----------   ----------
                                                                  (In thousands)

                                                       <c>        <c>          <c>        <c>
         At June 30, 2006:
         -----------------

         Securities available for sale
         -----------------------------

             Government-sponsored
                 enterprises                     $       41   $    1,959   $       38   $    1,962
             Mortgage-backed securities                 145        4,575          300        6,476
                                                 ----------   ----------   ----------   ----------
                    Total securities available
                        for sale                        186        6,534          338        8,438
                                                 ----------   ----------   ----------   ----------

         Securities held to maturity
         ---------------------------

             Government-sponsored
                 enterprises                             --           --           12          488
             Mortgage-backed securities                 129        3,047          231        5,701
                                                 ----------   ----------   ----------   ----------
                    Total securities held
                        to maturity                     129        3,047          243        6,189
                                                 ----------   ----------   ----------   ----------

                    Total temporarily impaired
                        securities               $      315   $    9,581   $      581   $   14,627
                                                 ==========   ==========   ==========   ==========
</table>

         At June 30, 2007, sixteen securities  classified as  available-for-sale
         and  eight  debt  securities   classified  as  held-to-maturity,   have
         unrealized  losses  with  aggregate   depreciation  of  2.5%  from  the
         Company's amortized cost basis.  Whereas these unrealized losses relate
         principally to  government-sponsored  enterprises  and  mortgage-backed
         securities,  are the  result  of  fluctuations  in  interest  rates and
         management has the intent and ability to hold these debt securities for
         the  foreseeable  future,  no  declines  are  deemed  to be other  than
         temporary.

                                      F-19
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


6.       LOANS

         A summary of loans is as follows:

                                                           At June 30,
                                                     ----------------------
                                                        2007         2006
                                                     ---------    ---------
                                                         (In thousands)
         Mortgage loans on real estate:
             One-to-four family residential          $  94,806    $  95,478
             Multi-family and commercial                14,556       11,891
             Construction                                5,987        9,529
             Home equity loans and lines of credit      10,304       10,614
                                                     ---------    ---------
                       Total mortgage loans            125,653      127,512
                                                     ---------    ---------

         Other loans:
             Consumer                                      763          617
             Commercial                                  2,157        1,486
                                                     ---------    ---------
                       Total other loans                 2,920        2,103
                                                     ---------    ---------

                       Total loans                     128,573      129,615
             Allowance for loan losses                  (1,079)      (1,016)
             Net deferred loan costs                       165          179
                                                     ---------    ---------

                       Loans, net                    $ 127,659    $ 128,778
                                                     =========    =========

         An analysis of the allowance for loan losses is as follows:

                                                      Years Ended June 30,
                                                     ----------------------
                                                        2007         2006
                                                     ---------    ---------
                                                         (In thousands)

         Balance at beginning of year                $   1,016    $     882
         Provision for loan losses                         105          108
         Recoveries                                         20           34
         Charge-offs                                       (62)          (8)
                                                     ---------    ---------

         Balance at end of year                      $   1,079    $   1,016
                                                     =========    =========

                                      F-20
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         LOANS (concluded)

         The  following is a summary of  information  pertaining to impaired and
         non-accrual loans:
<table>
<caption>
                                                                           At June 30,
                                                                       -------------------
                                                                         2007       2006
                                                                       --------   --------
                                                                         (In thousands)

                                                                    <c>        <c>
         Impaired loans without a valuation allowance                  $  2,266   $     --

         Impaired loans with a valuation allowance                           --      1,479
                                                                       --------   --------

         Total impaired loans                                          $  2,266   $  1,479
                                                                       ========   ========

         Valuation allowance related to impaired loans                 $     --   $    231
                                                                       ========   ========

         Total non-accrual loans                                       $    565   $    840
                                                                       ========   ========

         Total loans past due ninety days or more and still accruing   $     --   $     60
                                                                       ========   ========
<caption>

                                                                       Years Ended June 30,
                                                                       -------------------
                                                                         2007       2006
                                                                       --------   --------
                                                                         (In thousands)

                                                                    <c>        <c>
         Average investment in impaired loans                          $  1,796   $    559
                                                                       ========   ========

         Interest income recognized on impaired loans                  $    108   $     20
                                                                       ========   ========

         Interest income recognized on a cash basis
             on impaired loans                                         $     58   $      8
                                                                       ========   ========
</table>

         At June 30, 2007,  additional  funds of $290,000  were  committed to be
         advanced in connection  with one impaired loan. No funds were committed
         to be advanced in connection with impaired loans at June 30, 2006.

         At June 30, 2007 and 2006,  mortgage loans serviced for others amounted
         to  approximately  $518,000  and  $558,000,   respectively.  All  loans
         serviced for others were sold without recourse provisions.

                                      F-21
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


7.       PREMISES AND EQUIPMENT

         A summary of premises and equipment is as follows:
<table>
<caption>
                                                At June 30,
                                          ------------------------      Estimated
                                             2007          2006       Useful Lives
                                          ----------    ----------    ------------
                                               (In thousands)

                                            <c>           <c>      <c>
         Premises:
         Land                             $      279    $      279
         Buildings and improvements            4,738         4,742    5 - 40 years
         Equipment                             1,893         1,844    3 - 7 years
                                          ----------    ----------
                                               6,910         6,865
         Less accumulated depreciation
             and amortization                 (2,094)       (1,635)
                                          ----------    ----------

                                          $    4,816    $    5,230
                                          ==========    ==========
</table>

         Depreciation and amortization expense for the years ended June 30, 2007
         and 2006 amounted to $460,000 and $436,000, respectively.

