**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**FORM        10-KSB/A**

**(Mark      one)**

| |                X                | | ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF |   |
|-------------------------------------|-----------------------------------------------------------------|--------|
|                                | THE                SECURITIES EXCHANGE ACT OF 1934              |   |
|                                | **For                the Fiscal Year ended December 31, 2006**  |   |
|                                |                                                            |   |
| |                  |      | TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OF   |   |
|                                | THE                SECURITIES EXCHANGE ACT OF 1934              |   |
|                                | For                the transition period from ____ to ______    |   |

**Commission      File Number 000-51408**

**FIRST      VALLEY BANCORP, INC.**

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| Connecticut                                                                   |   | 06-1522403                                          |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (I.R.S.                Employer Identification No.) |
|                                                                          |   |                                                |
| Four                Riverside Avenue, Bristol, CT                             |   | 06010                                               |
| (Address                of principal executive offices)                       |   | (Zip                Code)                           |
|                                                                          |   |                                                |
| Issuer's                telephone number                                      |   | (860)                582-8868                       |

**None**

| **Common                  stock, no par value** | ** ** | **1,194,550**                                 |
|-------------------------------------------------|------------|-----------------------------------------------|
| Class                                           |       | Outstanding                  at March 9, 2007 |

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**Explanatory            Note**

| ·  | Part II, Item 6, Management's                    Discussion and Analysis or Plan of Operation  |
|--------------|-----------------------------------------------------------------------------------------------------|
|         | ·                                                                                    | Revised                      to present tabular disclosure of investment portfolio and provide                      weighted                      average yield for each range of maturities. |
|         | ·                                                                                    | Revised to present a summary of                    nonaccrual,                    past due and restructured loans and revised to present the allocation                    for                    loan losses and tabular disclosure loan principal repayments                    and breakdown                    of allowance for loan losses by loan category (sharing dollar                    amount) and                    contractual maturities and interest rate sensitivity of selected                    loan                    categories.  |
|         | ·                                                                                    | Revised to present amount outstanding                    of                    certificates of deposit in amounts of $100,000 or more by                    maturity.  |

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**TABLE      OF CONTENTS**

| **PART                I**   |                                                                                                              |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------|
|                        |                                                                                                              |   |
| Item                1       | Description                of Business                                                                            | 1-6 |
|                        |                                                                                                              |   |
| Item                2       | Description                of Property                                                                            | 6 |
|                        |                                                                                                              |   |
| Item                3       | Legal                Proceedings                                                                                  | 7 |
|                        |                                                                                                              |   |
| Item                4       | Submission                of Matters to a Vote of Security Holders                                                | 7 |
|                        |                                                                                                              |   |
| **PART                II**  |                                                                                                              |
|                        |                                                                                                              |   |
| Item                5       | Market                for Common Equity, and Related Stockholder Matters and Small Business                Issuer |   |
|                        | Purchases                of Securities                                                                            | 7-8 |
|                        |                                                                                                              |   |
| Item                6       | Management’s                Discussion and Analysis or Plan of Operations                                   | 8-23 |
|                        |                                                                                                              |   |
| Item                7       | Financial                Statements                                                                               | 24 |
|                        |                                                                                                              |   |
| Item                8       | Changes                In and Disagreements With Accountants on Accounting                                        |   |
|                        | and                Financial Disclosure                                                                           | 24 |
|                        |                                                                                                              |   |
| Item                8A      | Controls                and Procedures                                                                            | 24 |
|                        |                                                                                                              |   |
| Item                8B      | Other                Information                                                                                  | 24 |
|                        |                                                                                                              |   |
| **PART                III** |                                                                                                              |
|                        |                                                                                                              |   |
| Item                9       | Directors,                Executive Officers, Promoters, Control Persons and                                      |   |
|                        | Corporate                Governance; Compliance with Section 16(a) of the Exchange                Act             | 24 |
|                        |                                                                                                              |   |
| Item                10      | Executive                Compensation                                                                             | 30 |
|                        |                                                                                                              |   |
| Item                11      | Security                Ownership of Certain Beneficial Owners and Management and                Related          |   |
|                        | Stockholder                Matters                                                                                | 34 |
|                        |                                                                                                              |   |
| Item                12      | Certain                Relationships and Related Transactions, and Director                Independence           | 36 |
|                        |                                                                                                              |   |
| Item                13      | Exhibits                                                                                                          | 37-38 |
|                        |                                                                                                              |   |
| Item                14      | Principal                Accountant Fees and Services                                                             | 38 |
|                        |                                                                                                              |   |
| SIGNATURES                  | 40-41                                                                                                             |
|                        |                                                                                                              |   |
| CERTIFICATIONS              |                                                                                                              |

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**Item      1 - DESCRIPTION OF BUSINESS**

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**Item      2 - DESCRIPTION OF PROPERTY**

**Item      3 - LEGAL PROCEEDINGS**

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**Item      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**PART      II**

**Item      5 - MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS      ISSUER PURCHASES OF SECURITIES**

**Securities      Authorized for Issuance under Equity Compensation Plans**

----

| **Equity                Compensation Plan Information**                |
|------------------------------------------------------------------------|
|                                                                   | **Number                of****securities                to be****issued                upon****exercise                of****outstanding****options,****warrants****and                rights****(a)** | **Weighted****average****exercise                price****of****outstanding****options,****warrants****and                rights****(b)** | **Number                of securities****remaining                available for****future                grant under****equity                compensation****plans                (excluding****securities****reflected                in column (a))****(c)** |
| Equity                compensation plans                               |   |   |   |
| approved                byshareholders                                 | 123,742 | $8.43 | 132,065 |
| Equity                compensation plansnot                approved by |   |   |   |
| shareholders                                                           | -0- | -0- | -0- |
| Total                                                                  | 123,742 | $8.43 | 132,065 |

**Item      6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

**Cautionary      Statement**

**Overview**

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**Capital      Resources**

**Liquidity**

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** **

**Asset      / Liability Management and Market Risk**

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**Impact      of Inflation and Changing Prices**

**Off-Balance      Sheet Arrangements**

**Contractual      Obligations**

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**Investments**

|                                                      |   | December                    31, |   |
|-----------------------------------------------------------|--------|---------------------------------|--------|
|                                                      |   | 2006                            |   | 2005 |   |
| (In                    thousands)                         |   | AmortizedCost                   |   | FairValue |   | AmortizedCost |   | FairValue |   |
| U.S.                    Government and agency obligations |   | $                               | 7,500  |   | $ | 7,398 |   | $ | 9,008 |   | $ | 8,817 |   |
| Corporate                    bonds                        |   |                            | 2,060  |   |   | 2,010 |   |   | 2,095 |   |   | 2,020 |   |
| Municipal                    bonds                        |   |                            | 2,562  |   |   | 2,556 |   |   | 2,564 |   |   | 2,549 |   |
| Mortgage-backed                    securities             |   |                            | 12,986 |   |   | 12,708 |   |   | 20,456 |   |   | 20,021 |   |
| Equity                    securities                      |   |                            | 2,000  |   |   | 2,000 |   |   | 500 |   |   | 500 |   |
| Total                                                     |   | $                               | 27,108 |   | $ | 26,672 |   | $ | 34,623 |   | $ | 33,907 |   |

|                                                                         |   | **One                    Year or Less** |   | **More                    than One Year to Five****Years** |   | **More                    than Five****Years                    to Ten****Years** |   | **More                    than Ten****Years** |   | **Total**         |   |
|------------------------------------------------------------------------------|--------|-----------------------------------------|--------|------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|-------------------|--------|
|  December                    31, 2006(In                    thousands)  |   | **Fair****Value**                       |   | **Weighted****Average****Yield**                           |   | **Fair****Value**                                                                 |   | **Weighted****Average****Yield**              |   | **Fair****Value** |   | **Weighted****Average****Yield** |   | **Fair****Value** |   | **Weighted****Average****Yield** |   | **Fair****Value** |   | **Weighted****Average****Yield** |   |
| U.S.                    Government and agency                    obligations | $      | 3,471                                   |   |                                                       | 3.39   | %                                                                                 | $      | 3,927                                         |   |              | 3.86   | % | $ | - |   |   | - | % | $ | - |   |   | - | % | $ | 7,398 |   |   | 3.64 | % |
| Corporate                    bonds                                           |   |                                    | 504    |                                                       |   | 2.93                                                                              |   |                                          | 1,506  |              |   | 3.68 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 2,010 |   |   | 3.49 |   |
| Municipal                    bonds                                           |   |                                    | -      |                                                       |   | -                                                                                 |   |                                          | -      |              |   | - |   |   | 1,179 |   |   | 5.59 |   |   | 1,377 |   |   | 5.82 |   |   | 2,556 |   |   | 5.71 |   |
| Mortgage-backed                    securities                                | -      |                                    |   | -                                                          |   |                                                                              | 1,414  |                                          |   | 3.81              |   |   | - |   |   | - |   |   | 11,294 |   |   | 4.25 |   |   | 12,708 |   |   | 4.20 |   |
| Total                                                                        |   | $                                       | 3,975  |                                                       |   | 3.33                                                                              |   | $                                             | 6,847  |              |   | 3.81 |   | $ | 1,179 |   |   | 5.59 |   | $ | 12,671 |   |   | 4.42 |   | $ | 24,672 |   |   | 4.13 |   |

