----

----

----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Maryland                                                       |   | 80-0643149                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

| 803 Main Street, Willimantic, Connecticut |   | 06226      |
|-------------------------------------------|--------|------------|
| (Address of principal executive offices)  |   | (Zip Code) |

| Large Accelerated Filer o           | Accelerated Filer o         |
|------------------------------------------|-----------------------------|
| Non-Accelerated Filer   x | Smaller Reporting Company o |

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----

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TABLE 

|       |                                                                                                      | Page No. |
|------------|-----------------------------------------------------------------------------------------------------------|----------|
|       |                                                                                                      |     |
| PART I.    | FINANCIAL INFORMATION                                                                                     |     |
|       |                                                                                                      |     |
| Item 1.    | Financial Statements:                                                                                     |     |
|       |                                                                                                      |     |
|       | Consolidated Balance Sheets at March 31, 2011 and December 31, 2010                                       | 1        |
|       |                                                                                                      |     |
|       | Consolidated Statements of Income for the three months ended March 31, 2011 and 2010                      | 2        |
|       |                                                                                                      |     |
|       | Consolidated Statement of Changes in Shareholders’ Equity for the three months ended March 31, 2011 | 3        |
|       |                                                                                                      |     |
|       | Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010                  | 4        |
|       |                                                                                                      |     |
|       | Notes to Consolidated Financial Statements                                                                | 6        |
|       |                                                                                                      |     |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations               | 33       |
|       |                                                                                                      |     |
| Item 3.    | Quantitative and Qualitative Disclosures about Market Risk                                                | 41       |
|       |                                                                                                      |     |
| Item 4.    | Controls and Procedures                                                                                   | 42       |
|       |                                                                                                      |     |
| PART II.   | OTHER INFORMATION                                                                                         |     |
|       |                                                                                                      |     |
| Item 1.    | Legal Proceedings                                                                                         | 43       |
|       |                                                                                                      |     |
| Item 1A.   | Risk Factors                                                                                              | 43       |
|       |                                                                                                      |     |
| Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                               | 43       |
|       |                                                                                                      |     |
| Item 3.    | Defaults Upon Senior Securities                                                                           | 44       |
|       |                                                                                                      |     |
| Item 4.    | [Removed and Reserved]                                                                                    | 44       |
|       |                                                                                                      |     |
| Item 5.    | Other Information                                                                                         | 44       |
|       |                                                                                                      |     |
| Item 6.    | Exhibits                                                                                                  | 44       |
|       |                                                                                                      |     |
| SIGNATURES |                                                                                                      | 45       |

----

Table of Contents 

PART 

Item 

SI 

|                                                                                                                                                                                                                    |   | March 31,2011 |    |   | December 31,2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-----------------------|--------|
| ASSETS:                                                                                                                                                                                                                 |   |               |    |   |                  |   |
| Cash and due from banks:                                                                                                                                                                                                |   |               |    |   |                  |   |
| Noninterest-bearing                                                                                                                                                                                                     |   | $                  | 11,984  |   |                  | $      | 11,204 |   |
| Interest-bearing                                                                                                                                                                                                        |   |               | 2,852   |   |                  |   | 2,287 |   |
| Federal funds sold                                                                                                                                                                                                      |   |               | 34,700  |   |                  |   | 64,830 |   |
| Total cash and cash equivalents                                                                                                                                                                                         |   |               | 49,536  |   |                  |   | 78,321 |   |
|                                                                                                                                                                                                                    |   |               |    |   |                  |   |   |   |
| Trading securities, at fair value                                                                                                                                                                                       |   |               | 269     |   |                  |   | 248 |   |
| Available for sale securities, at fair value                                                                                                                                                                            |   |               | 217,204 |   |                  |   | 180,036 |   |
| Loans held for sale                                                                                                                                                                                                     |   |               | 1,776   |   |                  |   | 7,371 |   |
| Loans receivable (net of allowance for loan losses of $4,563 at March 31, 2011 and $4,799 at December 31, 2010)                                                                                                         |   |               | 608,506 |   |                  |   | 606,214 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                                                                                   |   |               | 8,388   |   |                  |   | 8,388 |   |
| Bank-owned life insurance                                                                                                                                                                                               |   |               | 8,796   |   |                  |   | 9,024 |   |
| Premises and equipment, net                                                                                                                                                                                             |   |               | 12,521  |   |                  |   | 12,123 |   |
| Goodwill and other intangibles                                                                                                                                                                                          |   |               | 4,121   |   |                  |   | 4,126 |   |
| Accrued interest receivable                                                                                                                                                                                             |   |               | 3,357   |   |                  |   | 3,113 |   |
| Deferred tax asset, net                                                                                                                                                                                                 |   |               | 5,417   |   |                  |   | 5,729 |   |
| Other real estate owned, net                                                                                                                                                                                            |   |               | 830     |   |                  |   | 1,285 |   |
| Prepaid FDIC deposit insurance assessment                                                                                                                                                                               |   |               | 2,350   |   |                  |   | 2,576 |   |
| Other assets                                                                                                                                                                                                            |   |               | 6,360   |   |                  |   | 7,855 |   |
| Total assets                                                                                                                                                                                                            |   | $                  | 929,431 |   |                  | $      | 926,409 |   |
|                                                                                                                                                                                                                    |   |               |    |   |                  |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY:                                                                                                                                                                                   |   |               |    |   |                  |   |   |   |
| Liabilities:                                                                                                                                                                                                            |   |               |    |   |                  |   |   |   |
| Deposits:                                                                                                                                                                                                               |   |               |    |   |                  |   |   |   |
| Noninterest-bearing                                                                                                                                                                                                     |   | $                  | 67,049  |   |                  | $      | 66,845 |   |
| Interest-bearing                                                                                                                                                                                                        |   |               | 604,325 |   |                  |   | 593,869 |   |
| Total deposits                                                                                                                                                                                                          |   |               | 671,374 |   |                  |   | 660,714 |   |
|                                                                                                                                                                                                                    |   |               |    |   |                  |   |   |   |
| Mortgagors' and investors' escrow accounts                                                                                                                                                                              |   |               | 1,791   |   |                  |   | 3,425 |   |
| Federal Home Loan Bank advances                                                                                                                                                                                         |   |               | 109,169 |   |                  |   | 114,169 |   |
| Junior subordinated debt owed to unconsolidated trust                                                                                                                                                                   |   |               | 8,248   |   |                  |   | 8,248 |   |
| Stock offering escrow                                                                                                                                                                                                   |   |               | -       |   |                  |   | 48,325 |   |
| Accrued expenses and other liabilities                                                                                                                                                                                  |   |               | 9,914   |   |                  |   | 10,424 |   |
| Total liabilities                                                                                                                                                                                                       |   |               | 800,496 |   |                  |   | 845,305 |   |
|                                                                                                                                                                                                                    |   |               |    |   |                  |   |   |   |
|                                                                                                                                                                                                                    |   |               |    |   |                  |   |   |   |
| Shareholders' Equity:                                                                                                                                                                                                   |   |               |    |   |                  |   |   |   |
| Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued)                                                                                                                                              |   |               | -       |   |                  |   | - |   |
| Common stock ($.01 par value; 35,000,000 and 75,000,000 shares authorized; 10,576,849 and 12,563,750 shares issued; 10,576,302 and 11,777,496 shares outstanding at March 31, 2011 and December 31, 2010, respectively) |   |               | 106     |   |                  |   | 126 |   |
| Additional paid-in-capital                                                                                                                                                                                              |   |               | 94,518  |   |                  |   | 52,198 |   |
| Unallocated common shares held by ESOP                                                                                                                                                                                  |   |               | (5,928  | )      |                  |   | (2,907 | ) |
| Unearned restricted shares                                                                                                                                                                                              |   |               | (23     | )      |                  |   | (25 | ) |
| Retained earnings                                                                                                                                                                                                       |   |               | 40,770  |   |                  |   | 40,859 |   |
| Accumulated other comprehensive loss                                                                                                                                                                                    |   |               | (503    | )      |                  |   | (1,108 | ) |
| Treasury stock, at cost (547 and 786,254 shares at March 31, 2011 and December 31, 2010, respectively)                                                                                                                  |   |               | (5      | )      |                  |   | (8,039 | ) |
| Total shareholders' equity                                                                                                                                                                                              |   |               | 128,935 |   |                  |   | 81,104 |   |
| Total liabilities and shareholders' equity                                                                                                                                                                              |   | $                  | 929,431 |   |                  | $      | 926,409 |   |

----

Table of Contents 

FINANCIAL 

|                                                          |   | Three Months EndedMarch 31, |   |
|---------------------------------------------------------------|--------|-----------------------------|--------|
|                                                          |   | 2011                        |   |   | 2010 |   |
| Interest and dividend income:                                 |   |                        |   |   |   |   |
| Loans, including fees                                         |   | $                           | 7,908  |   |   | $ | 8,411 |   |
| Securities:                                                   |   |                        |   |   |   |   |   |   |
| Taxable interest                                              |   |                        | 1,561  |   |   |   | 1,755 |   |
| Tax-exempt interest                                           |   |                        | 1      |   |   |   | 15 |   |
| Dividends                                                     |   |                        | 20     |   |   |   | 5 |   |
| Other                                                         |   |                        | 30     |   |   |   | 23 |   |
| Total interest and dividend income                            |   |                        | 9,520  |   |   |   | 10,209 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Interest expense:                                             |   |                        |   |   |   |   |   |   |
| Deposits                                                      |   |                        | 1,897  |   |   |   | 2,664 |   |
| Federal Home Loan Bank advances                               |   |                        | 1,012  |   |   |   | 1,076 |   |
| Subordinated debt                                             |   |                        | 83     |   |   |   | 39 |   |
| Total interest expense                                        |   |                        | 2,992  |   |   |   | 3,779 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Net interest income                                           |   |                        | 6,528  |   |   |   | 6,430 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Provision for loan losses                                     |   |                        | 210    |   |   |   | 170 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Net interest income after provision for loan losses           |   |                        | 6,318  |   |   |   | 6,260 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Noninterest income:                                           |   |                        |   |   |   |   |   |   |
| Total other-than-temporary impairment losses on securities    |   |                        | -      |   |   |   | (378 | ) |
| Portion of losses recognized in other comprehensive income    |   |                        | -      |   |   |   | 207 |   |
| Net impairment losses recognized in earnings                  |   |                        | -      |   |   |   | (171 | ) |
| Service fees                                                  |   |                        | 1,180  |   |   |   | 1,259 |   |
| Wealth management fees                                        |   |                        | 1,066  |   |   |   | 1,019 |   |
| Increase in cash surrender value of bank-owned life insurance |   |                        | 72     |   |   |   | 71 |   |
| Net gain on sale of securities                                |   |                        | 35     |   |   |   | 267 |   |
| Mortgage banking fees                                         |   |                        | 169    |   |   |   | 130 |   |
| Net gain in fair value on trading securities and derivatives  |   |                        | 27     |   |   |   | - |   |
| Net loss on disposal of equipment                             |   |                        | (7     | ) |   |   | - |   |
| Other                                                         |   |                        | 107    |   |   |   | 38 |   |
| Total noninterest income                                      |   |                        | 2,649  |   |   |   | 2,613 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Noninterest expenses:                                         |   |                        |   |   |   |   |   |   |
| Salaries and employee benefits                                |   |                        | 4,144  |   |   |   | 4,141 |   |
| Occupancy and equipment                                       |   |                        | 1,535  |   |   |   | 1,421 |   |
| Computer and electronic banking services                      |   |                        | 956    |   |   |   | 941 |   |
| Outside professional services                                 |   |                        | 267    |   |   |   | 249 |   |
| Marketing and advertising                                     |   |                        | 160    |   |   |   | 182 |   |
| Supplies                                                      |   |                        | 135    |   |   |   | 141 |   |
| FDIC deposit insurance and regulatory assessments             |   |                        | 305    |   |   |   | 339 |   |
| Contribution to SI Financial Group Foundation                 |   |                        | 500    |   |   |   | - |   |
| Other                                                         |   |                        | 711    |   |   |   | 723 |   |
| Total noninterest expenses                                    |   |                        | 8,713  |   |   |   | 8,137 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Income before income tax provision                            |   |                        | 254    |   |   |   | 736 |   |
| Income tax provision                                          |   |                        | 45     |   |   |   | 243 |   |
| Net income                                                    |   | $                           | 209    |   |   | $ | 493 |   |
|                                                          |   |                        |   |   |   |   |   |   |
| Net income per share:                                         |   |                        |   |   |   |   |   |   |
| Basic                                                         |   | $                           | 0.02   |   |   | $ | 0.05 |   |
| Diluted                                                       |   | $                           | 0.02   |   |   | $ | 0.05 |   |