8.       DEPOSITS

         A summary of deposit balances is as follows:

                                                            At June 30,
                                                         -----------------
                                                           2007      2006
                                                         -------   -------
                                                           (In thousands)

         Demand                                          $11,215   $12,423
         NOW                                              11,539     7,562
         Money market deposits                            22,832    21,706
         Regular and other savings                        11,914    15,008
                                                         -------   -------
                        Total non-certificate accounts    57,500    56,699
                                                         -------   -------

         Term certificates less than $100,000             24,284    26,715
         Term certificates of $100,000 or more            16,172    14,295
                                                         -------   -------
                        Total certificate accounts        40,456    41,010
                                                         -------   -------

                        Total deposits                   $97,956   $97,709
                                                         =======   =======

                                      F-22
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         DEPOSITS (concluded)

         A summary of certificate  accounts,  by maturity,  at June 30, 2007 and
         2006, is as follows:
<table>
<caption>
                                              2007                            2006
                                  ----------------------------    ----------------------------
                                                    Weighted                        Weighted
                                                     Average                        Average
                                     Amount           Rate           Amount           Rate
                                  ------------    ------------    ------------    ------------
                                                       (Dollars in thousands)

                              <c>                     <c>     <c>                     <c>
         Within 1 year            $     30,456            4.48%   $     22,957            4.31%
         Over 1 year to 3 years          7,443            4.13          15,332            3.83
         Over 3 years                    2,557            4.58           2,721            4.33
                                  ------------                    ------------

                                  $     40,456            4.42%   $     41,010            4.13%
                                  ============                    ============
</table>

         At June 30, 2006,  included in certificates of deposit  maturing within
         one year are brokered  certificates of deposit  amounting to $2,005,000
         with  a  weighted  average  rate  of  5.39%.   There  are  no  brokered
         certificates of deposit at June 30, 2007.

9.       FEDERAL HOME LOAN BANK ("FHLB") ADVANCES

         Short-term FHLB advances

         Short-term FHLB advances  consist of advances  maturing within one year
         at a  weighted  average  rate of 5.27% and  4.91% at June 30,  2007 and
         2006, respectively.

         The Company also has a $3,780,000  line-of-credit with the Federal Home
         Loan Bank ("FHLB").  There were no amounts outstanding at June 30, 2007
         and 2006. At June 30, 2007,  all FHLB  borrowings  are secured by first
         mortgage loans on owner-occupied  residential property in the amount of
         $85,276,000    and    obligations   of   the   U.S.    government   and
         government-sponsored   enterprises,   which  have  a  market  value  of
         $3,300,000.

                                      F-23
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         FEDERAL HOME LOAN BANK ("FHLB") ADVANCES (concluded)

         Long-term FHLB advances

         At June 30, 2007 and 2006, long-term FHLB advances are as follows:
<table>
<caption>
                                                2007                        2006
                                      ------------------------    ------------------------
                                                     Weighted                    Weighted
                                                      Average                    Average
                                        Amount         Rate         Amount         Rate
                                      ----------    ----------    ----------    ----------
                                      (Dollars in thousands)       (Dollars in thousands)

                                      <c>            <c>          <c>            <c>
         Fixed maturity:
                   2007               $       --            --%   $    3,500          3.44%
                   2008*                   6,100          4.54         4,100          4.25
                   2009*                  16,000          4.46        15,500          4.44
                   2010*                   7,000          5.09         1,000          5.62
                   2011*                   5,500          4.95         4,500          4.72
                   2012*                   3,000          5.04            --            --
                                      ----------                  ----------
                                          37,600          4.71        28,600          4.38
         Amortizing advance,
             due March 5, 2012,
             requiring monthly
             principal and interest
             of $5,300                       273          4.90           321          4.90
                                      ----------                  ----------

                                      $   37,873          4.71%   $   28,921          4.38%
                                      ==========                  ==========
</table>

         * Includes  advances  callable in 2008  aggregating  $6,000,000  with a
           weighted average rate of 4.10%.


                                      F-24
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


10.      SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

         Securities  sold under  agreements to repurchase  mature within one day
         from the transaction date. Information concerning securities sold under
         agreements to repurchase is summarized as follows:

                                                              At or for the
                                                           Years Ended June 30,
                                                           --------------------
                                                             2007        2006
                                                           --------    --------
                                                          (Dollars in thousands)

         Balance at year-end                               $    869    $    762
         Average balance during the year                        817         751
         Maximum month-end balance during the year              898         899
         Average interest rate during the year                 1.00%       1.00%

         Government-sponsored enterprises underlying the
            agreements at year-end are as follows:

             Carrying value                                $  1,998    $  2,473
             Estimated fair value                             1,997       2,462

         Securities sold under  agreements to repurchase are funds borrowed from
         customers   on  an   overnight   basis,   the   amount  of   securities
         collateralizing  the agreements to repurchase remains in securities and
         the  obligation  to  repurchase  securities  sold  is  reflected  as  a
         liability in the consolidated balance sheets.