**Loans**

----

|                                        |   | **December                    31,** |         |
|---------------------------------------------|--------|-------------------------------------|--------------|
|                                        |   | **2006**                            |         | **2005** |   |
| (In                    thousands)           |   | **Amount**                          |         | **Percent** |   | **Amount** |   | **Percent** |   |
|  Real                    estate loans: |   |                                |         |   |   |   |   |   |   |   |   |   |   |
| Residential                                 |   | $                                   | 22,925       |   |   | 16.9 | % | $ | 22,848 |   |   | 20.5 | % |
| Commercial                                  |   |                                | 69,603       |   |   | 51.2 |   |   | 54,653 |   |   | 49.0 |   |
| Total                    real estate loans  |   |                                |  92,528 |   |   |  68.1 |   |   |  77,501 |   |   |  69.5 |   |
| Commercial                    loans         |   |                                | 30,162       |   |   | 22.2 |   |   | 22,726 |   |   | 20.4 |   |
| Consumer                    loans           |   |                                | 13,127       |   |   | 9.7 |   |   | 11,317 |   |   | 10.1 |   |
| Total                    loans              |   |                                | 135,817      |   |   | 100.0 | % |   | 111,544 |   |   | 100.0 | % |
| Net                    deferred loan fees   |   |                                | 248          |   |   |   |   |   | 225 |   |   |   |   |
| Allowance                    for losses     |   |                                | 1,860        |   |   |   |   |   | 1,546 |   |   |   |   |
| Loans,                    net               |   | $                                   | 133,709      |   |   |   |   | $ | 109,773 |   |   |   |   |

|                                                                                                              |   | **December                    31,** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
| (In                    thousands)                                                                                 |   | **2006**                            |   | **2005** |   |
|  Nonaccrual                    loans:                                                                        |   |                                |   |   |   |   |   |
| Residential                    real estate                                                                        |   | $                                   | 257    |   | $ | 257 |   |
| Commercial                    real estate                                                                         |   |                                | -      |   |   | - |   |
| Commercial                                                                                                        |   |                                | -      |   |   | 80 |   |
| Consumer                    and home equity                                                                       |   |                                | 13     |   |   | - |   |
| Total                                                                                                             |   |                                | 270    |   |   | 337 |   |
|                                                                                                              |   |                                |   |   |   |   |   |
| Accruing                    loans past due 90 days or more:                                                       |   |                                |   |   |   |   |   |
| Residential                    real estate                                                                        |   |                                | -      |   |   | - |   |
| Commercial                    real estate                                                                         |   |                                | -      |   |   | - |   |
| Commercial                                                                                                        |   |                                | -      |   |   | - |   |
| Consumer                    and home equity                                                                       |   |                                | -      |   |   | - |   |
| Total                                                                                                             |   |                                | -      |   |   | - |   |
| Total                    of nonaccrual and 90 days or more past due loans                                         |   |                                | 270    |   |   | 337 |   |
|                                                                                                              |   |                                |   |   |   |   |   |
| Real                    estate owned                                                                              |   |                                | -      |   |   | - |   |
| Other                    nonperforming assets                                                                     |   |                                | -      |   |   | - |   |
| Total                    nonperforming assets                                                                     |   |                                | 270    |   |   | 337 |   |
| Troubled                    debt restructurings                                                                   |   |                                | 174    |   |   | - |   |
| Troubled                    debt restructurings and total nonperforming assets                                    |   | $                                   | 444    |   | $ | 337 |   |
|                                                                                                              |   |                                |   |   |   |   |   |
| Total                    nonperforming loans to total loans                                                       |   |                                | 0.20   | % |   | 0.30 | % |
| Total                    nonperforming loans to total assets                                                      |   |                                | 0.14   | % |   | 0.21 | % |
| Total                    nonperforming assets and troubled debt                    restructurings to total assets |   |                                | 0.23   | % |   | 0.21 | % |

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| December                      31, 2006 (In thousands):  |   | **One                        Year****Or                        Less** |   | **More                        than****One                        to****Five                        Years** |   | **More                        than****Five                        Years** |   | **Total** |   |
|-------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|-----------|--------|
|  Contractual                        Maturity:                |   |                                                                  |   |                                                                                                       |   |                                                                      |   |      |   |   |   |   |   |
| Residential                        real estate                    |   | $                                                                     | 1,315  |                                                                                                       | $      | 1,160                                                                     |   | $         | 20,450 |   | $ | 22,925 |   |
| Commercial                        real estate                     |   |                                                                  | 13,188 |                                                                                                       |   | 7,785                                                                     |   |      | 48,630 |   |   | 69,603 |   |
| Commercial                                                        |   |                                                                  | 8,339  |                                                                                                       |   | 13,960                                                                    |   |      | 7,863  |   |   | 30,162 |   |
| Consumer                        and home equity loans             |   |                                                                  | 655    |                                                                                                       |   | 3,368                                                                     |   |      | 9,104  |   |   | 13,127 |   |
| Total                                                             |   | $                                                                     | 23,497 |                                                                                                       | $      | 26,273                                                                    |   | $         | 86,047 |   | $ | 135,817 |   |
|                                                              |   |                                                                  |   |                                                                                                       |   |                                                                      |   |      |   |   |   |   |   |
| Interest                        rate sensitivity:                 |   |                                                                  |   |                                                                                                       |   |                                                                      |   |      |   |   |   |   |   |
| Fixed-rate                        loans                           |   | $                                                                     | 7,389  |                                                                                                       | $      | 17,654                                                                    |   | $         | 14,425 |   | $ | 39,468 |   |
| Variable                        rate loans                        |   |                                                                  | 16,108 |                                                                                                       |   | 8,619                                                                     |   |      | 71,622 |   |   | 96,349 |   |
| Total                                                             |   | $                                                                     | 23,497 |                                                                                                       | $      | 26,273                                                                    |   | $         | 86,047 |   | $ | 135,817 |   |

|                                            |   | **December                  31,** |   |
|-------------------------------------------------|--------|-----------------------------------|--------|
|                                            |   | **2006**                          |   | **2005** |   |
| (In                  thousands)                 |   | **Amount**                        |   | **%                  of****Loans                  in****Category****To                  Total****Loans** |   | **Amount** |   | **%                  of****Loans                  in****Category****To                  Total****Loans** |   |
| Residential                  real estate        |   | $                                 | 132    |   |   | 16.9 | % | $ | 96 |   |   | 20.5 | % |
| Commercial                  real estate         |   |                              | 673    |   |   | 51.2 |   |   | 596 |   |   | 49.0 |   |
| Commercial                                      |   |                              | 789    |   |   | 22.2 |   |   | 564 |   |   | 20.4 |   |
| Consumer                  and home equity       |   |                              | 149    |   |   | 9.7 |   |   | 147 |   |   | 10.1 |   |
| Unallocated                                     |   |                              | 117    |   |   | - |   |   | 143 |   |   | - |   |
| Total                  allowance for loanlosses | $      | 1,860                             |   |   | 100.0 | % | $ | 1,546 |   |   | 100.0 | % |

|                                                                                                                  |   | **December                      31,** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
| (In                      thousands)                                                                                   |   | **2006**                              |   | **2005** |   |
|  Allowance                      at beginning of period                                                           |   | $                                     | 1,546  |   | $ | 1,295 |   |
|                                                                                                                  |   |                                  |   |   |   |   |   |
| Provision                      for loan losses                                                                        |   |                                  | 321    |   |   | 348 |   |
| Charge                      offs:                                                                                     |   |                                  |   |   |   |   |   |
| Residential                      real estate loans                                                                    |   |                                  | -      |   |   | - |   |
| Commercial                      real estate loans                                                                     |   |                                  | -      |   |   | - |   |
| Commercial                      loans                                                                                 |   |                                  | -      |   |   | (114 | ) |
| Consumer                      and home equity loans                                                                   |   |                                  | (11    | ) |   | - |   |
| Total                      charge-offs                                                                                |   |                                  | (11    | ) |   | (114 | ) |
|                                                                                                                  |   |                                  |   |   |   |   |   |
| Recoveries                                                                                                            |   |                                  | 4      |   |   | 17 |   |
| Net                      charge-offs                                                                                  |   |                                  | (7     | ) |   | (97 | ) |
|                                                                                                                  |   |                                  |   |   |   |   |   |
| Allowance                      at end of period                                                                       |   | $                                     | 1,860  |   | $ | 1,546 |   |
|                                                                                                                  |   |                                  |   |   |   |   |   |
| Allowance                      to nonperforming loans                                                                 |   |                                  | 689.08 | % |   | 458.59 | % |
| Allowance                      to total loans outstanding at the end of the period                                    |   |                                  | 1.37   | % |   | 1.39 | % |
| Net                      charge-offs (recoveries) to average loans outstanding during                      the period |   |                                  | 0.01   | % |   | 0.11 | % |