----

Table of Contents 

SI 

|                                                                                                     |   | Common Stock |       |   | AdditionalPaid-in |   |   | UnallocatedCommonShares Heldby |   |   | UnearnedRestricted |   |   | Retained |   |   | AccumulatedOtherComprehensive |   |   | Treasury |   |   | TotalShareholders' |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------|------------|--------|-------------------|--------|--------|--------------------------------|--------|--------|--------------------|--------|--------|----------|--------|--------|-------------------------------|--------|--------|----------|--------|--------|--------------------|--------|
|                                                                                                     |   | Shares       |       |   | Dollars           |   |   | Capital                        |   |   | ESOP               |   |   | Shares   |   |   | Earnings                      |   |   | Loss     |   |   | Stock              |   |   | Equity |
|                                                                                                     |   |         |       |   |              |   |   |                           |   |   |               |   |   |     |   |   |                          |   |   |     |   |   |               |   |   |   |   |
| Balance at December 31, 2010                                                                             |   |         | 12,563,750 |   |              | $      | 126    |                           |   | $      | 52,198             |   |   | $        | (2,907 | )      |                          | $      | (25    | )        |   | $      | 40,859             |   |   | $ | (1,108 | ) |   | $ | (8,039 | ) |   | $ | 81,104 |   |
| Exchange of common stock pursuant to reorganization and concurrent second-step stock offering            |   |         | (1,986,901 | )      |              |   | (20    | )                              |   |   | 42,306             |   |   |     | -      |   |                          |   | -      |     |   |   | -                  |   |   |   | - |   |   |   | 8,039 |   |   |   | 50,325 |   |
| Comprehensive income:                                                                                    |   |         |       |   |              |   |   |                           |   |   |               |   |   |     |   |   |                          |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                               |   |         | -          |   |              |   | -      |                           |   |   | -                  |   |   |     | -      |   |                          |   | -      |     |   |   | 209                |   |   |   | - |   |   |   | - |   |   |   | 209 |   |
| Net unrealized gain on available for sale securities, net of reclassification adjustment and tax effects |   |         | -          |   |              |   | -      |                           |   |   | -                  |   |   |     | -      |   |                          |   | -      |     |   |   | -                  |   |   |   | 556 |   |   |   | - |   |   |   | 556 |   |
| Net unrealized gain on interest-rate swap derivative                                                     |   |         | -          |   |              |   | -      |                           |   |   | -                  |   |   |     | -      |   |                          |   | -      |     |   |   | -                  |   |   |   | 49 |   |   |   | - |   |   |   | 49 |   |
| Total comprehensive income                                                                               |   |         |       |   |              |   |   |                           |   |   |               |   |   |     |   |   |                          |   |   |     |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 814 |   |
| Cash dividends declared ($0.03 per share)                                                                |   |         | -          |   |              |   | -      |                           |   |   | -                  |   |   |     | -      |   |                          |   | -      |     |   |   | (298               | )      |   |   | - |   |   |   | - |   |   |   | (298 | ) |
| Equity incentive plan shares earned                                                                      |   |         | -          |   |              |   | -      |                           |   |   | 18                 |   |   |     | -      |   |                          |   | 2      |     |   |   | -                  |   |   |   | - |   |   |   | - |   |   |   | 20 |   |
| Shares purchased for ESOP pursuant to reorganization (392,670 shares)                                    |   |         | -          |   |              |   | -      |                           |   |   | -                  |   |   |     | (3,141 | )      |                          |   | -      |     |   |   | -                  |   |   |   | - |   |   |   | - |   |   |   | (3,141 | ) |
| Allocation of 12,159 ESOP shares                                                                         |   |         | -          |   |              |   | -      |                           |   |   | (6                 | )      |   |     | 120    |   |                          |   | -      |     |   |   | -                  |   |   |   | - |   |   |   | - |   |   |   | 114 |   |
| Tax benefit from share-based compensation                                                                |   |         | -          |   |              |   | -      |                           |   |   | 2                  |   |   |     | -      |   |                          |   | -      |     |   |   | -                  |   |   |   | - |   |   |   | - |   |   |   | 2 |   |
| Treasury stock purchased (547 shares)                                                                    |   |         | -          |   |              |   | -      |                           |   |   | -                  |   |   |     | -      |   |                          |   | -      |     |   |   | -                  |   |   |   | - |   |   |   | (5 | ) |   |   | (5 | ) |
| Balance at March 31, 2011                                                                                |   |         | 10,576,849 |   |              | $      | 106    |                           |   | $      | 94,518             |   |   | $        | (5,928 | )      |                          | $      | (23    | )        |   | $      | 40,770             |   |   | $ | (503 | ) |   | $ | (5 | ) |   | $ | 128,935 |   |

----

Table of Contents 

SI 

|                                                                                        |   | Three Months Ended March 31, |        |
|---------------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|
|                                                                                        |   | 2011                              |        |   | 2010 |   |
| Cash flows from operating activities:                                                       |   |                              |        |   |   |   |
| Net income                                                                                  |   | $                                 | 209         |   |   | $ | 493 |   |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |   |                              |        |   |   |   |   |   |
| Provision for loan losses                                                                   |   |                              | 210         |   |   |   | 170 |   |
| Employee stock ownership plan expense                                                       |   |                              | 114         |   |   |   | 45 |   |
| Equity incentive plan expense                                                               |   |                              | 20          |   |   |   | 155 |   |
| Excess tax benefit from share-based compensation                                            |   |                              | (2          | ) |   |   | (2 | ) |
| Amortization of investment premiums and discounts, net                                      |   |                              | 103         |   |   |   | 54 |   |
| Amortization of loan premiums and discounts, net                                            |   |                              | 204         |   |   |   | 154 |   |
| Depreciation and amortization of premises and equipment                                     |   |                              | 461         |   |   |   | 475 |   |
| Amortization of core deposit intangible                                                     |   |                              | 5           |   |   |   | 8 |   |
| Net gain on sale of securities                                                              |   |                              | (35         | ) |   |   | (267 | ) |
| Net gain on trading securities                                                              |   |                              | (21         | ) |   |   | - |   |
| Deferred income tax benefit                                                                 |   |                              | -           |   |   |   | (43 | ) |
| Loans originated for sale                                                                   |   |                              | (14,249     | ) |   |   | (9,280 | ) |
| Proceeds from sale of loans held for sale                                                   |   |                              | 19,785      |   |   |   | 7,624 |   |
| Net gain on sale of loans                                                                   |   |                              | (124        | ) |   |   | (67 | ) |
| Net loss on disposal of equipment                                                           |   |                              | 7           |   |   |   | - |   |
| Net loss on sales or write-downs of other real estate owned                                 |   |                              | 62          |   |   |   | 34 |   |
| Increase in cash surrender value of bank-owned life insurance                               |   |                              | (72         | ) |   |   | (71 | ) |
| Gain on bank-owned life insurance proceeds                                                  |   |                              | (120        | ) |   |   | - |   |
| Other-than-temporary impairment losses on securities                                        |   |                              | -           |   |   |   | 171 |   |
| Change in operating assets and liabilities:                                                 |   |                              |        |   |   |   |   |   |
| Accrued interest receivable                                                                 |   |                              | (244        | ) |   |   | (31 | ) |
| Other assets                                                                                |   |                              | 1,134       |   |   |   | (2,114 | ) |
| Accrued expenses and other liabilities                                                      |   |                              | (614        | ) |   |   | 431 |   |
| Net cash provided by (used in) operating activities                                         |   |                              | 6,833       |   |   |   | (2,061 | ) |
|                                                                                        |   |                              |        |   |   |   |   |   |
| Cash flows from investing activities:                                                       |   |                              |        |   |   |   |   |   |
| Purchases of available for sale securities                                                  |   |                              | (47,374     | ) |   |   | (26,764 | ) |
| Proceeds from sales of available for sale securities                                        |   |                              | 1,065       |   |   |   | 9,071 |   |
| Proceeds from maturities of and principal repayments on available for sale securities       |   |                              |  9,917 |   |   |   | 15,313 |   |
| Net decrease in loans                                                                       |   |                              | 14,633      |   |   |   | 12,978 |   |
| Purchases of loans                                                                          |   |                              | (17,419     | ) |   |   | (7,296 | ) |
| Proceeds from sale of other real estate owned                                               |   |                              | 473         |   |   |   | 443 |   |
| Purchases of premises and equipment                                                         |   |                              | (866        | ) |   |   | (126 | ) |
| Proceeds from bank-owned life insurance                                                     |   |                              | 600         |   |   |   | - |   |
| Net cash (used in) provided by investing activities                                         |   |                              | (38,971     | ) |   |   | 3,619 |   |
|                                                                                        |   |                              |        |   |   |   |   |   |
| Cash flows from financing activities:                                                       |   |                              |        |   |   |   |   |   |
| Net increase in deposits                                                                    |   |                              | 10,660      |   |   |   | 10,983 |   |
| Net decrease in mortgagors' and investors' escrow accounts                                  |   |                              | (1,634      | ) |   |   | (1,701 | ) |
| Proceeds from Federal Home Loan Bank advances                                               |   |                              | 14,000      |   |   |   | 7,386 |   |
| Repayments of Federal Home Loan Bank advances                                               |   |                              | (19,000     | ) |   |   | (9,386 | ) |
| Net proceeds from common stock offering                                                     |   |                              | 2,769       |   |   |   | - |   |
| Excess tax benefit from share-based compensation                                            |   |                              | 2           |   |   |   | 2 |   |
| Purchase of shares by ESOP pursuant to reorganization                                       |   |                              | (3,141      | ) |   |   | - |   |
| Cash dividends on common stock                                                              |   |                              | (298        | ) |   |   | - |   |
| Treasury stock purchased                                                                    |   |                              | (5          | ) |   |   | (3 | ) |
| Net cash provided by financing activities                                                   |   |                              | 3,353       |   |   |   | 7,281 |   |

----

Table of Contents 

SI 

|                                                            |   | Three Months Ended March 31, |    |
|-----------------------------------------------------------------|--------|------------------------------|---------|
|                                                            |   | 2011                         |    |   | 2010 |   |
|                                                            |   |                         |    |   |   |   |
| Net change in cash and cash equivalents                         |   |                         | (28,785 | ) |   |   | 8,839 |   |
| Cash and cash equivalents at beginning of period                |   |                         | 78,321  |   |   |   | 24,204 |   |
| Cash and cash equivalents at end of period                      |   | $                            | 49,536  |   |   | $ | 33,043 |   |
|                                                            |   |                         |    |   |   |   |   |   |
| Supplemental cash flow information:                             |   |                         |    |   |   |   |   |   |
| Interest paid                                                   |   | $                            | 3,009   |   |   | $ | 3,784 |   |
| Income taxes paid, net                                          |   |                         | -       |   |   |   | 1 |   |
| Transfer of stock offering escrow for issuance of common shares |   |                         | 47,556  |   |   |   | - |   |
| Transfer of loans to other real estate owned                    |   |                         | 80      |   |   |   | 1,003 |   |
| Due from broker                                                 |   |                         | -       |   |   |   | 2,160 |   |

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|   | o | Specific allowance for identified impaired loans.  For such loans that are identified as impaired, an allowance is established when the present value of expected cash flows (or collateral value or observable market price if the loan is collateral dependent) of the impaired loan is lower than the carrying value of that loan. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | General valuation allowance.  The general component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans.  For this portion of the allowance, loans are segregated by category and assigned an allowance percentage based on historical loan loss experience adjusted for qualitative factors stratified by the following loan segments:  residential one- to four-family, multi-family and commercial real estate, construction, commercial business and consumer.   Management uses a rolling average of historical losses based on the time frame appropriate to capture relevant loss data for each loan segment.  This historical loss factor is adjusted for the following qualitative factors:  levels/trends in delinquencies; level of charge-offs and nonperforming loans; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; experience/ability and depth of lending management and staff and national and local economic trends and conditions. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | o | Unallocated allowance.  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. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                            |   | Three Months EndedMarch 31,          |       |
|-------------------------------------------------|--------|--------------------------------------|------------|
|                                            |   | 2011                                 |       |   | 2010 |   |
|                                            |   | (In Thousands, Except Share Amounts) |       |
| Net income                                      |   | $                                    | 209        |   |   | $ | 493 |   |
|                                            |   |                                 |       |   |   |   |   |   |
| Weighted average common shares outstanding: (1) |   |                                 |       |   |   |   |   |   |
| Basic                                           |   |                                 | 10,114,324 |   |   |   | 10,297,874 |   |
| Effect of dilutive stock options                |   |                                 | 18,751     |   |   |   | - |   |
| Diluted                                         |   |                                 | 10,133,075 |   |   |   | 10,297,874 |   |
|                                            |   |                                 |       |   |   |   |   |   |
| Net income per share: (1)                       |   |                                 |       |   |   |   |   |   |
| Basic                                           |   | $                                    | 0.02       |   |   | $ | 0.05 |   |
| Diluted                                         |   | $                                    | 0.02       |   |   | $ | 0.05 |   |