11.      INCOME TAXES

         Allocation  of federal  and state  income  taxes  between  current  and
         deferred portions is as follows:

                                           Years Ended June 30,
                                           --------------------
                                             2007       2006
                                           -------    -------
                                             (In thousands)
         Current tax (benefit) expense:
             Federal                       $   (72)   $  (153)
             State                              12         18
                                           -------    -------
                                               (60)      (135)
                                           -------    -------
         Deferred tax (benefit) expense:
             Federal                          (164)       (40)
             State                             (19)         2
                                           -------    -------
                                              (183)       (38)
                                           -------    -------

                      Total tax benefit    $  (243)   $  (173)
                                           =======    =======


                                      F-25
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         INCOME TAXES (continued)

         The differences  between the statutory  federal income tax rate and the
         effective tax rates are summarized as follows:

                                                       Years Ended June 30,
                                                       -------------------
                                                         2007        2006
                                                       -------     -------

         Statutory rate                                  (34.0)%     (34.0)%
         Increase (decrease) resulting from:
             State taxes, net of federal tax benefit      (0.7)        2.4
             Bank-owned life insurance                    (2.3)       (2.5)
             Other, net                                    2.6         2.8
                                                       -------     -------

         Effective tax rates                             (34.4)%     (31.3)%
                                                       =======     =======

         The components of the net deferred tax asset at June 30, 2007 and 2006,
         included in other assets, are as follows:

                                                        2007        2006
                                                       -------     -------
                                                          (In thousands)
         Deferred tax liability:
             Federal                                    $   367    $   455
             State                                           96        113
                                                        -------    -------
                                                            463        568
                                                        -------    -------
         Deferred tax asset:
             Federal                                       (549)      (551)
             State                                         (144)      (153)
                                                        -------    -------
                                                           (693)      (704)
                                                        -------    -------

         Net deferred tax asset                         $  (230)   $  (136)
                                                        =======    =======

                                      F-26
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

         INCOME TAXES (concluded)

         At June 30, 2007 and 2006, the tax effects of each item that gives rise
         to deferred taxes are as follows:

                                                   2007      2006
                                                  ------    ------
                                                   (In thousands)

         Cash basis of accounting                 $  (36)   $  (34)
         Net unrealized gain/loss on securities
             available for sale                     (104)     (193)
         Depreciation and amortization               392       455
         Allowance for loan losses                  (441)     (398)
         Net operating loss carryover                (64)       --
         Other, net                                   23        34
                                                  ------    ------

         Net deferred tax asset                   $ (230)   $ (136)
                                                  ======    ======

         A summary of the change in the net deferred tax asset is as follows:

                                                        Years Ended June 30,
                                                        -------------------
                                                           2007      2006
                                                          ------    ------
                                                           (In thousands)

         Balance at beginning of year                     $ (136)   $   90
         Deferred tax benefit                               (183)      (38)
         Deferred tax effects on net unrealized
             gain/loss on securities available for sale       89      (188)
                                                          ------    ------

         Balance at end of year                           $ (230)   $ (136)
                                                          ======    ======

         At June 30, 2007,  the Company has a capital loss carryover of $61,000,
         of which $10,000  expires on June 30, 2010 and $51,000  expires on June
         30, 2011. Additionally,  the Company has a net operating loss carryover
         of $188,000 which expires on June 30, 2027.

         The federal  income tax reserve for loan losses at the  Company's  base
         year is  $723,000.  If any portion of the reserve is used for  purposes
         other  than to absorb  loan  losses,  approximately  150% of the amount
         actually used (limited to the amount of the reserve),  would be subject
         to taxation in the fiscal year in which used. As the Company intends to
         use the reserve solely to absorb loan losses,  a deferred tax liability
         of $297,000 has not been provided.

                                      F-27
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.      MINIMUM REGULATORY CAPITAL REQUIREMENTS

         The  Company  (on a  consolidated  basis)  and the Bank are  subject to
         various regulatory capital  requirements  administered by the Office of
         Thrift  Supervision.  Failure to meet minimum capital  requirements can
         initiate  certain  mandatory  and  possibly  additional   discretionary
         actions by regulators that, if undertaken, could have a direct material
         effect  on  the  Company's  consolidated  financial  statements.  Under
         capital  adequacy  guidelines and the  regulatory  framework for prompt
         corrective  action, the Company and the Bank must meet specific capital
         guidelines  that  involve   quantitative   measures  of  their  assets,
         liabilities  and certain  off-balance-sheet  items as calculated  under
         regulatory accounting practices. The capital amounts and classification
         are also  subject to  qualitative  judgments  by the  regulators  about
         components,  risk  weightings,  and other  factors.  Prompt  corrective
         action  provisions  are not  applicable  to  savings  and loan  holding
         companies.

         Quantitative  measures  established  by  regulation  to ensure  capital
         adequacy  require the Company and the Bank to maintain  minimum amounts
         and ratios of Total and Tier 1 capital (as  defined)  to  risk-weighted
         assets (as defined),  Tier 1 capital (as defined) to average assets (as
         defined)  and the  Bank to  maintain  a  minimum  amount  and  ratio of
         tangible   capital  (as  defined)  to  tangible  assets  (as  defined).
         Management believes, as of June 30, 2007 and 2006, that the Company and
         the Bank  meet all  capital  adequacy  requirements  to which  they are
         subject.