**Deposits**

----

| December                    31, 2006 (In thousands) |   | **Certificates****of                     Deposit** |    |
|-----------------------------------------------------|--------|---------------------------------------------------------|---------|
|  Maturity                    Period            |   |                                                    |    |   |
| Three                    months or less             |   | $                                                       | 33,339  |   |
| Over                    three through six months    |   |                                                    | 27,014  |   |
| Over                    six through twelve months   |   |                                                    | 35,377  |   |
| Over                    twelve months               |   |                                                    | 14,066  |   |
| Total                                               |   | $                                                       | 109,796 |   |

| December                    31, 2006 (In thousands)  |                                      |   |
|----------------------------------------------------------------|-------------------------------------------|--------|
| Maturity                    period:                       |                                      |   |
| Three                    months or less                   | $                       10,450  |   |
| Over                    three through six months     | 9,233                                     |   |
| Over                    six months through twelve months  | 17,763                               |   |
| Over                    twelve months                     | 4,073                                |   |
| **Total **                                                | 41,519                               |   |

**Borrowed      Funds**

|                                                                                      |   | **Years                      Ended December 31,** |   |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
| (In                      thousands)                                                       |   | **2006**                                          |   | **2005** |   |
|  Maximum                      amount outstanding at any month-end during the period: |   |                                              |   |   |   |   |   |
| FHLB                      advances                                                        |   | $                                                 | 16,976 |   | $ | 15,019 |   |
| Subordinated                      debt                                                    |   |                                              | 4,104  |   |   | 4,098 |   |
| Average                      amount outstanding during the period (1):                    |   |                                              |   |   |   |   |   |
| FHLB                      advances                                                        |   |                                              | 11,210 |   |   | 10,707 |   |
| Subordinated                      debt                                                    |   |                                              | 4,101  |   |   | 1,717 |   |
| Weighted                      average interest rate during the period (1):                |   |                                              |   |   |   |   |   |
| FHLB                      advances                                                        |   |                                              | 4.48   | % |   | 3.30 | % |
| Subordinated                      debt                                                    |   |                                              | 6.42   | % |   | 6.42 | % |
| Balance                      outstanding at end of period:                                |   |                                              |   |   |   |   |   |
| FHLB                      advances                                                        |   |                                              | 10,848 |   |   | 15,019 |   |
| Subordinated                      debt                                                    |   |                                              | 4,104  |   |   | 4,098 |   |
| Weighted                      average interest rate at end of period:                     |   |                                              |   |   |   |   |   |
| FHLB                      advances                                                        |   |                                              | 4.90   | % |   | 4.34 | % |
| Subordinated                      debt                                                    |   |                                              | 6.42   | % |   | 6.42 | % |

**Ratios**

|                                            | For                the year ended December 31, |
|-------------------------------------------------|------------------------------------------------|
|                                            | 2006                                           | 2005 | 2004 |
| Return                on Average Assets         | 0.33%                                          | 0.54% | 0.48% |
| Return                on Average Equity         | 5.60                                           | 7.94 | 6.43 |
| Average                Equity to Average Assets | 5.96                                           | 6.75 | 7.51 |
|                                            |                                           |   |   |
| Basic                Income per Share           | $0.48                                          | $0.63 | $0.49 |
| Diluted                Income per Share         | $0.45                                          | $0.60 | $0.47 |

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**Common      Stock Information**

|                                                                                  |   | **Stock                Price** |   |
|---------------------------------------------------------------------------------------|--------|--------------------------------|--------|
|                                                                                  |   | **High**                       |   | **Low** |   |
|                                                                                  |   |                           |   |   |   |   |   |
| **2006**                                                                              |   |                           |   |   |   |   |   |
| Quarter                Ended, December 31                                             |   | $                              | 21.85  |   | $ | 15.00 |   |
| Quarter                Ended, September 30                                            |   | $                              | 16.50  |   | $ | 14.10 |   |
| Quarter                Ended, June 30                                                 |   | $                              | 18.75  |   | $ | 16.00 |   |
| Quarter                Ended, March 31                                                |   | $                              | 21.00  |   | $ | 14.55 |   |
| **2005**                                                                              |   |                           |   |   |   |   |   |
| Quarter                Ended, December 31                                             |   | $                              | 17.00  |   | $ | 16.25 |   |
| Quarter                Ended, September 30                                            |   | $                              | 20.70  |   | $ | 15.00 |   |
| Quarter                Ended, June 30                                                 |   | $                              | 20.00  |   | $ | 14.00 |   |
| Quarter                Ended, March 31                                                |   | $                              | 20.00  |   | $ | 12.10 |   |
| ***The                closing price on December 31, 2006 was                $20.50*** |
|                                                                                  |

**Dividend      Information**

**YEAR      ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER 31,      2005**

**Earnings      Review**

----

**Net      Interest Income**

**Interest      Income**

**Interest        Expense**

**Provision      for Loan Losses**

**Noninterest      Income**

**Noninterest      Expense**

**Income      Taxes**

----

**YEAR      ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31,      2004**

**Earnings      Review**

**Net      Interest Income**

**Interest      Income**

**Interest      Expense**

**Provision      for Loan Losses**

----

**Noninterest      Income**

**Noninterest      Expense**

**Income      Taxes**

**Average      Balances, Yields and Costs - **

|                                                                      |   | **For                Years                Ended **  |    |
|---------------------------------------------------------------------------|--------|---------------------------------------------------------------|---------|
|                                                                      |   | **December                31, 2006**                          |    | **December                31, 2005** |   |
| **Interest                Earning Assets:**                               |   | Average                                                       |    | Income/ |   | Average |   | Average |   | Income/ |   | Average |   |
|                                                                      |   | Balance                                                       |    | Expense |   | Rate |   | Balance |   | Expense |   | Rate |   |
|                                                                      |   |                                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                funds sold and moneymarket                accounts |   | $                                                             | 10,477  |   | $ | 528 |   |   | 5.04 | % | $ | 5,846 |   | $ | 166 |   |   | 2.84 | % |
| Investment                securities                                      |   |                                                          | 29,994  |   |   | 1,226 |   |   | 4.09 |   |   | 38,088 |   |   | 1,419 |   |   | 3.73 |   |
| Loans                                                                     |   |                                                          | 124,270 |   |   | 9,022 |   |   | 7.26 |   |   | 89,951 |   |   | 6,014 |   |   | 6.69 |   |
| Total                interest-earnings assets                             |   |                                                          | 164,741 |   |   | 10,776 |   |   | 6.54 |   |   | 133,885 |   |   | 7,599 |   |   | 5.68 |   |
| Non-interest-earning                assets                                |   |                                                          | 7,044   |   |   |   |   |   |   |   |   | 5,940 |   |   |   |   |   |   |   |
| Total                assets                                               |   | $                                                             | 171,785 |   |   |   |   |   |   |   | $ | 139,825 |   |   |   |   |   |   |   |
|                                                                      |   |                                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                Bearing Liabilities:**                          |   |                                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                accounts                                               |   | $                                                             | 3,125   |   | $ | 26 |   |   | 0.83 | % | $ | 3,024 |   |   | 19 |   |   | 0.63 | % |