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|                                            |   | March 31, 2011    |    |
|-------------------------------------------------|--------|-------------------|---------|
|                                            |   | AmortizedCost (1) |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|                                            |   | (In Thousands)    |    |
| Debt securities:                                |   |              |    |   |   |   |   |   |   |   |   |   |
| U.S. Government and agency obligations          |   | $                 | 35,963  |   |   | $ | 195 |   |   | $ | (130 | ) |   | $ | 36,028 |   |
| Government-sponsored enterprises                |   |              | 36,082  |   |   |   | 209 |   |   |   | (260 | ) |   |   | 36,031 |   |
| Mortgage-backed securities:(2)                  |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency - residential                            |   |              | 100,703 |   |   |   | 2,874 |   |   |   | (258 | ) |   |   | 103,319 |   |
| Non-agency - residential                        |   |              | 10,177  |   |   |   | 244 |   |   |   | (634 | ) |   |   | 9,787 |   |
| Non-agency - HELOC                              |   |              | 3,638   |   |   |   | - |   |   |   | (398 | ) |   |   | 3,240 |   |
| Corporate debt securities                       |   |              | 15,047  |   |   |   | 262 |   |   |   | (19 | ) |   |   | 15,290 |   |
| Collateralized debt obligations                 |   |              | 6,458   |   |   |   | - |   |   |   | (2,998 | ) |   |   | 3,460 |   |
| Obligations of state and political subdivisions |   |              | 6,644   |   |   |   | 120 |   |   |   | (50 | ) |   |   | 6,714 |   |
| Tax-exempt securities                           |   |              | 140     |   |   |   | 3 |   |   |   | - |   |   |   | 143 |   |
| Foreign government securities                   |   |              | 75      |   |   |   | - |   |   |   | - |   |   |   | 75 |   |
| Total debt securities                           |   |              | 214,927 |   |   |   | 3,907 |   |   |   | (4,747 | ) |   |   | 214,087 |   |
|                                            |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities:                              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities - financial services          |   |              | 1,288   |   |   |   | 116 |   |   |   | (2 | ) |   |   | 1,402 |   |
| Equity securities - other                       |   |              | 1,696   |   |   |   | 37 |   |   |   | (18 | ) |   |   | 1,715 |   |
| Total equity securities                         |   |              | 2,984   |   |   |   | 153 |   |   |   | (20 | ) |   |   | 3,117 |   |
| Total available for sale securities             |   | $                 | 217,911 |   |   | $ | 4,060 |   |   | $ | (4,767 | ) |   | $ | 217,204 |   |

| (1) | Net of OTTI write-downs recognized in earnings. |
|-----|-------------------------------------------------|

| (2) | Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”).  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by one of the GSEs or the U.S. Government. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                            |   | December 31, 2010 |    |
|-------------------------------------------------|--------|-------------------|---------|
|                                            |   | AmortizedCost (1) |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|                                            |   | (In Thousands)    |    |
| Debt securities:                                |   |              |    |   |   |   |   |   |   |   |   |   |
| U.S. Government and agency obligations          |   | $                 | 23,399  |   |   | $ | 197 |   |   | $ | (13 | ) |   | $ | 23,583 |   |
| Government-sponsored enterprises                |   |              | 29,912  |   |   |   | 283 |   |   |   | (202 | ) |   |   | 29,993 |   |
| Mortgage-backed securities:(2)                  |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency - residential                            |   |              | 84,408  |   |   |   | 3,132 |   |   |   | (170 | ) |   |   | 87,370 |   |
| Non-agency - residential                        |   |              | 11,039  |   |   |   | 127 |   |   |   | (711 | ) |   |   | 10,455 |   |
| Non-agency - HELOC                              |   |              | 3,797   |   |   |   | - |   |   |   | (598 | ) |   |   | 3,199 |   |
| Corporate debt securities                       |   |              | 14,502  |   |   |   | 252 |   |   |   | (37 | ) |   |   | 14,717 |   |
| Collateralized debt obligations                 |   |              | 6,466   |   |   |   | - |   |   |   | (3,934 | ) |   |   | 2,532 |   |
| Obligations of state and political subdivisions |   |              | 6,800   |   |   |   | 157 |   |   |   | (52 | ) |   |   | 6,905 |   |
| Tax-exempt securities                           |   |              | 140     |   |   |   | 4 |   |   |   | - |   |   |   | 144 |   |
| Foreign government securities                   |   |              | 100     |   |   |   | - |   |   |   | - |   |   |   | 100 |   |
| Total debt securities                           |   |              | 180,563 |   |   |   | 4,152 |   |   |   | (5,717 | ) |   |   | 178,998 |   |
|                                            |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities:                              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities - financial services          |   |              | 1,024   |   |   |   | 27 |   |   |   | (13 | ) |   |   | 1,038 |   |
| Total available for sale securities             |   | $                 | 181,587 |   |   | $ | 4,179 |   |   | $ | (5,730 | ) |   | $ | 180,036 |   |

| (1) | Net of OTTI write-downs recognized in earnings. |
|-----|-------------------------------------------------|

| (2) | Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”).  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by one of the GSEs or the U.S. Government. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | Amortized Cost |    |   | Fair Value |   |
|-----------------------------|--------|----------------|---------|--------|------------|--------|
|                        |   | (In Thousands) |    |
| Within 1 year               |   | $              | 7,067   |   |       | $      | 7,148 |   |
| After 1 but within 5 years  |   |           | 43,457  |   |       |   | 43,622 |   |
| After 5 but within 10 years |   |           | 14,220  |   |       |   | 14,231 |   |
| After 10 years              |   |           | 35,665  |   |       |   | 32,740 |   |
|                        |   |           | 100,409 |   |       |   | 97,741 |   |
| Mortgage-backed securities  |   |           | 114,518 |   |       |   | 116,346 |   |
| Total debt securities       |   | $              | 214,927 |   |       | $      | 214,087 |   |

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|                           |   | Three Months EndedMarch 31, |   |
|--------------------------------|--------|-----------------------------|--------|
|                           |   | 2011                        |   |   | 2010 |   |
|                           |   | (In Thousands)              |   |
| Gross gains on sales           |   | $                           | 35     |   |   | $ | 485 |   |
| Gross losses on sales          |   |                        | -      |   |   |   | (218 | ) |
| Net gain on sale of securities |   | $                           | 35     |   |   | $ | 267 |   |

|                                            |   | Less Than 12 Months |   |   | 12 Months Or More |   |   | Total     |   |
|-------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|-----------|--------|
| March 31, 2011:                                 |   | FairValue           |   |   | UnrealizedLosses  |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                                            |   | (In Thousands)      |   |
| U.S. Government and agency obligations          |   | $                   | 14,627 |   |              | $      | 124    |      |   | $ | 753 |   |   | $ | 6 |   |   | $ | 15,380 |   |   | $ | 130 |   |
| Government-sponsored enterprises                |   |                | 19,767 |   |              |   | 260    |      |   |   | - |   |   |   | - |   |   |   | 19,767 |   |   |   | 260 |   |
| Mortgage-backed securities:                     |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency - residential                            |   |                | 26,211 |   |              |   | 234    |      |   |   | 1,062 |   |   |   | 24 |   |   |   | 27,273 |   |   |   | 258 |   |
| Non-agency - residential                        |   |                | 384    |   |              |   | 8      |      |   |   | 6,078 |   |   |   | 626 |   |   |   | 6,462 |   |   |   | 634 |   |
| Non-agency - HELOC                              |   |                | -      |   |              |   | -      |      |   |   | 3,240 |   |   |   | 398 |   |   |   | 3,240 |   |   |   | 398 |   |
| Corporate debt securities                       |   |                | 2,727  |   |              |   | 19     |      |   |   | - |   |   |   | - |   |   |   | 2,727 |   |   |   | 19 |   |
| Collateralized debt obligations                 |   |                | 45     |   |              |   | 42     |      |   |   | 3,415 |   |   |   | 2,956 |   |   |   | 3,460 |   |   |   | 2,998 |   |
| Obligations of state and political subdivisions |   |                | 1,495  |   |              |   | 50     |      |   |   | - |   |   |   | - |   |   |   | 1,495 |   |   |   | 50 |   |
| Equity securities - financial services          |   |                | 108    |   |              |   | 2      |      |   |   | - |   |   |   | - |   |   |   | 108 |   |   |   | 2 |   |
| Equity securities - other                       |   |                | 608    |   |              |   | 18     |      |   |   | - |   |   |   | - |   |   |   | 608 |   |   |   | 18 |   |
| Total                                           |   | $                   | 65,972 |   |              | $      | 757    |      |   | $ | 14,548 |   |   | $ | 4,010 |   |   | $ | 80,520 |   |   | $ | 4,767 |   |

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|                                            |   | Less Than 12 Months |   |   | 12 Months Or More |   |   | Total     |   |
|-------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|-----------|--------|
| December 31, 2010:                              |   | FairValue           |   |   | UnrealizedLosses  |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                                            |   | (In Thousands)      |   |
| U.S. Government and agency obligations          |   | $                   | 2,053  |   |              | $      | 4      |      |   | $ | 858 |   |   | $ | 9 |   |   | $ | 2,911 |   |   | $ | 13 |   |
| Government-sponsored enterprises                |   |                | 16,636 |   |              |   | 202    |      |   |   | - |   |   |   | - |   |   |   | 16,636 |   |   |   | 202 |   |
| Mortgage-backed securities:                     |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency - residential                            |   |                | 15,881 |   |              |   | 170    |      |   |   | - |   |   |   | - |   |   |   | 15,881 |   |   |   | 170 |   |
| Non-agency - residential                        |   |                | 2,805  |   |              |   | 9      |      |   |   | 6,512 |   |   |   | 702 |   |   |   | 9,317 |   |   |   | 711 |   |
| Non-agency - HELOC                              |   |                | -      |   |              |   | -      |      |   |   | 3,198 |   |   |   | 598 |   |   |   | 3,198 |   |   |   | 598 |   |
| Corporate debt securities                       |   |                | 3,667  |   |              |   | 37     |      |   |   | - |   |   |   | - |   |   |   | 3,667 |   |   |   | 37 |   |
| Collateralized debt obligations                 |   |                | 28     |   |              |   | 60     |      |   |   | 2,504 |   |   |   | 3,874 |   |   |   | 2,532 |   |   |   | 3,934 |   |
| Obligations of state and political subdivisions |   |                | 1,493  |   |              |   | 52     |      |   |   | - |   |   |   | - |   |   |   | 1,493 |   |   |   | 52 |   |
| Equity securities - financial services          |   |                | -      |   |              |   | -      |      |   |   | 747 |   |   |   | 13 |   |   |   | 747 |   |   |   | 13 |   |
| Total                                           |   | $                   | 42,563 |   |              | $      | 534    |      |   | $ | 13,819 |   |   | $ | 5,196 |   |   | $ | 56,382 |   |   | $ | 5,730 |   |