                                      F-28
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         MINIMUM REGULATORY CAPITAL REQUIREMENTS (continued)

         As of June 30, 2007,  the most recent  notification  from the Office of
         Thrift  Supervision  categorized the Bank as well capitalized under the
         regulatory framework for prompt corrective action. To be categorized as
         well capitalized, the Bank must maintain minimum Total risk-based, Tier
         1 risk-based,  Tier 1 leverage and tangible  ratios as set forth in the
         following  table.   There  are  no  conditions  or  events  since  that
         notification that management believes have changed the Bank's category.
         The Company's and the Bank's  actual  capital  amounts and ratios as of
         June 30, 2007 and 2006 are also presented in the table.
<table>
<caption>
                                                                                                       Minimum
                                                                                                     To Be Well
                                                                                Minimum           Capitalized Under
                                                                                Capital           Prompt Corrective
                                                         Actual               Requirement         Action Provisions
                                                   -------------------    -------------------    -------------------
                                                    Amount     Ratio       Amount     Ratio       Amount     Ratio
                                                   --------   --------    --------   --------    --------   --------
                                                                        (Dollars in thousands)

                                                  <c>          <c>        <c>          <c>       <c>          <c>
         At June 30, 2007:

         Total Capital to Risk Weighted Assets:
             Company                               $ 18,868       17.3%   $  8,701        8.0%        N/A        N/A
             Bank                                    16,122       14.8       8,701        8.0    $ 10,876       10.0%
         Tier 1 Capital to Risk Weighted Assets:
             Company                                 17,789       16.4       4,350        4.0         N/A        N/A
             Bank                                    15,043       13.8       4,350        4.0       6,526        6.0
         Tier 1 Capital to Average Assets:
             Company                                 17,789       10.8       6,605        4.0         N/A        N/A
             Bank                                    15,043        9.1       6,605        4.0       8,257        5.0
         Tangible Capital to Tangible Assets:
             Company                                    N/A        N/A         N/A        N/A         N/A        N/A
             Bank                                    15,043        9.1       2,477        1.5         N/A        N/A

         At June 30, 2006:

         Total Capital to Risk Weighted Assets:
             Company                               $ 20,005       18.1%   $  8,857        8.0%        N/A        N/A
             Bank                                    16,454       14.9       8,857        8.0    $ 11,071       10.0%
         Tier 1 Capital to Risk Weighted Assets:
             Company                                 18,989       17.2       4,428        4.0         N/A        N/A
             Bank                                    15,441       13.9       4,428        4.0       6,642        6.0
         Tier 1 Capital to Average Assets:
             Company                                 18,989       11.6       6,537        4.0         N/A        N/A
             Bank                                    15,441        9.4       6,537        4.0       8,171        5.0
         Tangible Capital to Tangible Assets:
             Company                                    N/A        N/A         N/A        N/A         N/A        N/A
             Bank                                    15,441        9.4       2,451        1.5         N/A        N/A

</table>

                                      F-29
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         MINIMUM REGULATORY CAPITAL REQUIREMENTS (concluded)

         Other capital restrictions

         Federal  banking  regulations  place certain  restrictions on dividends
         paid, stock repurchases and other  transactions  charged to the capital
         accounts of the Bank.  Capital  distributions  in the form of dividends
         paid to the  Bank's  stockholder  for any one year may not  exceed  the
         Bank's net income  for the year to date plus the  Bank's  retained  net
         income for the preceding two years.  In addition,  dividends paid would
         be prohibited if the effect  thereof would cause the Bank's  capital to
         be reduced below applicable minimum capital requirements.

         The  following  is  a  reconciliation   of  the  Company's   accounting
         principles  generally  accepted in the United States (GAAP)  capital to
         regulatory Tier 1 capital:

<table>
<caption>
                                                                    At June 30,
                                                                 -----------------
                                                                  2007       2006
                                                                 -------   -------
                                                                   (In thousands)

                                                                <c>       <c>
         Consolidated GAAP capital                               $17,610   $18,659
         Less: Unrealized losses on certain available-for-sale
                   securities, net of tax                            179       330
                                                                 -------   -------
         Tier 1 capital                                           17,789    18,989
         Plus: Allowance for loan losses                           1,079     1,016
                                                                 -------   -------

         Total regulatory capital                                $18,868   $20,005
                                                                 =======   =======
</table>

13.      EMPLOYEE BENEFIT PLANS

         401(k) plan

         The Bank provides a savings and  retirement  plan for  employees  which
         qualifies  under Section 401(k) of the Internal  Revenue Code. The plan
         provides for voluntary contributions by participating employees ranging
         from one percent to fifteen percent of their  compensation,  subject to
         certain  limitations.  In  addition,  the  Bank  will  make a  matching
         contribution,  equal to 50% of the employee's contribution.  The Bank's
         matching  contribution  will not exceed 3% of an employee's  salary. In
         addition, the Bank may make a discretionary  contribution not to exceed
         3% of an employee's salary. For the years ended June 30, 2007 and 2006,
         expense  attributable  to the plan  amounted  to $76,000  and  $83,000,
         respectively.