----

| Savings                and money market accounts                |   |    | 40,044                |   |   | 690    |   |   | 1.72   |   |    | 43,973  |   |   | 573    |   |   | 1.30   |   |
|-----------------------------------------------------------------|--------|---------|-----------------------|--------|--------|--------|--------|--------|--------|--------|---------|---------|--------|--------|--------|--------|--------|--------|--------|
| Time                deposits                                    |   |    | 83,528                |   |   | 3,480  |   |   | 4.17   |   |    | 54,060  |   |   | 1,667  |   |   | 3.08   |   |
| Borrowed                money                                   |   |    | 15,311                |   |   | 771    |   |   | 5.04   |   |    | 12,424  |   |   | 467    |   |   | 3.76   |   |
| Total                interest- bearing liabilities              |   |    | 142,008               |   |   | 4,967  |   |   | 3.50   |   |    | 113,481 |   |   | 2,726  |   |   | 2.40   |   |
| Non-interest-                bearing demand deposits            |   |    | 18,273                |   |   |   |   |   |   |   |    | 15,467  |   |   |   |   |   |   |   |
| Other                non-interest-bearing liabilities           |   |    | 1,                272 |   |   |   |   |   |   |   |    | 1,438   |   |   |   |   |   |   |   |
| Stockholders’                equity                       |   |    | 10,232                |   |   |   |   |   |   |   |    | 9,439   |   |   |   |   |   |   |   |
| Total                liabilities and Stockholders’ equity | $      | 171,785 |                  |   |   |   |   |   |   | $      | 139,825 |    |   |   |   |   |   |   |
|                                                            |   |    |                  |   |   |   |   |   |   |   |    |    |   |   |   |   |   |   |   |
| Net                interest income                              |   |    |                  |   |   | 5,809  |   |   |   |   |    |    |   |   | 4,873  |   |   |   |   |
| Net                interest margin                              |   |    |                  |   |   |   |   |   | 3.53   | %      |    |    |   |   |   |   |   | 3.64   | %      |
| Interest                rate spread                             |   |    |                  |   |   |   |   |   | 3.04   |   |    |    |   |   |   |   |   | 3.28   |   |

|                                                            |   | **For                Years Ended**   |    |
|-----------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                            |   | **December                31, 2005** |    | **December                31, 2004** |   |
| **Interest                Earning Assets:**                     |   | Average                              |    | Income/ |   | Average |   | Average |   | Income/ |   | Average |   |
|                                                            |   | Balance                              |    | Expense |   | Rate |   | Balance |   | Expense |   | Rate |   |
| Federal                funds sold and money                     |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| market                accounts                                  |   | $                                    | 5,846   |   | $ | 166 |   |   | 2.84 | % | $ | 3,989 |   | $ | 48 |   |   | 1.20 | % |
| Investment                securities                            |   |                                 | 38,088  |   |   | 1,419 |   |   | 3.73 |   |   | 37,075 |   |   | 1,309 |   |   | 3.53 |   |
| Loans                                                           |   |                                 | 89,951  |   |   | 6,014 |   |   | 6.69 |   |   | 71,055 |   |   | 4,561 |   |   | 6.42 |   |
| Total                interest-earnings assets                   |   |                                 | 133,885 |   |   | 7,599 |   |   | 5.68 |   |   | 112,119 |   |   | 5,918 |   |   | 5.28 |   |
| Non-interest-earning                assets                      |   |                                 | 5,940   |   |   |   |   |   |   |   |   | 6,286 |   |   |   |   |   |   |   |
| Total                assets                                     |   | $                                    | 139,825 |   |   |   |   |   |   |   | $ | 118,405 |   |   |   |   |   |   |   |
|                                                            |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                Bearing Liabilities:**                |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                accounts                                     |   | $                                    | 3,024   |   |   | 19 |   |   | 0.63 | % | $ | 2,907 |   |   | 11 |   |   | 0.38 | % |
| Savings                and money market accounts                |   |                                 | 43,973  |   |   | 5735 |   |   | 1.30 |   |   | 41,608 |   |   | 455 |   |   | 1.09 |   |
| Time                deposits                                    |   |                                 | 54,060  |   |   | 1,667 |   |   | 3.08 |   |   | 40,066 |   |   | 1,009 |   |   | 2.52 |   |
| Borrowed                money                                   |   |                                 | 12,424  |   |   | 467 |   |   | 3.76 |   |   | 10,920 |   |   | 268 |   |   | 2.45 |   |
| Total                interest-bearing liabilities               |   |                                 | 113,481 |   |   | 2,726 |   |   | 2.40 |   |   | 95,501 |   |   | 1,743 |   |   | 1.82 |   |
| Non-interest-bearing                demand deposits             |   |                                 | 15,467  |   |   |   |   |   |   |   |   | 12,751 |   |   |   |   |   |   |   |
| Other                non-interest-bearing liabilities           |   |                                 | 1,438   |   |   |   |   |   |   |   |   | 1,260 |   |   |   |   |   |   |   |
| Stockholders’                equity                       |   |                                 | 9,439   |   |   |   |   |   |  |   |   | 8,893 |   |   |   |   |   |   |   |
| Total                liabilities and Stockholders’ equity |   | $                                    | 139,825 |   |   |   |   |   |   |   | $ | 118,405 |   |   |   |   |   |   |   |
|                                                            |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income                              |   |                                 |    |   |   | 4,873 |   |   |   |   |   |   |   |   | 4,175 |   |   |   |   |
| Net                interest margin                              |   |                                 |    |   |   |   |   |   | 3.64 | % |   |   |   |   |   |   |   | 3.72 | % |
| Interest                rate spread                             |   |                                 |    |   |   |   |   |   | 3.28 |   |   |   |   |   |   |   |   | 3.46 |   |

----

**Rate/Volume      Analysis **

|                                             | 2006                Compared to 2005      |   | 2005                Compared to 2004      |   |
|--------------------------------------------------|-------------------------------------------|--------|-------------------------------------------|--------|
|                                             | Increase                (Decrease) Due to |   | Increase                (Decrease) Due to |   |
|                                             | Rate                                      |   | Volume                                    |   |                  Total |   | Rate |   | Volume |   | Total |   |
| Interest                Income:                  |                                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                funds sold and money      |                                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| market                accounts                   | $                                         | 179    |                                      | $      | 183 |   | $ | 362 |   | $ | 88 |   | $ | 30 |   | $ | 118 |   |
| Investment                securities             |                                      | 34     |                                      |   | (227 | ) |   | (193 | ) |   | 74 |   |   | 36 |   |   | 110 |   |
| Loans                                            |                                      | 553    |                                      |   | 2,455 |   |   | 3,008 |   |   | 198 |   |   | 1,255 |   |   | 1,453 |   |
| Total                interest income             |                                      | 766    |                                      |   | 2,411 |   |   | 3,177 |   |   | 360 |   |   | 1,321 |   |   | 1,681 |   |
|                                        |                                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                Expense:                 |                                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                accounts                      |                                      | 6      |                                      |   | 1 |   |   | 7 |   |   | 8 |   |   | 0 |   |   | 8 |   |
| Savings                and money market accounts |                                      | 132    |                                      |   | (15 | ) |   | 117 |   |   | 91 |   |   | 27 |   |   | 118 |   |
| Time                deposits                     |                                      | 709    |                                      |   | 1,104 |   |   | 1,813 |   |   | 256 |   |   | 402 |   |   | 658 |   |
| Borrowed                money                    |                                      | 180    |                                      |   | 124 |   |   | 304 |   |   | 158 |   |   | 41 |   |   | 199 |   |
| Total                interest expense            |                                      | 1,027  |                                      |   | 1,214 |   |   | 2,241 |   |   | 513 |   |   | 470 |   |   | 983 |   |
|                                             |                                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change                in net interest income     | $                                         | (261   | )                                         | $      | 1,197 |   | $ | 936 |   | $ | (153 | ) | $ | 851 |   | $ | 698 |   |
|                                             |                                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**Item      7 - FINANCIAL STATEMENTS**

**Item      8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL      DISCLOSURE**

**Item      8A - CONTROLS AND PROCEDURES**

**Evaluation      of disclosure controls and procedures**

**Change      in internal controls**

**Item      8B - OTHER INFORMATION**

**PART      III**

**Item      9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE      GOVERNANCE, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE      ACT**