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| Security |   | Class (1) |   | Amortized Cost |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | FairValue |   | LowestCreditRating (2) |   | TotalCredit-RelatedOTTI (3) |   |   | CreditSupportCoverageRatios (4) |   |
|----------|--------|-----------|--------|---------------------|--------|--------|----------------------------------|--------|--------|-----------------------------------|--------|--------|-----------|--------|------------------------|--------|-----------------------------|--------|--------|---------------------------------|--------|
|     |   |      |   |                |   |   |                             |   |   |                              |   |   |      |   |                   |   |                        |   |   |                            |   |
| MBS 1    |   | SSNR, AS  |   | $                   | 2,690  |   |                             | $      | -      |                              |   | $      | 448       |   |                   | $      | 2,242                       |   | CCC    |                            | $      | - |   |   |   | 0.51 |   |
| MBS 2    |   | SSUP, AS  |   |                | 216    |   |                             |   | 211    |                              |   |   | -         |   |                   |   | 427                         |   | CC     |                            |   | 1,059 |   |   |   | 0.00 |   |
| MBS 3    |   | PT, AS    |   |                | 393    |   |                             |   | -      |                              |   |   | 9         |   |                   |   | 384                         |   | CC     |                            |   | - |   |   |   | 0.78 |   |
| MBS 4    |   | CSTR      |   |                | 4,013  |   |                             |   | -      |                              |   |   | 177       |   |                   |   | 3,836                       |   | BB-    |                            |   | - |   |   |   | 2.80 |   |
|     |   |      |   | $                   | 7,312  |   |                             | $      | 211    |                              |   | $      | 634       |   |                   | $      | 6,889                       |   |   |                            | $      | 1,059 |   |   |   |   |   |

| (1) | Class definitions:  PT – Pass Through, AS – Accelerated, SSNR – Super Senior, SSUP – Senior Support and CSTR – Collateral Strip Interest. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The Company utilized credit ratings provided by Moody’s, S&P and Fitch in its evaluation of issuers. |
|-----|----------------------------------------------------------------------------------------------------------------|

| (3) | The OTTI amounts provided in the table represent cumulative credit loss amounts through March 31, 2011. |
|-----|---------------------------------------------------------------------------------------------------------|

| (4) | The credit support coverage ratio, which is the ratio that determines the multiple of credit support, is based on assumptions for the performance of loans within the delinquency pipeline.  The assumptions used are:  current collateral support/((60 day delinquencies x .60) + (90 day delinquencies x .70) + (foreclosures x 1.00) + (other real estate x 1.00)) x .40 for loss severity. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Security  |   | Class            |   | Amortized Cost |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | FairValue |   | LowestCreditRating (1) |   | TotalCredit-RelatedOTTI (2) |   |    | % of CurrentPerformingCollateralCoverage |   |
|-----------|--------|------------------|--------|---------------------|--------|--------|----------------------------------|--------|--------|-----------------------------------|--------|--------|-----------|--------|------------------------|--------|-----------------------------|--------|---------|------------------------------------------|--------|
|      |   |             |   |                |   |   |                             |   |   |                              |   |   |      |   |                   |   |                        |   |    |                                     |   |
| CDO 1     |   | B1               |   | $                   | 1,000  |   |                             | $      | -      |                              |   | $      | 776       |   |                   | $      | 224                         |   | CCC-    |                                     | $      | - |   |   |   | 110.6 |   |
| CDO 2     |   | B3               |   |                | 1,000  |   |                             |   | -      |                              |   |   | 770       |   |                   |   | 230                         |   | CCC-    |                                     |   | - |   |   |   | 110.6 |   |
| CDO 3     |   |    MEZ |   |                | 88     |   |                             |   | -      |                              |   |   | 42        |   |                   |   | 46                          |   | CC      |                                     |   | 34 |   |   |   | 124.0 |   |
| CDO 4 (3) |   | B                |   |                | 269    |   |                             |   | -      |                              |   |   | -         |   |                   |   | 269                         |   | CC      |                                     |   | 377 |   |   |   | 104.9 |   |
| CDO 5 (3) |   | C                |   |                | -      |   |                             |   | -      |                              |   |   | -         |   |                   |   | -                           |   |  C |                                     |   | 809 |   |   |   | 71.6 |   |
| CDO 6     |   | A2               |   |                | 2,637  |   |                             |   | -      |                              |   |   | 913       |   |                   |   | 1,724                       |   | CCC-    |                                     |   | - |   |   |   | 105.8 |   |
| CDO 7     |   | A1               |   |                | 1,733  |   |                             |   | -      |                              |   |   | 497       |   |                   |   | 1,236                       |   | CCC     |                                     |   | - |   |   |   | 139.3 |   |
|      |   |             |   | $                   | 6,727  |   |                             | $      | -      |                              |   | $      | 2,998     |   |                   | $      | 3,729                       |   |    |                                     | $      | 1,220 |   |   |   |   |   |

| (1) | The Company utilized credit ratings provided by Moody’s, S&P and Fitch in its evaluation of issuers. |
|-----|----------------------------------------------------------------------------------------------------------------|

| (2) | The OTTI amounts provided in the table represent cumulative credit loss amounts through March 31, 2011. |
|-----|---------------------------------------------------------------------------------------------------------|

| (3) | These securities were transferred from available for sale to trading securities during the quarter ended September 30, 2010. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

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|                                                                           |   | Three Months EndedMarch 31, 2011 |    |
|--------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                           |   | (In Thousands)                        |    |
| Balance at January 1, 2011                                                     |   | $                                     | 1,093   |   |
| Amounts related to credit for which OTTI losses were not previously recognized |   |                                  |  - |   |
| Additional credit losses for which OTTI losses were previously recognized      |   |                                  | -       |   |
|                                                                           |   |                                  |    |   |
| Balance at March 31, 2011                                                      |   | $                                     | 1,093   |   |

|                                         |   | March 31,2011 |    |   | December 31,2010 |   |
|----------------------------------------------|--------|--------------------|---------|--------|-----------------------|--------|
|                                         |   | (In Thousands)     |    |
| Real estate loans:                           |   |               |    |   |                  |   |
| Residential - 1 to 4 family                  |   | $                  | 265,306 |   |                  | $      | 270,923 |   |
| Multi-family and commercial                  |   |               | 155,594 |   |                  |   | 160,015 |   |
| Construction                                 |   |               | 6,877   |   |                  |   | 6,952 |   |
| Total real estate loans                      |   |               | 427,777 |   |                  |   | 437,890 |   |
|                                         |   |               |    |   |                  |   |   |   |
| Commercial business loans:                   |   |               |    |   |                  |   |   |   |
| SBA & USDA guaranteed                    |   |               | 130,355 |   |                  |   | 116,492 |   |
| Other                                        |   |               | 24,271  |   |                  |   | 26,310 |   |
| Total commercial business loans              |   |               | 154,626 |   |                  |   | 142,802 |   |
|                                         |   |               |    |   |                  |   |   |   |
| Consumer loans:                              |   |               |    |   |                  |   |   |   |
| Home equity                                  |   |               | 25,972  |   |                  |   | 25,533 |   |
| Other                                        |   |               | 3,044   |   |                  |   | 3,167 |   |
| Total consumer loans                         |   |               | 29,016  |   |                  |   | 28,700 |   |
|                                         |   |               |    |   |                  |   |   |   |
| Total loans                                  |   |               | 611,419 |   |                  |   | 609,392 |   |
|                                         |   |               |    |   |                  |   |   |   |
| Deferred loan origination costs, net of fees |   |               | 1,650   |   |                  |   | 1,621 |   |
| Allowance for loan losses                    |   |               | (4,563  | )      |                  |   | (4,799 | ) |
| Loans receivable, net                        |   | $                  | 608,506 |   |                  | $      | 606,214 |   |

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|                                       |   | March 31, 2011             |   |
|--------------------------------------------|--------|----------------------------|--------|
|                                       |   | Residential -1 to 4 Family |   |   | Multi-familyand Commercial |   |   | Construction |   |   | CommercialBusiness |   |   | Consumer |   |   | Total |   |
|                                       |   | (In Thousands)             |   |
| Balance at beginning of period             |   | $                          | 915    |   |   | $ | 2,700 |   |   | $ | 64 |   |   | $ | 790 |   |   | $ | 330 |   |   | $ | 4,799 |   |
|                                       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                  |   |                       | 81     |   |   |   | (70 | ) |   |   | 109 |   |   |   | (15 | ) |   |   | 105 |   |   |   | 210 |   |
| Loans charged-off                          |   |                       | (289   | ) |   |   | (32 | ) |   |   | (83 | ) |   |   | (31 | ) |   |   | (14 | ) |   |   | (449 | ) |
| Recoveries of loans previously charged-off |   |                       | -      |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | 3 |   |
| Balance at end of period                   |   | $                          | 707    |   |   | $ | 2,598 |   |   | $ | 90 |   |   | $ | 747 |   |   | $ | 421 |   |   | $ | 4,563 |   |

|                                       |   | March 31, 2010             |   |
|--------------------------------------------|--------|----------------------------|--------|
|                                       |   | Residential -1 to 4 Family |   |   | Multi-familyand Commercial |   |   | Construction |   |   | CommercialBusiness |   |   | Consumer |   |   | Total |   |
|                                       |   | (In Thousands)             |   |
| Balance at beginning of period             |   | $                          | 1,028  |   |   | $ | 2,443 |   |   | $ | 221 |   |   | $ | 906 |   |   | $ | 293 |   |   | $ | 4,891 |   |
|                                       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                  |   |                       | (20    | ) |   |   | 191 |   |   |   | (25 | ) |   |   | 11 |   |   |   | 13 |   |   |   | 170 |   |
| Loans charged-off                          |   |                       | (44    | ) |   |   | (222 | ) |   |   | - |   |   |   | - |   |   |   | (4 | ) |   |   | (270 | ) |
| Recoveries of loans previously charged-off |   |                       | 1      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 2 |   |
| Balance at end of period                   |   | $                          | 965    |   |   | $ | 2,412 |   |   | $ | 196 |   |   | $ | 917 |   |   | $ | 303 |   |   | $ | 4,793 |   |

|                                                      |   | March 31, 2011             |    |
|-----------------------------------------------------------|--------|----------------------------|---------|
|                                                      |   | Residential -1 to 4 Family |    |   | Multi-familyand Commercial |   |   | Construction |   |   | CommercialBusiness |   |   | Consumer |   |   | Total |   |
|                                                      |   | (In Thousands)             |    |
| Allowance for loans individually evaluated for impairment |   | $                          | 20      |   |   | $ | 234 |   |   | $ | - |   |   | $ | 5 |   |   | $ | - |   |   | $ | 259 |   |
| Allowance for loans collectively evaluated for impairment |   |                       | 687     |   |   |   | 2,364 |   |   |   | 90 |   |   |   | 742 |   |   |   | 421 |   |   |   | 4,304 |   |
| Total loan loss allowance                                 |   | $                          | 707     |   |   | $ | 2,598 |   |   | $ | 90 |   |   | $ | 747 |   |   | $ | 421 |   |   | $ | 4,563 |   |
|                                                      |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans individually evaluated for impairment               |   | $                          | 4,946   |   |   | $ | 6,829 |   |   | $ | - |   |   | $ | 52 |   |   | $ | 50 |   |   | $ | 11,877 |   |
| Loans collectively evaluated for impairment               |   |                       | 260,360 |   |   |   | 148,765 |   |   |   | 6,877 |   |   |   | 154,574 |   |   |   | 28,966 |   |   |   | 599,542 |   |
| Total loans                                               |   | $                          | 265,306 |   |   | $ | 155,594 |   |   | $ | 6,877 |   |   | $ | 154,626 |   |   | $ | 29,016 |   |   | $ | 611,419 |   |

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|                                                      |   | December 31, 2010          |    |
|-----------------------------------------------------------|--------|----------------------------|---------|
|                                                      |   | Residential -1 to 4 Family |    |   | Multi-familyand Commercial |   |   | Construction |   |   | CommercialBusiness |   |   | Consumer |   |   | Total |   |
|                                                      |   | (In Thousands)             |    |
| Allowance for loans individually evaluated for impairment |   | $                          | 212     |   |   | $ | 290 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 502 |   |
| Allowance for loans collectively evaluated for impairment |   |                       | 703     |   |   |   | 2,410 |   |   |   | 64 |   |   |   | 790 |   |   |   | 330 |   |   |   | 4,297 |   |
| Total loan loss allowance                                 |   | $                          | 915     |   |   | $ | 2,700 |   |   | $ | 64 |   |   | $ | 790 |   |   | $ | 330 |   |   | $ | 4,799 |   |
|                                                      |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans individually evaluated for impairment               |   | $                          | 3,768   |   |   | $ | 6,169 |   |   | $ | 82 |   |   | $ | 116 |   |   | $ | 51 |   |   | $ | 10,186 |   |
| Loans collectively evaluated for impairment               |   |                       | 267,155 |   |   |   | 153,846 |   |   |   | 6,870 |   |   |   | 142,686 |   |   |   | 28,649 |   |   |   | 599,206 |   |
| Total loans                                               |   | $                          | 270,923 |   |   | $ | 160,015 |   |   | $ | 6,952 |   |   | $ | 142,802 |   |   | $ | 28,700 |   |   | $ | 609,392 |   |

|                        |   | March 31, 2011    |         |
|-----------------------------|--------|-------------------|--------------|
|                        |   | 30-59DaysPast Due |         |   | 60-89DaysPast Due |   |   | Greater Than90 DaysPast Due |   |   | Total 30Days or MorePast Due |   |   | Current |   |   | TotalLoans |   |   | Past Due 90Days or Moreand Accruing |   |
|                        |   | (In Thousands)    |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real Estate:                |   |              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential - 1 to 4 family |   | $                 | 2,882        |   |   | $ | 306 |   |   | $ | 3,034 |   |   | $ | 6,222 |   |   | $ | 259,084 |   |   | $ | 265,306 |   |   | $ | - |   |
| Multi-family and commercial |   |              | 858          |   |   |   | - |   |   |   | 29 |   |   |   | 887 |   |   |   | 154,707 |   |   |   | 155,594 |   |   |   | - |   |
| Construction                |   |              | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,877 |   |   |   | 6,877 |   |   |   | - |   |
| Commercial Business:        |   |              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SBA & USDA guaranteed   |   |              |  15,144 |   |   |   | - |   |   |   | 350 |   |   |   | 15,494 |   |   |   | 114,861 |   |   |   | 130,355 |   |   |   | 350 |   |
| Other                       |   |              | -            |   |   |   | - |   |   |   | 46 |   |   |   | 46 |   |   |   | 24,225 |   |   |   | 24,271 |   |   |   | - |   |
| Consumer:                   |   |              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity                 |   |              | 284          |   |   |   | - |   |   |   | 50 |   |   |   | 334 |   |   |   | 25,638 |   |   |   | 25,972 |   |   |   | - |   |
| Other                       |   |              | 10           |   |   |   | 2 |   |   |   | - |   |   |   | 12 |   |   |   | 3,032 |   |   |   | 3,044 |   |   |   | - |   |
| Total                       |   | $                 | 19,178       |   |   | $ | 308 |   |   | $ | 3,509 |   |   | $ | 22,995 |   |   | $ | 588,424 |   |   | $ | 611,419 |   |   | $ | 350 |   |