                                      F-30
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         EMPLOYEE BENEFIT PLANS (concluded)

         Incentive plan

         The Company has an Incentive  Plan (the "Plan")  whereby all  employees
         are eligible to receive a bonus if the Company meets or exceeds certain
         base standards of performance for its fiscal year. The structure of the
         Plan is to be  reviewed on an annual  basis by the Board of  Directors.
         There  was  no  incentive  compensation  expense  for  June  30,  2007.
         Incentive  compensation  expense  for the  year  ended  June  30,  2006
         amounted to $50,000.

         Executive supplemental retirement agreements

         The  Company  has  supplemental   retirement  agreements  with  certain
         executive officers, which provide for the payment of specified benefits
         upon  retirement.  In  connection  with these  agreements  the Bank has
         entered into  split-dollar  collateral  assignments  of life  insurance
         policies, included in other assets, on behalf of the executives whereby
         the  Company  holds  collateral  assignments  equal  to the  amount  of
         premiums paid by the Company. It was determined that the cash surrender
         values of such  policies  would not be sufficient to fulfill the entire
         liability under these agreements. For the years ended June 30, 2007 and
         2006,  compensation expense applicable to these agreements and recorded
         in the  accompanying  financial  statements  amounted  to  $22,000  and
         $33,000, respectively.

14.      EMPLOYEE STOCK OWNERSHIP PLAN

         The Bank  established  an ESOP for the benefit of each employee who has
         reached the age of 21 and has completed at least 1,000 hours of service
         in the previous  twelve-month  period. The ESOP is funded by the Bank's
         contributions  of cash.  Benefits may be paid in shares of common stock
         or in cash, subject to the employees' right to demand shares.

         The ESOP  had a loan  agreement  with  Georgetown  Funding  Corporation
         whereby $1,000,000 was borrowed for the purpose of purchasing shares of
         the  Company's  common  stock.  The loan  has  eight  remaining  annual
         principal and interest payments of $117,000 and one payment of $57,000,
         all of which are due on the last  business  day of each year.  The loan
         documents  provide  that the loan may be repaid over a shorter  period,
         without penalty for prepayments.  On July 6, 2006,  Georgetown  Funding
         Corporation  was dissolved and the loan  receivable was  transferred to
         the Company.


                                      F-31
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         EMPLOYEE STOCK OWNERSHIP PLAN (concluded)

         The remaining  principal  balance on the ESOP debt at June 30, 2007, is
         payable as follows:

                 Year Ending
                   June 30,                                Amount
               -----------------                         ----------
                                                       (In thousands)

                     2008                                $       61
                     2009                                        65
                     2010                                        71
                     2011                                        76
                     2012                                        83
                  Thereafter                                    343
                                                         ----------

                                                         $      699
                                                         ==========

         The Bank has committed to make  contributions to the ESOP sufficient to
         support the debt  service of the loan.  The loan is only secured by the
         shares  purchased,  which are held in a suspense account for allocation
         among the participants as the loan is paid. Total compensation  expense
         applicable  to the ESOP  amounted  to $72,000  and $67,000 for the year
         ended June 30, 2007 and 2006, respectively.

         Shares  held  by the  ESOP  at June  30,  2007  and  2006  include  the
         following:

                                       2007       2006
                                     --------   --------

         Allocated                     30,422     22,229
         Committed to be allocated      4,096      4,099
         Unallocated                   65,463     73,653
                                     --------   --------

                                       99,981     99,981
                                     ========   ========

         Any cash dividends  received on allocated  shares would be allocated to
         members and cash dividends received on shares held in suspense would be
         applied to repay the  outstanding  debt of the ESOP.  The fair value of
         unallocated  ESOP  shares  at June 30,  2007 and 2006 is  $517,000  and
         $644,000,  respectively.  No  dividends  have  been paid to date by the
         Company.


                                      F-32
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


15.      OTHER COMMITMENTS AND CONTINGENCIES

         Loan commitments

         The Company is a party to financial  instruments with off-balance sheet
         risk in the normal  course of business to meet the  financing  needs of
         its  customers.  These  financial  instruments  include  commitments to
         extend credit,  which involve elements of credit and interest rate risk
         in excess of the amount  recognized  in the  accompanying  consolidated
         balance sheets. The Company's exposure to credit loss is represented by
         the contractual  amount of the  instruments.  The Company uses the same
         credit policies in making  commitments as it does for  on-balance-sheet
         instruments.  At June 30, 2007 and 2006,  financial  instruments  whose
         contract amounts represent credit risk consist of the following:

                                                             2007      2006
                                                           -------   -------
                                                             (In thousands)

         Commitments to grant loans                        $ 3,055   $ 3,279
         Unadvanced funds on home equity lines of credit    11,647    11,761
         Unadvanced funds on commercial lines of credit      1,869     1,242
         Unadvanced funds on construction loans              3,789     2,861
         Unadvanced funds on other unsecured personal
              lines of credit                                  504       532

         Commitments  to extend  credit are  agreements to lend to a customer as
         long as there  is no  violation  of any  condition  established  in the
         contract.  Commitments  generally have fixed  expiration dates or other
         termination  clauses and may require  payment of a fee. The commitments
         for all lines of credit may expire without being drawn upon, therefore,
         the total commitment  amounts do not necessarily  represent future cash
         requirements.  The Company  evaluates each customer's credit worthiness
         on  a  case-by-case   basis.   Substantially  all  of  these  financial
         instruments,  except  for  unadvanced  lines  of  credit  on  unsecured
         personal  loans and  commercial  lines of credit,  are  secured by real
         estate.