**Item      401**

**(a)**
**Identify      Directors and Executive Officers**

----

| **Name**                        | **Age** | **Position                and Offices with Company and Bank and****Principal                Occupation and Employment**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------------------------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Thomas                O. Barnes | 57      | Director                of the Bank since 1998 and of Company since 2005. He is the Chairman                of                the Board of Barnes Group, Inc. where he has been employed since                1993.                Barnes Group, Inc. is a public company involved in various manufacturing                and distribution enterprises. Mr. Barnes is currently Chairman of                the                Board of the Main St. Community Foundation and has served on many                other                boards of charitable organizations. Mr. Barnes is the Chairman of                the                Strategic Planning Committee, a member of the Executive Committee,                Governance Committee, Loan Committee and Salary/Personnel                Committee.                                                                                                                                                                                                                                                                                                                                                                                 |
| James                G. Biondi  | 69      | Director                of the Bank since 1998 and of Company since 2005. Mr. Biondi is retired.                He was the President and CEO of Apex Machine Tool Co. Inc. from 1961                until                1997. He is a current member and past President of the Connecticut                Tooling                and Machine Association. Mr. Biondi was a member of the advisory                Board of                Directors of Bank of Southington. Mr. Biondi is the Chairman of the                Loan                Committee and a member of the Asset/Liability Committee and                Audit/Compliance Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Mark                J. Blum     | 53      | Director                of the Bank and of Company since 2006. Mr. Blum has been the Executive                   Vice President and Chief Financial Officer of the Bank since December                2000                and Company since 2005. In December 2004, he was appointed Treasurer                of                the Bank. He has thirty years of banking experience. Prior to joining                the                Bank, he served as Executive Vice President and Chief Financial Officer                of                Eagle Financial Corporation and its subsidiary, Eagle Bank. He is                the                President of the Bristol Boy’s and Girl’s Club, Vice President of the Main                Street Community Foundation and a Director of Bristol Hospital. Mr.                Blum                is Chairman of the Asset/Liability Committee and a member of the                Operations/Technology Committee and Strategic Planning Committee.                Mr. Blum                serves as a Management Committee Liaison to the Governance Committee                and                Audit/Compliance Committee.  |

----

| Bonnie                Crane      | 62 | Director                of the Bank since 1998 and of Company since 2005. Mrs. Crane is retired.                She was the Director of Human Resources at Kaba High Security Lock,                Southington, Connecticut. Mrs. Crane is one of the former owners                of Lori                Lock Corporation of Southington, Connecticut. Mrs. Crane is the Chairman                of the Salary/Personnel Committee and a member of Operations/Technology                Committee.                                                                                                                                                                                                                                                                                                                                                                                                      |
|----------------------------------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Edmund                D. Donovan | 62 | Director                of the Bank since 1998 and of Company since 2005. Mr. Donovan serves                as                the Executive Vice President of Nickson Industries, Inc., a Plainville,                Connecticut manufacturer of automotive exhaust hardware and has been                in                its employ since 1977. He is also involved in a real estate development                in                Southington, Connecticut. Mr. Donovan is Chairman of the                Operations/Technology Committee and a member of Asset/Liability Committee,                Loan Committee and Strategic Planning Committee. Mr. Donovan serves                as an                alternate member of the Audit\Compliance Committee.                                                                                                                                        |
| David                W. Florian  | 72 | Director                of the Bank since 1998 and of Company since 2005. Mr. Florian was                the                founder and CEO of Lori Lock of Southington from 1960 until 1990.                He is a                real estate developer and a Director and President of Bison Realty,                Inc.                Mr. Florian was formerly a Director of State Savings Bank located                in                Southington, Connecticut. Mr. Florian is the Chairman of the                Audit/Compliance Committee and a member of the Executive Committee                and                Governance Committee.                                                                                                                                                                                                                                                     |
| Mark                A. Gibson    | 44 | Director                of Company and the Bank since 2005. Mr. Gibson is the President and                1/3                owner of Quality Coils, Incorporated. He is also President and 1/3                owner                of DynaLock Corporation. Both companies are located in Bristol,                Connecticut. Mr. Gibson graduated from Rider College with a degree                in                accounting. Mr. Gibson has served as a Director of the Bristol Chamber                of                Commerce, and as both a Director of, and Vice President of, Chippanee                Golf                Club, as well as having served on the Advisory Board of Bank of Boston.                Mr. Gibson is a member of the Audit/Compliance Committee,                Operations/Technology Committee, Salary/Personnel Committee and ALCO                Committee.  |

----

| Edward                T. McPhee, Jr.  | 71 | Director                of the Bank since 1998 and of Company since 2005. Mr. McPhee is a                graduate                Engineer from Lowell Technological Institute and Founder of McPhee,                Ltd.                and McPhee & Sons, Ltd., firms engaged in electrical contracting. He                is a member of the Academy of Electrical Contractors. He is an officer                and                Director of Kozy Kollar, Inc., a manufacturing concern. Founder and                Director of the McPhee Foundation, a charitable corporation. Mr.                McPhee is                a U.S. Army veteran. Mr. McPhee is a member of the Executive Committee,                Governance Committee, Audit/Compliance Committee, Loan Committee                and                Salary/Personnel Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------------------------------------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Robert                L. Messier, Jr. | 64 | President,                Chief Executive Officer and Director of the Bank since 1998 and of                Company                since 2005. Mr. Messier served as Vice President and regional commercial                banking officer with Eagle Bank from 1996 until its merger with Webster                Bank in 1998. From 1992 to 1996, Mr. Messier was a Vice President,                with                corporate/small business lending regional manager responsibilities                of                BankBoston Connecticut. He is Director Emeritus and Past Chairman                of                Greater Bristol Health Care, Inc., a Director of St. Francis Hospital                and                Medical Center and Director of Central Connecticut Medical Management.                He                served as the President of the Greater Bristol Chamber of Commerce                from                1995 to 1997. He has been the President of the Business Education                Foundation since 1990. He was Chairman of the Central Connecticut                Revolving Loan Fund from 1995 to 2006. Mr. Messier is a member of                the                Executive Committee, the Asset/Liability Committee, the Loan Committee,                the Operations/Technology Committee, and the Strategic Planning Committee.                Mr. Messier also participates in the Salary/Personnel Committee except                with respect to his own compensation and serves as a Management Liaison                to                the Governance Committee and the Audit/Compliance Committee.  |
| Thomas                P. O'Brien      | 61 | Director                of the Bank since 1999 and of Company since 2005. Mr. O'Brien is                the                Manager of O'Brien Funeral Home, located in Forestville, Connecticut.                Mr.                O'Brien is currently serving as Chairman of the Bristol/Burlington                Health                District and is a member of the Bristol Board of Education. Mr. O'Brien                is                a member of the Asset/Liability Committee, the Loan Committee, and                the                Strategic Planning Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

| David                J. Preleski | 50 | Director                of the Bank since 1998 and of Company since 2005. Mr. Preleski is                a                principal in the law firm of Vitrano, Preleski & Wynne, LLC where he                has been employed since 1996. Attorney Preleski's previous experience                includes a twenty year career in banking with Bristol Savings Bank,                First                Federal Bank and Webster Financial Corporation. He is a former President                and Corporate Secretary of Bristol Savings Bank and has experience                in                retail and commercial banking and as legal liaison with bank regulatory                agencies. He is a Director of the New England Carousel Museum and                is Past                President of the Board of Directors of the Family Center. Mr. Preleski                is                Chairman of the Governance Committee and a member of the Executive                Committee, the Asset/Liability Committee, Loan Committee and                Operations/Technology Committee.  |
|----------------------------------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| James                J. Pryor    | 70 | Chairman                and Director of the Bank since 1998 and of Company since 2005. Mr.                Pryor                is a Director of Allied Insurance Center. Mr. Pryor is a past Director                of                St. Francis Hospital and past Chairman of Bristol Hospital. Mr. Pryor                was                formerly an organizer and a Director of Bank of Southington in                Southington, Connecticut. Mr. Pryor is the Chairman of the Executive                Committee and a member of the Governance Committee and the                Salary/Personnel Committee. Mr. Pryor serves as an alternate member                of the                Audit/Compliance Committee.                                                                                                                                                                                                                                                                                                                                                                                        |

**Executive      Officers**

|  **Name**                     |  **Age** | **Position                and Offices With Company Presently Held****and **** Principal                Occupation and Employment**                                                                                                                                                                                                                                                                |
|------------------------------------|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                               |          |                                                                                                                                                                                                                                                                                                                                                                                                        |
| Anthony                M. Mattioli | 47            | Mr.                Mattioli** **is                the Executive Vice President and Senior Lending Officer and has been                employed by the Bank since April 2000. He has been in banking and                finance                since 1984. Prior to joining the Bank, he was a Commercial Lender                at                Webster Bank and Bristol Savings                Bank. |