|                        |   | December 31, 2010 |   |
|-----------------------------|--------|-------------------|--------|
|                        |   | 30-59DaysPast Due |   |   | 60-89DaysPast Due |   |   | Greater Than90 DaysPast Due |   |   | Total 30Days or MorePast Due |   |   | Current |   |   | TotalLoans |   |   | Past Due 90Days or Moreand Accruing |   |
|                        |   | (In Thousands)    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real Estate:                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential - 1 to 4 family |   | $                 | 2,387  |   |   | $ | 1,291 |   |   | $ | 2,364 |   |   | $ | 6,042 |   |   | $ | 264,881 |   |   | $ | 270,923 |   |   | $ | - |   |
| Multi-family and commercial |   |              | 597    |   |   |   | - |   |   |   | 44 |   |   |   | 641 |   |   |   | 159,374 |   |   |   | 160,015 |   |   |   | - |   |
| Construction                |   |              | -      |   |   |   | - |   |   |   | 82 |   |   |   | 82 |   |   |   | 6,870 |   |   |   | 6,952 |   |   |   | - |   |
| Commercial Business:        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SBA & USDA guaranteed   |   |              | 10,718 |   |   |   | - |   |   |   | - |   |   |   | 10,718 |   |   |   | 105,774 |   |   |   | 116,492 |   |   |   | - |   |
| Other                       |   |              | -      |   |   |   | - |   |   |   | 46 |   |   |   | 46 |   |   |   | 26,264 |   |   |   | 26,310 |   |   |   | - |   |
| Consumer:                   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home equity                 |   |              | 25     |   |   |   | 50 |   |   |   | - |   |   |   | 75 |   |   |   | 25,458 |   |   |   | 25,533 |   |   |   | - |   |
| Other                       |   |              | 10     |   |   |   | 1 |   |   |   | - |   |   |   | 11 |   |   |   | 3,156 |   |   |   | 3,167 |   |   |   | - |   |
| Total                       |   | $                 | 13,737 |   |   | $ | 1,342 |   |   | $ | 2,536 |   |   | $ | 17,615 |   |   | $ | 591,777 |   |   | $ | 609,392 |   |   | $ | - |   |

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| March 31, 2011                              |   | RecordedInvestment |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | TotalNonaccrualLoans |   |
|---------------------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|----------------------|--------|
|                                        |   | (In Thousands)     |   |
| Impaired loans without valuation allowance: |   |               |   |   |                   |   |   |             |   |   |
| Real Estate:                                |   |               |   |   |                   |   |   |             |   |   |                 |   |
| Residential - 1 to 4 family                 |   | $                  | 4,761  |   |                   | $      | 4,761  |             |   | $      | -                    |   |   | $ | 3,894 |   |
| Multi-family and commercial                 |   |               | 2,200  |   |                   |   | 2,215  |             |   |   | -                    |   |   |   | 1,084 |   |
| Commercial business                         |   |               | 47     |   |                   |   | 163    |             |   |   | -                    |   |   |   | 47 |   |
| Consumer                                    |   |               | 50     |   |                   |   | 50     |             |   |   | -                    |   |   |   | 50 |   |
| Total                                       |   |               | 7,058  |   |                   |   | 7,189  |             |   |   | -                    |   |   |   | 5,075 |   |
|                                        |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Impaired loans with valuation allowance:    |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Real Estate:                                |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Residential - 1 to 4 family                 |   |               | 185    |   |                   |   | 185    |             |   |   | 20                   |   |   |   | 185 |   |
| Multi-family and commercial                 |   |               | 4,629  |   |                   |   | 4,629  |             |   |   | 234                  |   |   |   | 908 |   |
| Commercial business                         |   |               | 5      |   |                   |   | 5      |             |   |   | 5                    |   |   |   | 5 |   |
| Total                                       |   |               | 4,819  |   |                   |   | 4,819  |             |   |   | 259                  |   |   |   | 1,098 |   |
|                                        |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Total impaired loans                        |   | $                  | 11,877 |   |                   | $      | 12,008 |             |   | $      | 259                  |   |   | $ | 6,173 |   |

| December 31, 2010                           |   | RecordedInvestment |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | TotalNonaccrualLoans |   |
|---------------------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|----------------------|--------|
|                                        |   | (In Thousands)     |   |
| Impaired loans without valuation allowance: |   |               |   |   |                   |   |   |             |   |   |
| Real Estate:                                |   |               |   |   |                   |   |   |             |   |   |                 |   |
| Residential - 1 to 4 family                 |   | $                  | 3,212  |   |                   | $      | 3,212  |             |   | $      | -                    |   |   | $ | 2,345 |   |
| Multi-family and commercial                 |   |               | 1,513  |   |                   |   | 1,513  |             |   |   | -                    |   |   |   | 853 |   |
| Construction                                |   |               | 82     |   |                   |   | 990    |             |   |   | -                    |   |   |   | 82 |   |
| Commercial business                         |   |               | 116    |   |                   |   | 201    |             |   |   | -                    |   |   |   | 116 |   |
| Consumer                                    |   |               | 51     |   |                   |   | 51     |             |   |   | -                    |   |   |   | 51 |   |
| Total                                       |   |               | 4,974  |   |                   |   | 5,967  |             |   |   | -                    |   |   |   | 3,447 |   |
|                                        |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Impaired loans with valuation allowance:    |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Real Estate:                                |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Residential - 1 to 4 family                 |   |               | 556    |   |                   |   | 556    |             |   |   | 212                  |   |   |   | 556 |   |
| Multi-family and commercial                 |   |               | 4,656  |   |                   |   | 4,656  |             |   |   | 290                  |   |   |   | 922 |   |
| Total                                       |   |               | 5,212  |   |                   |   | 5,212  |             |   |   | 502                  |   |   |   | 1,478 |   |
|                                        |   |               |   |   |                   |   |   |             |   |   |                 |   |   |   |   |   |
| Total impaired loans                        |   | $                  | 10,186 |   |                   | $      | 11,179 |             |   | $      | 502                  |   |   | $ | 4,925 |   |

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|                        |   | Three Months Ended March 31, 2011      |   |
|-----------------------------|--------|---------------------------------------------|--------|
|                        |   | Average RecordedInvestment inImpaired Loans |   |   | Interest IncomeRecognized onImpaired Loans |   |   | Cash Interest IncomeReceived onImpaired Loans |   |
| Real Estate:                |   |                                        |   |   |   |   |   |   |   |
| Residential - 1 to 4 family |   | $                                           | 3,449  |   |   | $ | - |   |   | $ | 38 |   |
| Multi-family and commercial |   |                                        | 4,522  |   |   |   | 13 |   |   |   | 96 |   |
| Construction                |   |                                        | 241    |   |   |   | 73 |   |   |   | - |   |
| Commercial business         |   |                                        | 168    |   |   |   | - |   |   |   | - |   |
| Total                       |   | $                                           | 8,380  |   |   | $ | 86 |   |   | $ | 134 |   |

|                        |   | Three Months Ended March 31, 2010      |   |
|-----------------------------|--------|---------------------------------------------|--------|
|                        |   | Average RecordedInvestment inImpaired Loans |   |   | Interest IncomeRecognized onImpaired Loans |   |   | Cash Interest IncomeReceived onImpaired Loans |   |
| Real Estate:                |   |                                        |   |   |   |   |   |   |   |
| Residential - 1 to 4 family |   | $                                           | 3,250  |   |   | $ | 1 |   |   | $ | 13 |   |
| Multi-family and commercial |   |                                        | 1,263  |   |   |   | 39 |   |   |   | 39 |   |
| Construction                |   |                                        | 2,207  |   |   |   | - |   |   |   | - |   |
| Commercial business         |   |                                        | 130    |   |   |   | - |   |   |   | 1 |   |
| Total                       |   | $                                           | 6,850  |   |   | $ | 40 |   |   | $ | 53 |   |

|   | o | Pass (Ratings 1-4):  Loans in these categories are considered low to average risk. |
|--------|---|----------------------------------------------------------------------------------------------|

|   | o | Special Mention (Rating 5): Loans in this category are starting to show signs of potential weakness and are being closely monitored by management. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Substandard (Rating 6): Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged.  There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Doubtful (Rating 7):  Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Loss (Rating 8): Loans in this category are considered uncollectible and of such little value that their continuance as loans is not warranted. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

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|            |   | Real Estate Loans          |    |   | Commercial Business        |   |    | Consumer     |   |   |          |   |
|-----------------|--------|----------------------------|---------|--------|----------------------------|--------|---------|--------------|--------|--------|---------------|--------|
| March 31, 2011  |   | Residential -1 to 4 Family |    |   | Multi-familyand Commercial |   |    | Construction |   |   | SBA &USDA |   |   | Other |   |   | HomeEquity |   |   | Other |   |   | TotalLoans |   |
|            |   | (In Thousands)             |    |
| Not Rated       |   | $                          | -       |   |                       | $      | -       |         |   | $      | -             |   |   | $ | 130,355 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 130,355 |   |
| Pass            |   |                       | 260,232 |   |                       |   | 126,578 |         |   |   | 6,349         |   |   |   | - |   |   |   | 18,128 |   |   |   | 25,862 |   |   |   | 3,044 |   |   |   | 440,193 |   |
| Special Mention |   |                       | 830     |   |                       |   | 18,906  |         |   |   | 528           |   |   |   | - |   |   |   | 2,348 |   |   |   | - |   |   |   | - |   |   |   | 22,612 |   |
| Substandard     |   |                       | 4,244   |   |                       |   | 10,110  |         |   |   | -             |   |   |   | - |   |   |   | 3,764 |   |   |   | 110 |   |   |   | - |   |   |   | 18,228 |   |
| Doubtful        |   |                       | -       |   |                       |   | -       |         |   |   | -             |   |   |   | - |   |   |   | 31 |   |   |   | - |   |   |   | - |   |   |   | 31 |   |
| Loss            |   |                       | -       |   |                       |   | -       |         |   |   | -             |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total           |   | $                          | 265,306 |   |                       | $      | 155,594 |         |   | $      | 6,877         |   |   | $ | 130,355 |   |   | $ | 24,271 |   |   | $ | 25,972 |   |   | $ | 3,044 |   |   | $ | 611,419 |   |

|              |   | Real Estate Loans          |    |   | Commercial Business        |   |    | Consumer     |   |   |          |   |
|-------------------|--------|----------------------------|---------|--------|----------------------------|--------|---------|--------------|--------|--------|---------------|--------|
| December 31, 2010 |   | Residential -1 to 4 Family |    |   | Multi-familyand Commercial |   |    | Construction |   |   | SBA &USDA |   |   | Other |   |   | HomeEquity |   |   | Other |   |   | TotalLoans |   |
|              |   | (In Thousands)             |    |
| Not Rated         |   | $                          | -       |   |                       | $      | -       |         |   | $      | -             |   |   | $ | 116,492 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 116,492 |   |
| Pass              |   |                       | 267,023 |   |                       |   | 134,484 |         |   |   | 6,504         |   |   |   | - |   |   |   | 20,105 |   |   |   | 25,483 |   |   |   | 3,166 |   |   |   | 456,765 |   |
| Special Mention   |   |                       | 834     |   |                       |   | 16,260  |         |   |   | 366           |   |   |   | - |   |   |   | 2,896 |   |   |   | - |   |   |   | - |   |   |   | 20,356 |   |
| Substandard       |   |                       | 3,066   |   |                       |   | 9,271   |         |   |   | 82            |   |   |   | - |   |   |   | 3,239 |   |   |   | 50 |   |   |   | 1 |   |   |   | 15,709 |   |
| Doubtful          |   |                       | -       |   |                       |   | -       |         |   |   | -             |   |   |   | - |   |   |   | 70 |   |   |   | - |   |   |   | - |   |   |   | 70 |   |
| Loss              |   |                       | -       |   |                       |   | -       |         |   |   | -             |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total             |   | $                          | 270,923 |   |                       | $      | 160,015 |         |   | $      | 6,952         |   |   | $ | 116,492 |   |   | $ | 26,310 |   |   | $ | 25,533 |   |   | $ | 3,167 |   |   | $ | 609,392 |   |

|                                      |   | March 31,2011 |    |   | December 31,2010 |   |
|-------------------------------------------|--------|--------------------|---------|--------|-----------------------|--------|
|                                      |   | (In Thousands)     |    |
| Land                                      |   | $                  | 2,098   |   |                  | $      | 2,098 |   |
| Buildings                                 |   |               | 6,086   |   |                  |   | 6,077 |   |
| Leasehold improvements                    |   |               | 7,787   |   |                  |   | 7,786 |   |
| Furniture and equipment                   |   |               | 11,964  |   |                  |   | 11,388 |   |
| Construction in process                   |   |               | -       |   |                  |   | 21 |   |
|                                      |   |               | 27,935  |   |                  |   | 27,370 |   |
| Accumulated depreciation and amortization |   |               | (15,414 | )      |                  |   | (15,247 | ) |
| Premises and equipment, net               |   | $                  | 12,521  |   |                  | $      | 12,123 |   |