                                      F-33
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         OTHER COMMITMENTS AND CONTINGENCIES (concluded)

         Lease commitments

         Pursuant to the terms of  noncancelable  lease  agreements in effect at
         June 30, 2007,  pertaining to branch facilities,  future minimum rental
         payments are as follows:

              Year Ending
                June 30,                               Payments
              ------------                             --------
                                                    (In thousands)

                  2008                                 $    152
                  2009                                      155
                  2010                                      157
                  2011                                      167
                  2012                                      173
                Thereafter                                1,799
                                                       --------

                                                       $  2,603
                                                       ========

         One of the  leases  contains  an option to  extend  for ten  additional
         years. The cost of such rentals is not included above.

         Rental  expense  amounted to $161,000  and $113,000 for the years ended
         June 30, 2007 and 2006, respectively.

         Employment agreements

         The  Bank  has  entered  into  employment  agreements  with  its  Chief
         Executive Officer and Chief Financial Officer,  which expire on January
         5,  2010,  that  generally  provide  for  a  specified  minimum  annual
         compensation and the continuation of benefits currently  received.  The
         employment agreements may be terminated for cause, as defined,  without
         incurring any continuing obligations. In addition, the Bank has entered
         into a change in  control  agreement  with an officer of the Bank which
         expires on January  19,  2008 that  provides  for a lump sum  severance
         payment,   subject  to  certain   conditions.   These   agreements  are
         automatically renewed annually unless a notice of non-renewal is issued
         upon recommendation from the Board of Directors.

         Other contingencies

         Various  legal claims  arise from time to time in the normal  course of
         business,  which,  in the opinion of management,  will have no material
         effect on the Company's consolidated financial position.


                                      F-34
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


16.      LOANS TO RELATED PARTIES

         In the  ordinary  course of business,  the Company  grants loans to its
         Officers and  Directors  and their  affiliates.  Activity for the years
         indicated is as follows:

                                          Years Ended June 30,
                                         --------------------
                                           2007        2006
                                         --------    --------
                                            (In thousands)

         Beginning balance               $  2,072    $  2,264
         Originations                       1,519          --
         Payments and change in status       (676)       (192)
                                         --------    --------

         Ending balance                  $  2,915    $  2,072
                                         ========    ========

17.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair value of a financial  instrument  is the  current  amount that
         would be  exchanged  between  willing  parties,  other than in a forced
         liquidation.  Fair value is best  determined  based upon quoted  market
         prices.  However, in many instances,  there are no quoted market prices
         for the Company's various financial instruments.  In cases where quoted
         market  prices are not  available,  fair values are based on  estimates
         using present value or other valuation techniques. Those techniques are
         significantly  affected by the assumptions used, including the discount
         rate and  estimates of future cash flows.  Accordingly,  the fair value
         estimates  may  not  be  realized  in an  immediate  settlement  of the
         instrument.  Statement  of  Financial  Accounting  Standards  No.  107,
         Disclosures about Fair Value of Financial Instruments, excludes certain
         financial  instruments  and  all  nonfinancial   instruments  from  its
         disclosure requirements.  Accordingly, the aggregate fair value amounts
         presented may not  necessarily  represent the underlying  fair value of
         the Company.

         The  following  methods  and  assumptions  were used by the  Company in
         estimating fair value disclosures for financial instruments:

                  Cash and cash  equivalents:  The carrying  amounts of cash and
                  --------------------------
                  short-term investments approximate fair values.

                  Securities: Fair values for securities, excluding Federal Home
                  ----------
                  Loan  Bank  stock,  are  based on quoted  market  prices.  The
                  carrying  value of Federal  Home Loan Bank stock  approximates
                  fair value based on the  redemption  provisions of the Federal
                  Home Loan Bank.

                                      F-35
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

                  Loans:  For  variable-rate  loans that reprice  frequently and
                  -----
                  with no  significant  change in credit  risk,  fair values are
                  based on  carrying  values.  Fair  values for 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.

                  Deposits: The fair values for non-certificate accounts are, by
                  --------
                  definition,  equal to the  amount  payable  on  demand  at the
                  reporting date which is the carrying  amount.  Fair values for
                  certificates  of deposit are estimated using a discounted cash
                  flow  calculation  that applies interest rates currently being
                  offered on certificates  to a schedule of aggregated  expected
                  monthly maturities on time deposits.

                  Short-term FHLB advances:  The carrying  amounts of short-term
                  ------------------------
                  FHLB advances approximate fair value.

                  Long-term  FHLB  advances:   Fair  value  for  long-term  FHLB
                  -------------------------
                  advances is  estimated  using  discounted  cash flow  analyses
                  based on  borrowing  rates  for  similar  types  of  borrowing
                  arrangements.

                  Securities sold under agreements to repurchase: The fair value
                  ----------------------------------------------
                  estimate of  securities  sold under  agreements  to repurchase
                  approximates  carrying  value as they  mature  daily  and bear
                  market interest rates.