**(b)      Identify Significant Employees**

**(c)**
**Family      Relationships**

**(d)**
**Involvement      in Certain Legal Proceedings**

**Item      405**
**Compliance      with Section 16(a) of the Exchange Act**

----

**Item      406 Code of Ethics.**

**Item      407(c)(3) **
**Material      changes to procedures by which security holders may recommend      nominees**

**Item      407(d)(4) Audit Committee**

**Item      407(d)(5) Audit Committee Financial Expert**

----

**Item      10. - Executive Compensation**

**Summary      Compensation Table**

| **Name****and****Principal****Position**                                                                                                                             | **Year**   | **Salary                (1)****($)** | **Bonus                (2)****($)** | **Stock****Awards                (3)****($)** | **Option****Awards****($)** | **Non-****Equity****Incentive****Plan****Compensa****tion****($)** | **Nonqualified****Deferred****Compensation****Earnings****($)** | **All****Other****Compensation                (4)****($)** | **Total****($)**                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------|-------------------------------------|-----------------------------------------------|-----------------------------|--------------------------------------------------------------------|-----------------------------------------------------------------|------------------------------------------------------------|---------------------------------|
| (a)                                                                                                                                                                  | (b)        | (c)                                  | (d)                                 | (e)                                           | (f)                         | (g)                                                                | (h)                                                             | (i)                                                        | (j)                             |
| Robert                L. Messier,                Jr.President,                and                ChiefExecutiveOfficer                                               | 2006       | $163,962                        | $                40,500        | $                -                       | $                -          | $                -                                                 | $                -                                              | $                81,892                               | $                286,354   |
|                                                                                                                                                                 |       |                                 |                                |                                          |                        |                                                               |                                                            |                                                       |                            |
| MarkBlum,                Executive                Vice                President, Chief                Financial                Officer, and                Treasurer | 2006       | $119,865                        | $                21,960        | $17,787                                  | $                -          | $                -                                                 | $                -                                         | $                -                                         | $                159,613   |
|                                                                                                                                                                 |       |                                 |                                |                                          |                        |                                                               |                                                            |                                                       |                            |
| Anthony                Mattioli,Executive                Vice                President,                Senior                Lending                Officer          | 2006  | $114,865                        | $                21,060        | $17,387                                  | $                -     | $                -                                       | $                -                                              | $                -                                         | $                153,312   |

|   | (1) | Salary                figures include amounts deferred under Valley Bank’s 401K Profit-Sharing                Plan. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Annual                bonuses awarded under the incentive compensation plan may include                both                cash bonuses and/or the fair value of stock bonuses on the date of                the                award. Amounts awarded for 2006 include only cash bonuses. The bonuses                were awarded for meeting certain objectives of the Board of                Directors. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (3) | Stock                awards include the fair value of stock compensation awards. Assumptions                made in valuing these awards are disclosed in footnote 12, "Employee                and                Director Benefit Plan" to First Valley Bancorp's Consolidated Financial                Statements for year ended December 31, 2006, following page 40 hereof.                Mr.                Messier was awarded no shares in 2006. Mr. Blum and Mr. Mattioli                were                awarded 102 shares and 77 shares, respectively, in 2006. In addition,                the                amounts shown for Messrs. Blum and Mattioli reflect the value of                restricted stock awards. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | All                other compensation for Mr. Messier includes $69,000 relating to a                SERP                agreement, with the remaining amount for automobile, 401K match,                country                club dues and life insurance premiums. Compensation in the form of                perquisites and other personal benefits provided by us has been omitted                when the total amount of those perquisites and personal benefits                constituted less than $10,000 for the Named Executive Officer for                2006. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Outstanding      Equity Awards at Fiscal Year-End Table**

| **Option                Awards**                                                                               | **Stock                Awards**                                                                                                                           |
|----------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Name**                  | **Number****Of****Securities****Underlying****Unexercised****Options****(#)****Exercisable****(1)**          | **Number****Of****Securities****Underlying****Unexercised****Options****(#)****Unexercisable**        | **Equity****Incentive****Plan****Awards:****Number****Of****Securities****Underlying****Unexercised****Unearned****Options****(#)**       | **Option****Exercise****Price****($)(2)**             | **Option****Expiration****Date****(3)**             | **Number                of****Shares****Or                Units****Of****Stock****That****Have****Not****Vested****(#)**        | **Market****Value****Of****Shares****Or****Units****Of****Stock****That****Have****Not                Vested****($)**       | **Equity****Incentive****Plan****Award:****Number****Of****Unearned****Shares,****Units****Or****Other****Rights****That****Have****Not****Vested****(#)(4)**   | **Equity****Incentive****Plan****Award:****Market****Or****Payout****Value****Of****Unearned****Shares,****Units****Or****Other****Rights****That****Have****Not****Vested****($)(5)**   |
| **(a)**                                                                                                        |  **(b)**                                                                                                                                             | **(c)** |  ****(d)**** |  **(e)** |  **(f)** |  **(g)** |  **(h)** |  **(i)** |  **(j)** |
| Robert                L. Messier, Jr.President,                and                Chief Executive Officer      | 3,9933,630                                                                                                                                                | $                - | - | $7.51                $9.09 | 5/24/104/28/13 | -- | - | - | - |
| Mark                Blum, Executive                Vice President, Chief Financial Officer, and Treasurer      | -                                                                                                                                                         | - | - | - | - | - | - | 2,750 | $56,375 |
| Anthony                Mattioli,Executive                Vice President, Senior Lending Officer                | -                                                                                                                                                         | - | - | - | - | - | - | 2,750 | $56,375 |

|   | (1) | During                2006, the Company did not grant stock options to any of the Named                Executive Officers. At December 31, 2006, Mr. Messier had 7,623 total                shares underlying unexercised options. All options are fully vested                and                currently exercisable. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The                total options outstanding at December 31, 2006 are at an average                exercise                price of $8.26. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (3) | All                options are exercisable for a ten (10) year period from the effective                date                of the actual grant. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | In                July 2005, Messrs. Blum and Mattioli were each awarded 2,500 shares                of                common stock (2,750 shares after adjusting for stock splits) payable                in                July 2008. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Value                of shares is based upon the $20.50 closing price of the Company’s common                stock on December 31, 2006. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

**Compensation      of Directors**

| **Name**       | **Fees****Earned****Or****Paid                in****Cash****($)                (1)**    | **Stock****Awards****($)**      | **Option****Awards****($)**      | **Non-Equity****Incentive                Plan****Compensation****($)**     | **Change                in****Pension                Value****and****Nonqualified****Deferred****Compensation****Earnings**  | **All                Other Compensation****($)(2)**     | **Total****($)**       |
|----------------------------------------------|--------------------------------------------------------------------------------------------------------|----------------------------------------------------------|-----------------------------------------------------------|------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|------------------------------------------------------|
|  **(a)**                                | **(b)**                                                                                           |  **(c)**                                            |  **(d)**                                             |  **(e)**                                                                                  |  **(f)**                                                                                                                     |  **(g)**                                                               | **(h)**                                         |
|                                         |                                                                                                   |                                                     |                                                      |                                                                                           |                                                                                                                              |                                                                        |                                                 |
| **Thomas                O. Barnes**          | $3,725                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $3,725                                               |
| **James                G. Biondi**           | $4,475                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $4,475                                               |
| **Bonnie                Crane**              | $3,075                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $3,075                                               |
| **Edmund                D. Donovan**         | $6,950                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $6,950                                               |
| **David                W. Florian**          | $4,700                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $4,700                                               |
| **Mark                A. Gibson**            | $2,425                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $2,425                                               |
| **Edward                T. McPhee, Jr.**     | $3,550                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $3,550                                               |
| **Thomas                P. O'Brien**         | $3,750                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $3,750                                               |
| **David                J. Preleski**         | $5,025                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $5,025                                               |
| **James                J. Pryor**            | $8,125                                                                                                 | -                                                        | -                                                         | -                                                                                              | -                                                                                                                                 | -                                                                           | $8,125                                               |

----

**Item      11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED      STOCKHOLDER MATTERS**

**Item      201(d) Securities Authorized for Issuance Under Equity Compensation      Plans**

**Item      403 Security Ownership of Certain Beneficial Owners and      Managment**

|   | · | each                person, or group of affiliated persons, who is known to Company to                beneficially own more than 5% of our Common                Stock; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | each                of our directors; |
|--------|--------|---------------------------------------|

|   | · | each                of our executive officers named in the Summary Compensation Table;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | all                of our directors and executive officers as a                group. |
|--------|--------|---------------------------------------------------------------------------------------|

| **Name                of Beneficial Owner**     | **Amount                and Nature of****Beneficial                Ownership** | **Percent                of Class** |
|-------------------------------------------------|--------------------------------------------------------------------------------|-------------------------------------|
| *5%                Shareholders:*               |                                                                           |                                |
|                                            |                                                                           |                                |
| Leo                G. Charette                  | 62,147**                                                                       | 5.2%                                |
|                                            |                                                                           |                                |
| Edward                T. McPhee, Jr. - Director | 63,508                                                                         | 5.3%                                |
|                                            |                                                                           |                                |
| David                W. Florian - Director      | 73,505                                                                         | 6.1%                                |