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|                                                                    |   | March 31, 2011   |   |
|-------------------------------------------------------------------------|--------|------------------|--------|
|                                                                    |   | Before TaxAmount |   |   | TaxEffects |   |   | Net of TaxAmount |   |
|                                                                    |   | (In Thousands)   |   |
| Securities:                                                             |   |             |   |   |   |   |   |   |   |
| Unrealized holding gains on available for sale securities               |   | $                | 758    |   |   | $ | (259 | ) |   | $ | 499 |   |
| Noncredit portion of OTTI on available for sale securities              |   |             | 121    |   |   |   | (41 | ) |   |   | 80 |   |
| Reclassification adjustment for gains realized in net income            |   |             | (35    | ) |   |   | 12 |   |   |   | (23 | ) |
| Unrealized holding gains on available for sale securities, net of taxes |   |             | 844    |   |   |   | (288 | ) |   |   | 556 |   |
| Derivative instrument:                                                  |   |             |   |   |   |   |   |   |   |   |   |   |
| Change in fair value of effective cash flow hedging derivative          |   |             | 74     |   |   |   | (25 | ) |   |   | 49 |   |
| Other comprehensive income                                              |   | $                | 918    |   |   | $ | (313 | ) |   | $ | 605 |   |

|                                                          |   | March 31, 2011   |   |
|---------------------------------------------------------------|--------|------------------|--------|
|                                                          |   | Before TaxAmount |   |   | TaxEffects |   |   | Net of TaxAmount |   |
|                                                          |   | (In Thousands)   |   |
| Net unrealized losses on available for sale securities        |   | $                | (876   | ) |   | $ | 297 |   |   | $ | (579 | ) |
| Noncredit portion of OTTI on available for sale securities    |   |             | 169    |   |   |   | (57 | ) |   |   | 112 |   |
| Net unrealized loss on effective cash flow hedging derivative |   |             | (55    | ) |   |   | 19 |   |   |   | (36 | ) |
|                                                          |   |             |   |   |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive loss                          |   | $                | (762   | ) |   | $ | 259 |   |   | $ | (503 | ) |

|                                                          |   | December 31, 2010 |   |
|---------------------------------------------------------------|--------|-------------------|--------|
|                                                          |   | Before TaxAmount  |   |   | TaxEffects |   |   | Net of TaxAmount |   |
|                                                          |   | (In Thousands)    |   |
| Net unrealized losses on available for sale securities        |   | $                 | (1,599 | ) |   | $ | 544 |   |   | $ | (1,055 | ) |
| Noncredit portion of OTTI on available for sale securities    |   |              | 48     |   |   |   | (16 | ) |   |   | 32 |   |
| Net unrealized loss on effective cash flow hedging derivative |   |              | (129   | ) |   |   | 44 |   |   |   | (85 | ) |
|                                                          |   |              |   |   |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive loss                          |   | $                 | (1,680 | ) |   | $ | 572 |   |   | $ | (1,108 | ) |

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| March 31, 2011                  |   | Actual |    |   | For Capital Adequacy Purposes |   |   | To Be Well Capitalized Under Prompt Corrective Action Provisions |   |
|---------------------------------|--------|--------|---------|--------|-------------------------------|--------|--------|------------------------------------------------------------------|--------|
| (Dollars in Thousands)          |   | Amount |    |   | Ratio                         |   |   | Amount                                                           |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                            |   |   |    |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |
| Total Risk-based Capital Ratio  |   | $      | 103,590 |   |                          |   | 21.77  | %                                                                |   | $ | 38,067 |   |   |   | 8.00 | % |   | $ | 47,584 |   |   |   | 10.00 | % |
| Tier I Risk-based Capital Ratio |   |   | 98,974  |   |                          |   | 20.80  |                                                             |   |   | 19,033 |   |   |   | 4.00 |   |   |   | 28,550 |   |   |   | 6.00 |   |
| Tier I Capital Ratio            |   |   | 98,974  |   |                          |   | 10.91  |                                                             |   |   | 36,287 |   |   |   | 4.00 |   |   |   | 45,359 |   |   |   | 5.00 |   |
| Tangible Equity Ratio           |   |   | 98,974  |   |                          |   | 10.91  |                                                             |   |   | 13,608 |   |   |   | 1.50 |   |   |   | N/A |   |   |   | N/A |   |

| December 31, 2010               |   | Actual |   |   | For Capital Adequacy Purposes |   |   | To Be Well Capitalized Under Prompt Corrective Action Provisions |   |
|---------------------------------|--------|--------|--------|--------|-------------------------------|--------|--------|------------------------------------------------------------------|--------|
| (Dollars in Thousands)          |   | Amount |   |   | Ratio                         |   |   | Amount                                                           |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                            |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |
| Total Risk-based Capital Ratio  |   | $      | 75,823 |   |                          |   | 15.34  | %                                                                |   | $ | 39,543 |   |   |   | 8.00 | % |   | $ | 49,428 |   |   |   | 10.00 | % |
| Tier I Risk-based Capital Ratio |   |   | 71,173 |   |                          |   | 14.40  |                                                             |   |   | 19,770 |   |   |   | 4.00 |   |   |   | 29,655 |   |   |   | 6.00 |   |
| Tier I Capital Ratio            |   |   | 71,173 |   |                          |   | 7.81   |                                                             |   |   | 36,452 |   |   |   | 4.00 |   |   |   | 45,565 |   |   |   | 5.00 |   |
| Tangible Equity Ratio           |   |   | 71,173 |   |                          |   | 7.81   |                                                             |   |   | 13,670 |   |   |   | 1.50 |   |   |   | N/A |   |   |   | N/A |   |

| Level 1: | Valuation is based on quoted prices in active markets for identical assets or liabilities.  Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 2: | Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3: | Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.  Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar  techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | o | Cash and cash equivalents. The carrying amounts of cash and short-term instruments approximate the fair values based on the short-term nature of the assets. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Trading securities.  The Company holds two securities designated as trading securities.  The determination of the fair value for these securities is determined based on a discounted cash flow methodology.  Certain inputs to the fair value calculation are unobservable and management determined that since an orderly and active market for these securities did not exist, the securities meet the definition of Level 3 securities. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Securities available for sale.  Included in the available for sale category are both debt and equity securities.  The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market.  Securities measured at fair value in Level 2 are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data. The Company utilizes Interactive Data Corporation (“IDC”), a third-party, nationally-recognized pricing service to estimate fair value measurements for the majority of its portfolio.  The pricing service evaluates each asset class based on relevant market information considering observable data but these prices do not represent binding quotes.  The fair value prices on all investments are reviewed for reasonableness by management.  Securities measured at fair value in Level 3 include collateralized debt obligations that are backed by trust preferred securities issued by banks, thrifts and insurance companies. Management determined that an orderly and active market for these securities and similar securities did not exist based on a significant reduction in trading volume and widening spreads relative to historical levels.  The Company estimates future cash flows discounted using a rate management believes is representative of current market conditions.  Factors in determining the discount rate include the current level of deferrals and/or defaults, changes in credit rating and the financial condition of the debtors within the underlying securities, broker quotes for securities with similar structure and credit risk, interest rate movements and pricing for new issuances. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Federal Home Loan Bank stock.  The carrying value of Federal Home Loan Bank (“FHLB”) stock approximates fair value based on the redemption provisions of the FHLB. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Loans held for sale.  The fair value of loans held for sale is estimated using quoted market prices. |
|--------|---|----------------------------------------------------------------------------------------------------------------|

|   | o | Loans receivable.  For variable rate loans which reprice frequently and have no significant change in credit risk, fair values are based on carrying values.  The fair value of fixed-rate loans are estimated by discounting the future cash flows using the rates at the end of the period in which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | o | Accrued interest receivable.  The carrying amount of accrued interest approximates fair value. |
|--------|---|----------------------------------------------------------------------------------------------------------|

|   | o | Deposits.  The fair value of demand deposits, negotiable orders of withdrawal, regular savings, certain money market deposits and mortgagors’ and investors’ escrow accounts is the amount payable on demand at the reporting date.  The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities to a schedule of aggregated expected maturities on such deposits. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Federal Home Loan Bank advances.  The fair value of the advances is estimated using a discounted cash flow calculation that applies current FHLB interest rates for advances of similar maturity to a schedule of maturities of such advances. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Junior subordinated debt owed to unconsolidated trust.  Rates currently available for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Interest rate swap agreement.  The fair value of the Company’s interest rate swap is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of the derivative.  The pricing analysis is based on observable inputs for the contractual term of the derivative, including the period to maturity and interest rate curves. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Forward loan sale commitments and derivative loan commitments.  Forward loan sale commitments and derivative loan commitments are based on the fair values of the underlying mortgage loans and the probability of such commitments being exercised.  Significant management judgment and estimation is required in determining these fair value measurements. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Off-balance sheet instruments.  Fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standings. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                          |   | March 31, 2011 |   |
|---------------------------------------------------------------|--------|----------------|--------|
|                                                          |   | Level 1        |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                          |   | (In Thousands) |   |
| Assets:                                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| Trading securities                                            |   | $              | -      |   |   | $ | - |   |   | $ | 269 |   |   | $ | 269 |   |
| U.S. Government and agency obligations                        |   |           | 1,018  |   |   |   | 35,010 |   |   |   | - |   |   |   | 36,028 |   |
| Government-sponsored enterprises                              |   |           | -      |   |   |   | 36,031 |   |   |   | - |   |   |   | 36,031 |   |
| Mortgage-backed securities                                    |   |           | -      |   |   |   | 116,346 |   |   |   | - |   |   |   | 116,346 |   |
| Corporate debt securities                                     |   |           | -      |   |   |   | 15,290 |   |   |   | - |   |   |   | 15,290 |   |
| Collateralized debt obligations                               |   |           | -      |   |   |   | - |   |   |   | 3,460 |   |   |   | 3,460 |   |
| Obligations of state and political subdivisions               |   |           | -      |   |   |   | 6,714 |   |   |   | - |   |   |   | 6,714 |   |
| Tax-exempt securities                                         |   |           | -      |   |   |   | 143 |   |   |   | - |   |   |   | 143 |   |
| Foreign government securities                                 |   |           | -      |   |   |   | 75 |   |   |   | - |   |   |   | 75 |   |
| Equity securities - financial services                        |   |           | 652    |   |   |   | 750 |   |   |   | - |   |   |   | 1,402 |   |
| Equity securities - other                                     |   |           | 1,715  |   |   |   | - |   |   |   | - |   |   |   | 1,715 |   |
| Forward loan sale commitments and derivative loan commitments |   |           | -      |   |   |   | - |   |   |   | 8 |   |   |   | 8 |   |
| Total assets                                                  |   | $              | 3,385  |   |   | $ | 210,359 |   |   | $ | 3,737 |   |   | $ | 217,481 |   |
|                                                          |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                  |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward loan sale commitments and derivative loan commitments |   | $              | -      |   |   | $ | - |   |   | $ | 23 |   |   | $ | 23 |   |
| Interest rate swap agreement                                  |   |           | -      |   |   |   | 55 |   |   |   | - |   |   |   | 55 |   |
| Total liabilities                                             |   | $              | -      |   |   | $ | 55 |   |   | $ | 23 |   |   | $ | 78 |   |

|                                                          |   | December 31, 2010 |   |
|---------------------------------------------------------------|--------|-------------------|--------|
|                                                          |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                          |   | (In Thousands)    |   |
| Assets:                                                       |   |              |   |   |   |   |   |   |   |   |   |   |
| Trading securities                                            |   | $                 | -      |   |   | $ | - |   |   | $ | 248 |   |   | $ | 248 |   |
| U.S. Government and agency obligations                        |   |              | 1,025  |   |   |   | 22,558 |   |   |   | - |   |   |   | 23,583 |   |
| Government-sponsored enterprises                              |   |              | -      |   |   |   | 29,993 |   |   |   | - |   |   |   | 29,993 |   |
| Mortgage-backed securities                                    |   |              | -      |   |   |   | 101,024 |   |   |   | - |   |   |   | 101,024 |   |
| Corporate debt securities                                     |   |              | -      |   |   |   | 14,717 |   |   |   | - |   |   |   | 14,717 |   |
| Collateralized debt obligations                               |   |              | -      |   |   |   | - |   |   |   | 2,532 |   |   |   | 2,532 |   |
| Obligations of state and political subdivisions               |   |              | -      |   |   |   | 6,905 |   |   |   | - |   |   |   | 6,905 |   |
| Tax-exempt securities                                         |   |              | -      |   |   |   | 144 |   |   |   | - |   |   |   | 144 |   |
| Foreign government securities                                 |   |              | -      |   |   |   | 100 |   |   |   | - |   |   |   | 100 |   |
| Equity securities                                             |   |              | 299    |   |   |   | 739 |   |   |   | - |   |   |   | 1,038 |   |
| Forward loan sale commitments and derivative loan commitments |   |              | -      |   |   |   | - |   |   |   | 163 |   |   |   | 163 |   |
| Total assets                                                  |   | $                 | 1,324  |   |   | $ | 176,180 |   |   | $ | 2,943 |   |   | $ | 180,447 |   |
|                                                          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward loan sale commitments and derivative loan commitments |   | $                 | -      |   |   | $ | - |   |   | $ | 184 |   |   | $ | 184 |   |
| Interest rate swap agreement                                  |   |              | -      |   |   |   | 129 |   |   |   | - |   |   |   | 129 |   |
| Total liabilities                                             |   | $                 | -      |   |   | $ | 129 |   |   | $ | 184 |   |   | $ | 313 |   |