                  Accrued  interest:  The carrying  amounts of accrued  interest
                  -----------------
                  approximate fair value.

                  Off-balance-sheet     instruments:     Fair     values     for
                  ---------------------------------
                  off-balance-sheet,  credit-related  financial  instruments are
                  based  on  fees  currently   charged  to  enter  into  similar
                  agreements,  taking into  account the  remaining  terms of the
                  agreements and the  counterparties'  credit standing.  At June
                  30, 2007 and 2006, the fair value of  commitments  outstanding
                  is not significant since fees charged are not material.

                                      F-36
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         FAIR VALUE OF FINANCIAL INSTRUMENTS (concluded)

         The  estimated  fair  values  and  related  carrying  amounts,  of  the
         Company's financial instruments are as follows:
<table>
<caption>
                                                                 At June 30,
                                              -------------------------------------------------
                                                        2007                     2006
                                              -----------------------   -----------------------
                                               Carrying       Fair       Carrying      Fair
                                                Amount       Value        Amount       Value
                                              ----------   ----------   ----------   ----------
                                                               (In thousands)

                                               <c>          <c>          <c>          <c>
         Financial assets:
           Cash and cash equivalents          $    5,603   $    5,603   $    3,977   $    3,977
           Securities available for sale          12,690       12,690       15,465       15,465
           Securities held to maturity             8,182        7,968        9,823        9,453
           Federal Home Loan Bank stock            2,905        2,905        2,905        2,905
           Loans, net                            127,659      118,681      128,778      119,501
           Accrued interest receivable               682          682          674          674

         Financial liabilities:
           Deposits                               97,956      100,224       97,709      100,128
           Short-term FHLB advances                9,850        9,850       22,300       22,300
           Long-term FHLB advances                37,873       37,726       28,921       28,624
           Securities sold under agreements
               to repurchase                         869          869          762          762
           Accrued interest payable                  503          503          206          206

</table>


                                      F-37
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


18.      CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

         The condensed balance sheets of the Company are as follows:
<table>
<caption>
                                      BALANCE SHEETS
                                                                           At June 30,
                                                                     -----------------------
                                                                        2007         2006
                                                                     ----------   ----------
                                                                          (In thousands)

                                                                      <c>          <c>
                                          ASSETS

         Non-interest bearing deposit in Georgetown Savings Bank     $    2,074   $    2,592
         Loan to Georgetown Savings Bank ESOP                               699           --
         Investment in subsidiaries                                      14,864       16,153
                                                                     ----------   ----------

                        Total assets                                 $   17,637   $   18,745
                                                                     ==========   ==========


                             LIABILITIES AND STOCKHOLDERS' EQUITY

         Other liabilities                                           $       27   $       86
         Stockholders' equity                                            17,610       18,659
                                                                     ----------   ----------

                        Total liabilities and stockholders' equity   $   17,637   $   18,745
                                                                     ==========   ==========
<caption>

         The condensed statements of operations of the Company are as follows:

                                    STATEMENTS OF OPERATIONS
                                                                         Years Ended June 30,
                                                                         --------------------
                                                                           2007        2006
                                                                         --------    --------
                                                                            (In thousands)

                                                                            <c>         <c>

         Interest income -ESOP loan                                      $     60    $     --
         Non-interest expense                                                  50          54
                                                                         --------    --------
         Income (loss) before income taxes and equity in undistributed
              net loss of Georgetown Savings Bank                              10         (54)
         Applicable income tax provision (benefit)                              4         (17)
                                                                         --------    --------

         Income (loss) before equity in undistributed net loss
             of subsidiary                                                      6         (37)

         Equity in undistributed net loss of subsidiary                      (470)       (343)
                                                                         --------    --------

         Net loss                                                        $   (464)   $   (380)
                                                                         ========    ========
</table>

                                      F-38
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


         CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (concluded)

         The condensed statements of cash flows of the Company are as follows:

<table>
<caption>
                                                                  Years Ended June 30,
                                                                 --------------------
                                                                   2007        2006
                                                                 --------    --------
                                                                    (In thousands)

                                                                   <c>          <c>
         Cash flows from operating activities:
         Net loss                                                $   (464)   $   (380)
             Adjustments to reconcile net loss to net cash
               provided by operating activities:
                  Repayment of ESOP Loan                               57          --
                  Equity in undistributed loss of subsidiary          470         343
                  Other, net                                          227          67
                                                                 --------    --------
                     Net cash provided by operating activities        290          30
                                                                 --------    --------

         Cash flows from financing activities:
             Treasury stock purchased                                (808)         --
                                                                 --------    --------
                     Net cash used by financing activities           (808)         --
                                                                 --------    --------

         Net change in cash and cash equivalents                     (518)         30

         Cash and cash equivalents at beginning of year             2,592       2,562
                                                                 --------    --------

         Cash and cash equivalents at end of year                $  2,074    $  2,592
                                                                 ========    ========
</table>


                                      F-39
<page>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)


19.      QUARTERLY DATA (UNAUDITED)

         A summary of consolidated  operating results on a quarterly basis is as
         follows:
<table>
<caption>
                                                                             Years Ended June 30,
                                             -------------------------------------------------------------------------------------
                                                                2007                                       2006
                                             -----------------------------------------   -----------------------------------------
                                              Fourth     Third      Second      First     Fourth     Third      Second      First
                                              Quarter    Quarter    Quarter    Quarter    Quarter    Quarter    Quarter    Quarter
                                             --------   --------   --------   --------   --------   --------   --------   --------
                                                                      (In thousands, except per share data)