----

| *Directors                and Executive Officers:*                                                                                    |            |        |
|---------------------------------------------------------------------------------------------------------------------------------------|-----------------|-------------|
|                                                                                                                                  |            |        |
| Thomas                O. BarnesDirector                                                                                               | 42,892          | 3.6%        |
|                                                                                                                                  |            |        |
| Mark                J. BlumExecutive                Vice President, Treasurer and Chief Financial                Officer and Director | 8,093           | 0.7%        |
|                                                                                                                                  |            |        |
| James                G. BiondiDirector                                                                                                | 54,478          | 4.5%        |
|                                                                                                                                  |            |        |
| Bonnie                CraneDirector                (and Director Nominee)                                                             | 17,108          | 1.4%        |
|                                                                                                                                  |            |        |
| Edmund                D. DonovanDirector                                                                                              | 17,727          | 1.5%        |
|                                                                                                                                  |            |        |
| Mark                A. GibsonDirector                (and Director Nominee)                                                           | 4,740           | 0.4%        |
|                                                                                                                                  |            |        |
| Anthony                M. MattioliExecutive                Vice President and Senior LendingOfficer                                   | 7,177           | 0.6%        |
|                                                                                                                                  |            |        |
| Robert                L. Messier, Jr.President,                Chief Executive Officer and Director                                   | 28,869          | 2.4%        |
|                                                                                                                                  |            |        |
| Thomas                P. O'BrienDirector                                                                                              | 39,690          | 3.3%        |
|                                                                                                                                  |            |        |
| David                J. PreleskiDirector                (and Director Nominee)                                                        | 12,243          | 1.0%        |
|                                                                                                                                  |            |        |
| James                J. PryorChairman                of the Board, Director (and DirectorNominee)                                     | 45,147          | 3.7%        |
|                                                                                                                                  |            |        |
| All                directors and executive officers as                a group (14 persons)(2)                                         |  415,177** |  32.0% |

----

**Item      12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR      INDEPENDENCE**

**Item      404 Transactions with Related Persons, Promoters and Certain Control      Persons**

**Item      407(a) Director Independence**

----

**Item      13 - EXHIBITS **

| (a)    | List                of Documents Filed as Part of This Report.                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (1)                                                                                                                                                     | Financial                Statements Filed: |
|   | 1.                                                                                                                                                      | Report                of Independent Registered Public Accounting Firm |
|   | 2.                                                                                                                                                      | Consolidated                Statements of Financial Condition as of December 31, 2006 and                2005 |
|   | 3.                                                                                                                                                      | Consolidated                Statements of Income for each of the three years in the period ended                December 31, 2006 |
|   | 4.                                                                                                                                                      | Consolidated                Statements of Changes in Stockholders’ Equity for each of the three years                in the period ended December 31, 2006 |
|   | 5.                                                                                                                                                      | Consolidated                Statements of Cash Flows for each of the three years in the period                ended                December 31, 2006 |
|   | 6.                                                                                                                                                      | Notes                to Consolidated Financial Statements |
|   | (2)                                                                                                                                                     | Financial                Statement Schedules. All schedules are omitted because of the absence                of                conditions under which they are required or because the required                information is included in the financial statement and related                notes.  |
| (b)    | Exhibits:                The following exhibits are filed as Exhibits to this Form 10-KSB,                as                required by Regulation S-B. |
|   | 2.1                                                                                                                                                     | Agreement                and Plan of Reorganization by and between Valley Bank and First Valley                Bancorp, Inc. dated as of May 23, 2005 (incorporated by reference                to                Company's Form 8-A dated June 27, 2005) |
|   | 2.2                                                                                                                                                     | Agreement                and Plan of Merger dated November 21, 2006 by and between New England                Bancshares, Inc., New England Bancshares Acquisition, Inc. and First                Valley Bancorp, Inc. (incorporated by reference to Company's Form                8-K                dated November 28, 2006) |
|   | 3.1                                                                                                                                                     | Certificate                of Incorporation (incorporated by reference to Company's Form 8-A                dated                June 27, 2005) |
|   | 3.2                                                                                                                                                     | Bylaws                (incorporated by reference to Company's Form 8-A dated June 27,                2005) |
|   | 4.1                                                                                                                                                     | Instruments                Defining Rights of Security Holders (incorporated by reference to                Company's Form 8-A dated June 27, 2005) |
|   | 10.1                                                                                                                                                    | Employment                Agreement between Valley Bank and Robert L. Messier, Jr. dated July                1,                2004 (incorporated by reference to Company's Form 8-A dated June                27,                2005) |
|   | 10.1.1                                                                                                                                                  | Amendment                to Employment Agreement between Valley Bank and Robert L. Messier,                Jr.                dated November 1, 2004 (incorporated by reference to Company's Form                8-A                dated June 27, 2005) |
|   | 10.1.2                                                                                                                                                  | Addendum              to              Employment Agreement between Valley Bank and Robert L. Messier, Jr.              dated              November 21, 2006.  |

----

|   | 10.2   | Change                in Control Agreement dated October 1, 2004 by and between Valley                Bank and                Mark J. Blum (incorporated by reference to Company's Form 8-A dated                June                27, 2005)           |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.3   | Change                in Control Agreement dated October 1, 2004 by and between                                                                                                                                                                          |
|   |   | Valley                Bank and Anthony M. Mattioli (incorporated by reference to Company's                Form                8-A dated June 27, 2005)                                                                                                   |
|   | 10.4   | Change                in Control Agreement dated October 1, 2004 by and between Valley                Bank and                Robert L. Messier, Jr. (incorporated by reference to Company's Form                8-A                dated June 27, 2005) |
|   | 10.5   | Stock                Option and Stock Compensation Plan (incorporated by reference to                Company's                Form 8-A dated June 27, 2005)                                                                                              |
|   | 10.6   | Supplemental                Executive Retirement Plan dated November 21, 2006 between Valley                Bank and                Robert L. Messier, Jr.                                                                                          |
|   | 14     | Code                of Ethics                                                                                                                                                                                                                            |
|   | 16     | Letter                on change in certifying accountant (incorporated by reference to                Company's                Form 8-K filed on January 30, 2006)                                                                                       |
|   | 21     | Subsidiaries                                                                                                                                                                                                                                             |
|   | 23     | Consent                of Whittlesey & Hadley, P.C.                                                                                                                                                                                                  |
|   | 31.1   | Chief                Executive Officer Certification Pursuant to 17 CFR 240.13a-14, as                adopted                pursuant to Section 302 of the Sarbanes Oxley Act of                2002.                                                   |
|   | 31.2   | Chief                Financial Officer Certification Pursuant to 17 CFR 240.13a-14, as                adopted                pursuant to Section 302 of the Sarbanes Oxley Act of                2002.                                                   |
|   | 32.1   | Chief                Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes Oxley Act of                2002.                                              |
|   | 32.2   | Chief                Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes Oxley Act of                2002.                                              |

**Item      14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES**

----

|                                                                                                                                                                                                                                                                                                                                                                                           |   | 2006                   |   | 2005                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|------------------------|
| **Audit                Fees**                consist of fees for professional services rendered for the audit                of the                consolidated financial statements and review of financial statements                included in quarterly reports on Form 10-QSB and services connected                with                statutory and regulatory filings or engagements. |   | $52,000                |   | $43,000                |
|                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |   |                   |
| **Audit                Related Fees**consist                of fees for assurance and related services that are reasonably related                to                the performance of the audit or review of financial statements not                reported above in "Audit Fees"                                                                                                           |   |                   |   |                   |
|                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |   |                   |
| **Tax                Service Fees**consist                of fees for tax return preparation, planning and tax                advice.                                                                                                                                                                                                                                                          |   | $                5,300 |   | $                4,750 |
|                                                                                                                                                                                                                                                                                                                                                                                           |   |                   |   |                   |
| **Other                Fees**                                                                                                                                                                                                                                                                                                                                                                  |   | -0-                    |   | -0-                    |

**Policy      on Audit/Compliance Committee Pre-Approval of Audit and Non-Audit      Services**

----

**SIGNATURES**

| /s/                Robert L. Messier, Jr.                         | Dated:                 April 12, 2007 |
|-------------------------------------------------------------------|--------------------------------------------|
| Robert                L. Messier, Jr.                             |                                       |
| President                and Chief Executive                      |                                       |
| Officer                                                           |                                       |
|                                                              |                                       |
|                                                              |                                       |
| /s/                Mark J. Blum                                   | Dated:                 April 12, 2007 |
| Mark                J. Blum                                       |                                       |
| Executive                Vice President, Treasurer, Chief         |                                       |
| Financial                Officer and Principal Accounting Officer |                                       |