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|                                                          |   | Assets                        |   |   | Liabilities                                                     |   |
|---------------------------------------------------------------|--------|-------------------------------|--------|--------|-----------------------------------------------------------------|--------|
|                                                          |   | CollateralizedDebtObligations |   |   | Forward Loan SaleCommitments andDerivative LoanCommitments, Net |   |
|                                                          |   | (In Thousands)                |   |
| Balance at December 31, 2010                                  |   | $                             | 2,780  |   |                                                            | $      | 21 |   |
| Transfers to/from Level 3                                     |   |                          | -      |   |                                                            |   | - |   |
| Impairment charges included in net income                     |   |                          | -      |   |                                                            |   | - |   |
| Change in fair value included in net income                   |   |                          | 21     |   |                                                            |   | (6 | ) |
| Increase in fair value included in other comprehensive income |   |                          | 928    |   |                                                            |   | - |   |
| Balance at March 31, 2011                                     |   | $                             | 3,729  |   |                                                            | $      | 15 |   |

|                    |   | At March 31, 2011 |   | Three Months EndedMarch 31, 2011 |    |
|-------------------------|--------|------------------------|--------|---------------------------------------|---------|
|                    |   | Level 1                |   |                                  | Level 2 |   |   | Level 3 |   |   | Total Losses |   |
|                    |   | (In Thousands)         |
| Impaired loans          |   | $                      | -      |                                  |    | $ | - |   |   | $ | 904 |   |   | $ | 5 |   |
| Other real estate owned |   |                   | -      |                                  |    |   | - |   |   |   | 830 |   |   |   | 25 |   |
| Total assets            |   | $                      | -      |                                  |    | $ | - |   |   | $ | 1,734 |   |   | $ | 30 |   |

|                    |   | At March 31, 2010 |   | Three Months EndedMarch 31, 2010 |    |
|-------------------------|--------|------------------------|--------|---------------------------------------|---------|
|                    |   | Level 1                |   |                                  | Level 2 |   |   | Level 3 |   |   | Total Losses |   |
|                    |   | (In Thousands)         |
| Impaired loans          |   | $                      | -      |                                  |    | $ | - |   |   | $ | 800 |   |   | $ | 24 |   |
| Other real estate owned |   |                   | -      |                                  |    |   | - |   |   |   | 4,206 |   |   |   | - |   |
| Total assets            |   | $                      | -      |                                  |    | $ | - |   |   | $ | 5,006 |   |   | $ | 24 |   |

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|                                                                       |   | March 31, 2011 |    |   | December 31, 2010 |   |
|----------------------------------------------------------------------------|--------|---------------------|---------|--------|------------------------|--------|
|                                                                       |   | Carrying Amount     |    |   | Fair Value             |   |   | Carrying Amount |   |   | Fair Value |   |
|                                                                       |   | (In Thousands)      |    |
| Financial Assets:                                                          |   |                |    |   |                   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                  |   | $                   | 49,536  |   |                   | $      | 49,536 |   |   | $ | 78,321 |   |   | $ | 78,321 |   |
| Trading securities                                                         |   |                | 269     |   |                   |   | 269 |   |   |   | 248 |   |   |   | 248 |   |
| Available for sale securities                                              |   |                | 217,204 |   |                   |   | 217,204 |   |   |   | 180,036 |   |   |   | 180,036 |   |
| Loans held for sale                                                        |   |                | 1,776   |   |                   |   | 1,796 |   |   |   | 7,371 |   |   |   | 7,460 |   |
| Loans receivable, net                                                      |   |                | 608,506 |   |                   |   | 617,106 |   |   |   | 606,214 |   |   |   | 608,935 |   |
| Federal Home Loan Bank stock                                               |   |                | 8,388   |   |                   |   | 8,388 |   |   |   | 8,388 |   |   |   | 8,388 |   |
| Accrued interest receivable                                                |   |                | 3,357   |   |                   |   | 3,357 |   |   |   | 3,113 |   |   |   | 3,113 |   |
| Forward loan sale commitments and derivative loan commitments              |   |                | 8       |   |                   |   | 8 |   |   |   | 163 |   |   |   | 163 |   |
|                                                                       |   |                |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Financial Liabilities:                                                     |   |                |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Savings deposits                                                           |   |                | 52,521  |   |                   |   | 52,521 |   |   |   | 56,495 |   |   |   | 56,495 |   |
| Demand deposits, negotiable orders of withdrawal and money market accounts |   |                | 337,612 |   |                   |   | 337,612 |   |   |   | 314,656 |   |   |   | 314,656 |   |
| Certificates of deposit                                                    |   |                | 281,241 |   |                   |   | 283,910 |   |   |   | 289,563 |   |   |   | 293,035 |   |
| Mortgagors' and investors' escrow accounts                                 |   |                | 1,791   |   |                   |   | 1,791 |   |   |   | 3,425 |   |   |   | 3,425 |   |
| Federal Home Loan Bank advances                                            |   |                | 109,169 |   |                   |   | 113,202 |   |   |   | 114,169 |   |   |   | 118,799 |   |
| Junior subordinated debt owed to unconsolidated trust                      |   |                | 8,248   |   |                   |   | 6,308 |   |   |   | 8,248 |   |   |   | 6,115 |   |
| Forward loan sale commitments and derivative loan commitments              |   |                | 23      |   |                   |   | 23 |   |   |   | 184 |   |   |   | 184 |   |
| Interest rate swap agreement                                               |   |                | 55      |   |                   |   | 55 |   |   |   | 129 |   |   |   | 129 |   |

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| Notional amount                                |   | $      | 8,000 |   |
|------------------------------------------------|--------|--------|-------|--------|
| Weighted average fixed pay rate                |   |   | 2.44  | %      |
| Weighted average variable receive rate         |   |   | 0.31  | %      |
| Weighted average maturity in years             |   |   | 4.7   |   |
| Unrealized loss relating to interest rate swap |   | $      | 55    |   |

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|   | o | Residential Loans.   Residential mortgage loans comprised 43.4% of the total loan portfolio at March 31, 2011.  Residential mortgage loans decreased $5.6 million, or 2.1%.  Contributing to the decrease was the sale of $19.8 million of longer-term fixed-rate residential mortgage loans.  Loan originations for residential loans increased $7.8 million for the first three months of 2011 over the comparable period in 2010. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Commercial Loans.  The commercial loan portfolio, which includes multi-family and commercial real estate and commercial business loans, represented 50.7% of total loans.  Multi-family and commercial real estate loans decreased $4.4 million, or 2.8%.  Loan originations for commercial real estate loans increased $7.1 million during the first three months of 2011 compared to the same period in 2010.  Commercial business loans increased $11.8 million, or 8.3%, for 2011 primarily due to the purchase of $17.4 million in SBA and USDA loans that are fully guaranteed by the U.S. Government.  Loan originations for commercial business loans decreased $280,000 during the first three months of 2011 compared to the same period in 2010. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Consumer Loans.  Consumer loans represent 4.8% of the Company’s total loan portfolio.  Consumer loans increased $316,000 during the first quarter of 2011.  Increases in home equity loans of $439,000 were offset by a decrease of $123,000 in other consumer loans.  Loan originations for consumer loans increased $643,000 for the three months ended March 31, 2011 from the comparable period in 2010. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                        |   | March 31,         |   |   | December 31, |   |
|-----------------------------------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                                                        |   | 2011                   |   |   | 2010              |   |
|                                                                        |   | (Dollars in Thousands) |   |
| Nonaccrual loans:                                                           |   |                   |   |   |              |   |
| Real estate loans                                                           |   |                   |   |   |              |   |
| Residential - 1 to 4 family                                                 |   | $                      | 4,079  |   |              | $      | 2,901 |   |
| Multi-family and commercial                                                 |   |                   | 1,992  |   |              |   | 1,775 |   |
| Construction                                                                |   |                   | -      |   |              |   | 82 |   |
| Total real estate loans                                                     |   |                   | 6,071  |   |              |   | 4,758 |   |
| Commercial business loans                                                   |   |                   | 52     |   |              |   | 116 |   |
| Consumer loans                                                              |   |                   | 50     |   |              |   | 51 |   |
| Total nonaccrual loans                                                      |   |                   | 6,173  |   |              |   | 4,925 |   |
|                                                                        |   |                   |   |   |              |   |   |   |
| Accruing loans past due 90 days or more                                     |   |                   | 350    |   |              |   | - |   |
| Total nonperforming loans                                                   |   |                   | 6,523  |   |              |   | 4,925 |   |
|                                                                        |   |                   |   |   |              |   |   |   |
| Other real estate owned, net (1)                                            |   |                   | 830    |   |              |   | 1,285 |   |
| Total nonperforming assets                                                  |   |                   | 7,353  |   |              |   | 6,210 |   |
|                                                                        |   |                   |   |   |              |   |   |   |
| Accruing troubled debt restructurings                                       |   |                   | 5,704  |   |              |   | 5,261 |   |
| Total nonperforming assets and troubled debt restructurings                 |   | $                      | 13,057 |   |              | $      | 11,471 |   |
|                                                                        |   |                   |   |   |              |   |   |   |
| Total nonperforming loans to total loans                                    |   |                   | 1.06   | %      |              |   | 0.80 | % |
| Total nonperforming loans to total assets                                   |   |                   | 0.70   | %      |              |   | 0.53 | % |
| Total nonperforming assets and troubled debt restructurings to total assets |   |                   | 1.40   | %      |              |   | 1.24 | % |

| (1) | Other real estate owned balances are shown net of related write-downs or valuation allowance. |
|-----|-----------------------------------------------------------------------------------------------|