                                             <c>        <c>        <c>        <c>        <c>        <c>          <c>        <c>
         Interest and dividend income        $  2,206   $  2,202   $  2,217   $  2,287   $  2,088   $  2,071   $  2,012   $  1,956
         Interest expense                       1,271      1,255      1,277      1,281      1,175      1,058        973        872
                                             --------   --------   --------   --------   --------   --------   --------   --------
         Net interest income                      935        947        940      1,006        913      1,013      1,039      1,084
         Provision (credit) for loan losses        (4)         4         41         64         50         --         25         33
                                             --------   --------   --------   --------   --------   --------   --------   --------

         Net interest income, after
           provision for loan losses              939        943        899        942        863      1,013      1,014      1,051
         Non-interest income                      232        168        162        175        104        134        107        109
         Non-interest expenses                  1,400      1,311      1,208      1,248      1,374      1,252      1,212      1,110
                                             --------   --------   --------   --------   --------   --------   --------   --------

         Income (loss) before income taxes       (229)      (200)      (147)      (131)      (407)      (105)       (91)        50

         Income tax expense (benefit)             (79)       (71)       (48)       (45)      (116)       (39)       (34)        16
                                             --------   --------   --------   --------   --------   --------   --------   --------

         Net income (loss)                   $   (150)  $   (129)  $    (99)  $    (86)  $   (291)  $    (66)  $    (57)  $     34
                                             ========   ========   ========   ========   ========   ========   ========   ========

         Earnings (loss) per share:
           Basic and diluted                 $  (0.06)  $  (0.05)  $  (0.04)  $  (0.03)  $  (0.11)  $  (0.02)  $  (0.02)  $   0.01
</table>



                                      F-40
<page>


STOCKHOLDER INFORMATION

DIRECTORS
EDWARD G. WILLIAMS, CHAIRMAN                T. LOUIS HAMELIN
ROBERT E. BALLETTO                          THOMAS L. HAMELIN
DAVID H. CONDON                             CALVIN H. PINGREE
KEITH N. CONGDON                            ARTHUR J. RAUSEO
ANTHONY S. CONTE, JR.                       RICHARD F. SPENCER
STEPHEN L. FLYNN                            MARY L. WILLIAMS



SENIOR OFFICERS
ROBERT E. BALLETTO, PRESIDENT AND CHIEF EXECUTIVE OFFICER
WENDY A. GIRROIR, SENIOR VICE PRESIDENT/HUMAN RESOURCES
JOSEPH W. KENNEDY, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER AND
TREASURER
JOSEPH R. POLLARD, SENIOR VICE PRESIDENT/RETAIL BANKING
CHARLES R. SHEDIAC, SENIOR VICE PRESIDENT AND CHIEF LOAN OFFICER
KAREN COHN, VICE PRESIDENT AND SENIOR LOAN OFFICER
HOLLY E. POULIOT, VICE PRESIDENT/MANAGEMENT INFORMATION SYSTEM


INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM                      LEGAL COUNSEL
WOLF & COMPANY, PC                          LUSE GORMAN POMERENK & SCHICK, P.C.
99 HIGH STREET                              5335 WISCONSIN AVENUE, N.W.
BOSTON, MA 02110                            SUITE 400
(617) 439-9700                              WASHINGTON, DC 20015-2035
                                            (202) 274-2000


REGISTRAR AND TRANSFER AGENT                STOCK LISTING
REGISTRAR AND TRANSFER COMPANY              OTC BULLETIN BOARD
10 COMMERCE DRIVE                           SYMBOL: GTWN
CRANFORD, NJ 07016                          WWW.OTCBB.COM
(800) 368-5948
WWW.RTCO.COM

CONTACT OUR TRANSFER  AGENT  DIRECTLY FOR  ASSISTANCE  IN CHANGING YOUR ADDRESS,
ELIMINATION OF DUPLICATE MAILINGS, TRANSFERRING STOCK, OR REPLACING LOST, STOLEN
OR DESTROYED STOCK CERTIFICATES:


ANNUAL REPORT ON FORM 10-KSB
ADDITIONAL  COPIES OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 2007, ARE AVAILABLE UPON WRITTEN REQUEST TO:

JOSEPH W. KENNEDY
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
GEORGETOWN BANCORP, INC.
P.O. BOX 260
2 EAST MAIN STREET
GEORGETOWN, MA 01833-0360

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BRANCH LOCATIONS
----------------

GEORGETOWN

2 EAST MAIN STREET
GEORGETOWN, MA 01833
(978) 352-8600

ROWLEY

303 HAVERHILL STREET
ROWLEY, MA 01969
(978) 948-8602

NORTH ANDOVER

75 TURNPIKE STREET
NORTH ANDOVER, MA 01845
(978) 557-1679

WWW.GEORGETOWNSB.COM

   [LOGO]                                                             [LOGO]
EQUAL HOUSING                                                      Georgetown
   LENDER                                                         Bancorp, Inc.

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                                                          THERE IS A DIFFERENCE.

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