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|                                                                              |   | At or For the Three Months Ended March 31, |    |
|-----------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|
|                                                                              |   | 2011                                            |    |   | 2010 |   |
|                                                                              |   | AverageBalance                                  |    |   | Interest &Dividends |   |   | AverageYield/Rate |   |   | AverageBalance |   |   | Interest &Dividends |   |   | AverageYield/Rate |   |
|                                                                              |   | (Dollars in Thousands)                          |    |
| Interest-earning assets:                                                          |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1) (2)                                                                     |   | $                                               | 614,448 |   |   | $ | 7,908 |   |   |   | 5.22 | % |   | $ | 607,198 |   |   | $ | 8,411 |   |   |   | 5.62 | % |
| Securities (3)                                                                    |   |                                            | 211,845 |   |   |   | 1,582 |   |   |   | 3.03 |   |   |   | 191,353 |   |   |   | 1,780 |   |   |   | 3.77 |   |
| Other interest-earning assets                                                     |   |                                            | 56,909  |   |   |   | 30 |   |   |   | 0.21 |   |   |   | 20,293 |   |   |   | 23 |   |   |   | 0.46 |   |
| Total interest-earning assets                                                     |   |                                            | 883,202 |   |   |   | 9,520 |   |   |   | 4.37 |   |   |   | 818,844 |   |   |   | 10,214 |   |   |   | 5.06 |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning assets                                                        |   |                                            | 58,562  |   |   |   |   |   |   |   |   |   |   |   | 53,341 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                      |   | $                                               | 941,764 |   |   |   |   |   |   |   |   |   |   | $ | 872,185 |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                     |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                         |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW and money market                                                              |   | $                                               | 262,036 |   |   |   | 339 |   |   |   | 0.52 |   |   | $ | 227,257 |   |   |   | 465 |   |   |   | 0.83 |   |
| Savings (4)                                                                       |   |                                            | 55,258  |   |   |   | 54 |   |   |   | 0.40 |   |   |   | 62,413 |   |   |   | 79 |   |   |   | 0.51 |   |
| Certificates of deposit (5)                                                       |   |                                            | 284,930 |   |   |   | 1,504 |   |   |   | 2.14 |   |   |   | 309,427 |   |   |   | 2,120 |   |   |   | 2.78 |   |
| Total interest-bearing deposits                                                   |   |                                            | 602,224 |   |   |   | 1,897 |   |   |   | 1.28 |   |   |   | 599,097 |   |   |   | 2,664 |   |   |   | 1.80 |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank advances                                                   |   |                                            | 113,447 |   |   |   | 1,012 |   |   |   | 3.62 |   |   |   | 118,171 |   |   |   | 1,076 |   |   |   | 3.69 |   |
| Subordinated debt                                                                 |   |                                            | 8,248   |   |   |   | 83 |   |   |   | 4.08 |   |   |   | 8,248 |   |   |   | 39 |   |   |   | 1.92 |   |
| Total interest-bearing liabilities                                                |   |                                            | 723,919 |   |   |   | 2,992 |   |   |   | 1.68 |   |   |   | 725,516 |   |   |   | 3,779 |   |   |   | 2.11 |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing liabilities                                                   |   |                                            | 87,236  |   |   |   |   |   |   |   |   |   |   |   | 67,172 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                 |   |                                            | 811,155 |   |   |   |   |   |   |   |   |   |   |   | 792,688 |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total shareholders' equity                                                        |   |                                            | 130,609 |   |   |   |   |   |   |   |   |   |   |   | 79,497 |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders' equity                                        |   | $                                               | 941,764 |   |   |   |   |   |   |   |   |   |   | $ | 872,185 |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest-earning assets                                                       |   | $                                               | 159,283 |   |   |   |   |   |   |   |   |   |   | $ | 93,328 |   |   |   |   |   |   |   |   |   |
|                                                                              |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax equivalent net interest income (3)                                            |   |                                            |    |   |   |   | 6,528 |   |   |   |   |   |   |   |   |   |   |   | 6,435 |   |   |   |   |   |
| Tax equivalent interest rate spread (6)                                           |   |                                            |    |   |   |   |   |   |   |   | 2.69 | % |   |   |   |   |   |   |   |   |   |   | 2.95 | % |
| Tax equivalent net interest margin as a percentage of interest-earning assets (7) |   |                                            |    |   |   |   |   |   |   |   | 3.00 | % |   |   |   |   |   |   |   |   |   |   | 3.19 | % |
| Average of interest-earning assets to average interest-bearing liabilities        |   |                                            |    |   |   |   |   |   |   |   | 122.00 | % |   |   |   |   |   |   |   |   |   |   | 112.86 | % |
| Less tax equivalent adjustment (3)                                                |   |                                            |    |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | (5 | ) |   |   |   |   |
| Net interest income                                                               |   |                                            |    |   |   | $ | 6,528 |   |   |   |   |   |   |   |   |   |   | $ | 6,430 |   |   |   |   |   |

| (1) | Amount is net of deferred loan origination fees and costs.  Average balances include nonaccrual loans and loans held for sale. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Loan fees are included in interest income and are immaterial. |
|-----|---------------------------------------------------------------|

| (3) | Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%.  The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amounts reported in the statements of income. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Includes mortgagors’ and investors’ escrow accounts. |
|-----|------------------------------------------------------------------|

| (5) | Includes brokered deposits. |
|-----|-----------------------------|

| (6) | Tax equivalent net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Tax equivalent net interest margin represents tax equivalent net interest income divided by average interest-earning assets. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

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|                               |   | Three Months EndedMarch 31, 2011 and 2010 |   |
|------------------------------------|--------|------------------------------------------------|--------|
|                               |   |  Increase  (Decrease) Due To         |   |
|                               |   | Rate                                           |   |   |  Volume |   |   | Net |   |
|                               |   | (In Thousands)                                 |   |
| Interest-earning assets:           |   |                                           |   |   |   |   |   |   |   |
| Interest and dividend income:      |   |                                           |   |   |   |   |   |   |   |
| Loans (1)(2)                       |   | $                                              | (602   | ) |   | $ | 99 |   |   | $ | (503 | ) |
| Securities (3)                     |   |                                           | (376   | ) |   |   | 178 |   |   |   | (198 | ) |
| Other interest-earning assets      |   |                                           | (17    | ) |   |   | 24 |   |   |   | 7 |   |
| Total interest-earning assets      |   |                                           | (995   | ) |   |   | 301 |   |   |   | (694 | ) |
|                               |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:      |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                  |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Deposits (4)                       |   |                                           | (664   | ) |   |   | (103 | ) |   |   | (767 | ) |
| Federal Home Loan Bank advances    |   |                                           | (22    | ) |   |   | (42 | ) |   |   | (64 | ) |
| Subordinated debt                  |   |                                           | 44     |   |   |   | - |   |   |   | 44 |   |
| Total interest-bearing liabilities |   |                                           | (642   | ) |   |   | (145 | ) |   |   | (787 | ) |
|                               |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Change in net interest income (5)  |   | $                                              | (353   | ) |   | $ | 446 |   |   | $ | 93 |   |

| (1) | Amount is net of deferred loan origination fees and costs.  Average balances include nonaccrual loans and loans held for sale. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Loan fees are included in interest income and are immaterial. |
|-----|---------------------------------------------------------------|

| (3) | Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%.  The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amount reported in the statements of income. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Includes mortgagors’ and investors’ escrow accounts. |
|-----|------------------------------------------------------------------|

| (5) | Presented on a tax equivalent basis using a tax rate of 34%. |
|-----|--------------------------------------------------------------|

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|                                                          |   | Three Months Ended March 31, |   |   | Change |   |
|---------------------------------------------------------------|--------|-----------------------------------|--------|--------|--------|--------|
|                                                          |   | 2011                              |   |   | 2010   |   |   | Dollars |   |   | Percent |   |
|                                                          |   | (Dollars in Thousands)            |   |
| Service fees                                                  |   | $                                 | 1,180  |   |   | $      | 1,259 |   |   | $ | (79 | ) |   |   | (6.3 | )% |
| Wealth management fees                                        |   |                              | 1,066  |   |   |   | 1,019 |   |   |   | 47 |   |   |   | 4.6 |   |
| Increase in cash surrender value of bank-owned life insurance |   |                              | 72     |   |   |   | 71 |   |   |   | 1 |   |   |   | 1.4 |   |
| Net gain on sale of securities                                |   |                              | 35     |   |   |   | 267 |   |   |   | (232 | ) |   |   | (86.9 | ) |
| Net impairment losses recognized in earnings                  |   |                              | -      |   |   |   | (171 | ) |   |   | 171 |   |   |   | (100.0 | ) |
| Mortgage banking fees                                         |   |                              | 169    |   |   |   | 130 |   |   |   | 39 |   |   |   | 30.0 |   |
| Net gain in fair value on trading securities and derivatives  |   |                              | 27     |   |   |   | - |   |   |   | 27 |   |   |   | N/A |   |
| Net loss on disposal of equipment                             |   |                              | (7     | )      |   |   | - |   |   |   | (7 | ) |   |   | N/A |   |
| Other                                                         |   |                              | 107    |   |   |   | 38 |   |   |   | 69 |   |   |   | 181.6 |   |
| Total noninterest income                                      |   | $                                 | 2,649  |   |   | $      | 2,613 |   |   | $ | 36 |   |   |   | 1.4 | % |

|                                              |   | Three Months Ended March 31, |   |   | Change |   |
|---------------------------------------------------|--------|------------------------------|--------|--------|--------|--------|
|                                              |   | 2011                         |   |   | 2010   |   |   | Dollars |   |   | Percent |   |
|                                              |   | (Dollars in Thousands)       |   |
| Salaries and employee benefits                    |   | $                            | 4,144  |   |   | $      | 4,141 |   |   | $ | 3 |   |   |   | 0.1 | % |
| Occupancy and equipment                           |   |                         | 1,535  |   |   |   | 1,421 |   |   |   | 114 |   |   |   | 8.0 |   |
| Computer and electronic banking services          |   |                         | 956    |   |   |   | 941 |   |   |   | 15 |   |   |   | 1.6 |   |
| Outside professional services                     |   |                         | 267    |   |   |   | 249 |   |   |   | 18 |   |   |   | 7.2 |   |
| Marketing and advertising                         |   |                         | 160    |   |   |   | 182 |   |   |   | (22 | ) |   |   | (12.1 | ) |
| Supplies                                          |   |                         | 135    |   |   |   | 141 |   |   |   | (6 | ) |   |   | (4.3 | ) |
| FDIC deposit insurance and regulatory assessments |   |                         | 305    |   |   |   | 339 |   |   |   | (34 | ) |   |   | (10.0 | ) |
| Contribution to SI Financial Group Foundation     |   |                         | 500    |   |   |   | - |   |   |   | 500 |   |   |   | N/A |   |
| Other                                             |   |                         | 711    |   |   |   | 723 |   |   |   | (12 | ) |   |   | (1.7 | ) |
| Total noninterest expenses                        |   | $                            | 8,713  |   |   | $      | 8,137 |   |   | $ | 576 |   |   |   | 7.1 | % |

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|                                    |   | March 31, |   |   | December 31, |   |
|-----------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                    |   | 2011           |   |   | 2010              |   |
|                                    |   | (In Thousands) |   |
| Commitments to extend credit:           |   |           |   |   |              |   |
| Future loan commitments                 |   | $              | 9,173  |   |              | $      | 10,166 |   |
| Undisbursed construction loans          |   |           | 6,812  |   |              |   | 6,708 |   |
| Undisbursed home equity lines of credit |   |           | 22,206 |   |              |   | 21,106 |   |
| Undisbursed commercial lines of credit  |   |           | 15,339 |   |              |   | 12,239 |   |
| Overdraft protection lines              |   |           | 1,314  |   |              |   | 1,311 |   |
| Standby letters of credit               |   |           | 115    |   |              |   | 115 |   |
| Total commitments                       |   | $              | 54,959 |   |              | $      | 51,645 |   |

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|                                      |   | Percentage Change in EstimatedNet Interest Income Over |   |
|-------------------------------------------|--------|--------------------------------------------------------|--------|
|                                      |   | 12 Months                                              |   |   | 24 Months |   |
| 300 basis point increase in rates         |   |                                                   | 2.29%  |   |   |   | 1.65% |   |
| Gradual 200 basis point increase in rates |   |                                                   | 0.58   |   |   |   | 0.97 |   |
| 50 basis point decrease in rates          |   |                                                   | (1.56) |   |   |   | (2.97) |   |

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| 3.1  |    | Articles of Incorporation of SI Financial Group, Inc. (1)         |
|------|--------------|-------------------------------------------------------------------|
| 3.2  |         | Bylaws of SI Financial Group, Inc. (2)                            |
| 4.0  |    | Specimen Stock Certificate of SI Financial Group, Inc. (1)        |
| 31.1 |    | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
| 31.2 |    | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
| 32.0 |    | 18 U.S.C. Section 1350 Certifications                             |

| (1) | Incorporated herein by reference into this document from the Exhibits on the Registration Statement on Form S-1 (File No. 333-169302), and any amendments thereto, filed with the Securities and Exchange Commission on September 10, 2010. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)  | Incorporated herein by reference into this document from the Exhibits to the Company’s Current Report on Form 8-K (File No. 000-54241) filed with the Securities and Exchange Commission on February 17, 2011. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

|                          | SI FINANCIAL GROUP, INC.                     |
|-------------------------------|----------------------------------------------|
|                          |                                         |   |
|                          |                                         |   |
| Date:  May 10, 2011 | /s/ Rheo A. Brouillard                       |   |
|                          | Rheo A. Brouillard                           |   |
|                          | President and Chief Executive Officer        |   |
|                          | (principal executive officer)                |   |
|                          |                                         |   |
|                          |                                         |   |
|                          |                                         |   |
| Date:  May 10, 2011 | /s/ Brian J. Hull                            |   |
|                          | Brian J. Hull                                |   |
|                          | Executive Vice President, Treasurer and      |   |
|                          | Chief Financial Officer                      |   |
|                          | (principal financial and accounting officer) |   |

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