----

|                                                                                                                            |                                         |
|---------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|
| /s/                  Robert L. Messier, Jr.                                                                                     | Dated:                   March 30, 2007 |
| Robert                  L. Messier, Jr.                                                                                         |                                         |
| President                  and Chief Executive                                                                                  |                                         |
| Officer                  and Director                                                                                           |                                         |
|                                                                                                                            |                                         |
|                                                                                                                            |                                         |
| /s/                  Mark J. Blum                                                                                               | Dated:                   March 30, 2007 |
| Mark                  J. Blum                                                                                                   |                                         |
| Executive                  Vice President, Treasurer,                                                                           |                                         |
| Chief                  Financial Officer, Principal                                                                             |                                         |
| Accounting                  Officer and Director                                                                                |                                         |
|                                                                                                                            |                                         |
|                                                                                                                            |                                         |
| /s/                  Thomas O. Barnes                                                                                           | Dated:                   March 30, 2007 |
| Thomas                  O. Barnes      Director                                                        |                                         |
|                                                                                                                            |                                         |
|                                                                                                                            |                                         |
| /s/                  James G. Biondi                                                                                            | Dated:                   March 30, 2007 |
| James                  G. Biondi                           Director                |                                         |
|                                                                                                                            |                                         |
|                                                                                                                            |                                         |
| /s/                  Bonnie Crane                                                                                               | Dated:                   March 30, 2007 |
| Bonnie                  Crane                              Director |                                         |
|                                                                                                                            |                                         |
|                                                                                                                            |                                         |
| /s/                  Edmund D. Donovan                                                                                          | Dated:                   March 30, 2007 |
| Edmund                  D. Donovan  Director                                                                          |                                         |
|                                                                                                                            |                                         |
|                                                                                                                            |                                         |
| /s/                  David W. Florian                                                                                           | Dated:                   March 30, 2007 |
| David                  W. Florian       Director                                                  |                                         |
|                                                                                                                            |                                         |
|                                                                                                                            |                                         |
| /s/                  Mark A. Gibson                                                                                             | Dated:                   March 30, 2007 |
| Mark                  A. Gibson       Director                                                    |                                         |

----

|                                                                                                                                                                 |                                         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|
| /s/                  Edward T. McPhee, Jr.                                                                                                                           | Dated:                   March 30, 2007 |
| Edward                  T. McPhee, Jr.    Director                                                                                                    |                                         |
|                                                                                                                                                                 |                                         |
|                                                                                                                                                                 |                                         |
|                                                                                                                                                                 |                                         |
| /s/                  Thomas P. O'Brien                                                                                                                               | Dated:                   March 30, 2007 |
| Thomas                  P. O’Brien                           Director                                             |                                         |
|                                                                                                                                                                 |                                         |
|                                                                                                                                                                 |                                         |
| /s/                  David J. Preleski                                                                                                                               | Dated:                   March 30, 2007 |
| David                  J.                  Preleski                              Director                |                                         |
|                                                                                                                                                                 |                                         |
| /s/                  James J. Pryor                                                                                                                                  | Dated:                   March 30, 2007 |
| James                  J.                  Pryor                                 Director |                                         |
|                                                                                                                                                                 |                                         |

----

----

| **Report                    of Independent Registered Public Accounting Firm**          | **1**                                                           |
|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------|
| ** **                                                                              | ** **                                                      |
| **Consolidated                    Statements of Financial Condition**                   | **2**                                                           |
| ** **                                                                              | ** **                                                      |
| **Consolidated                    Statements of Income**                                | **3**                                                           |
| ** **                                                                              | ** **                                                      |
| **Consolidated                    Statements of Changes in Stockholders’ Equity** | **4**                                                           |
| ** **                                                                              | ** **                                                      |
| **Consolidated                    Statements of Cash Flows**                            | **5**                                                           |
| ** **                                                                              | ** **                                                      |
| **Notes                    to Consolidated Financial Statements**                       | **6**                                                           |
|                                                                                    |                                                            |
| *1.*                                                                                    | *Summary                    of Significant Accounting Policies* | *6* |
| * *                                                                                | * *                                                        | * * |
| *2.*                                                                                    | *Investment                    Securities*                      | *11* |
| * *                                                                                | * *                                                        | * * |
| *3.*                                                                                    | *Loans*                                                         | *13* |
| * *                                                                                | * *                                                        | * * |
| *4.*                                                                                    | *Premises                    and Equipment*                     | *15* |
| * *                                                                                | * *                                                        |   |
| *5.*                                                                                    | *Deposits*                                                      | *16* |
| * *                                                                                | * *                                                        | * * |
| *6.*                                                                                    | *Borrowed                    Funds*                             | *17* |
| * *                                                                                | * *                                                        | * * |
| *7.*                                                                                    | *Income                    Taxes*                               | *18* |
| * *                                                                                | * *                                                        | * * |
| *8.*                                                                                    | *Regulatory                    Matters*                         | *19* |
| * *                                                                                | * *                                                        | * * |
| *9.*                                                                                    | *Employee                    Benefits*                          | *20* |
| * *                                                                                | * *                                                        | * * |
| *10.*                                                                                   | *Comprehensive                    Income*                       | *20* |
| * *                                                                                | * *                                                        | * * |
| *11.*                                                                                   | *Financial                    Instruments*                      | *21* |
| * *                                                                                | * *                                                        | * * |
| *12.*                                                                                   | *Employee                    and Director Benefit Plan*         | *22* |
| * *                                                                                | * *                                                        | * * |
| *13.*                                                                                   | *Stock                    Split*                                | *23* |
| * *                                                                                | * *                                                        | * * |
| *14.*                                                                                   | *Definitive                    Merger Agreement*                | *23* |
| * *                                                                                | * *                                                        | * * |
| *15.*                                                                                   | *Parent                    Company Only Financial Statements*   | *24* |

----

**Report        of Independent Registered Public Accounting Firm**

----

**Consolidated        Statements of Financial Condition**

|                                                                      |
|---------------------------------------------------------------------------|
|                                                                      |   | 2006 |   | 2005 |   |
|                                                                      |   | *(in                    thousands except share data)* |   |
| **ASSETS**                                                                |   |   |   |   |   |   |   |
| Cash                    and due from depository institutions              |   | $ | 12,319 |   | $ | 3,447 |   |
| Federal                    funds sold and money market accounts           |   |   | 13,841 |   |   | 9,220 |   |
| Investment                    securities                                  |   |   | 26,672 |   |   | 33,907 |   |
| Loans                    receivable, net                                  |   |   | 133,709 |   |   | 109,773 |   |
| Loans                    held for sale                                    |   |   | 1,080 |   |   | 252 |   |
| Premises                    and equipment, net                            |   |   | 2,321 |   |   | 1,435 |   |
| Federal                    Home Loan Bank of Boston Stock                 |   |   | 719 |   |   | 855 |   |
| Accrued                    income receivable                              |   |   | 865 |   |   | 680 |   |
| Deferred                    income taxes                                  |   |   | 1,052 |   |   | 904 |   |
| Other                    assets                                           |   |   | 569 |   |   | 453 |   |
|                                                                      |   |   |   |   |   |   |   |
| **Total                    assets**                                       |   | $ | 193,147 |   | $ | 160,926 |   |
|                                                                      |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |
| **LIABILITIES                    AND STOCKHOLDERS' EQUITY**               |   |   |   |   |   |   |   |
| Liabilities                                                               |   |   |   |   |   |   |   |
| Deposits                                                                  |   | $ | 164,758 |   | $ | 129,200 |   |
| Borrowed                    funds                                         |   |   | 14,952 |   |   | 19,117 |   |
| Mortgagors'                    escrow accounts                            |   |   | 169 |   |   | 176 |   |
| Other                    liabilities                                      |   |   | 2,737 |   |   | 2,733 |   |
| Total                    liabilities                                      |   |   | 182,616 |   |   | 151,226 |   |
|                                                                      |   |   |   |   |   |   |   |
| Commitments                    and Contingencies                          |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |
| Stockholders'                    equity                                   |   |   |   |   |   |   |   |
| Common                    stock, no par value; authorized 3,000,000       |   |   |   |   |   |   |   |
| shares;                    issued and outstanding 1,194,550 and 1,186,236 |   |   |   |   |   |   |   |
| in                    2006 and 2005, respectively                         |   |   | 899 |   |   | 892 |   |
| Additional                    paid in capital                             |   |   | 8,273 |   |   | 8,194 |   |
| Retained                    earnings                                      |   |   | 1,627 |   |   | 1,054 |   |
| Accumulated                    other comprehensive loss                   |   |   | (268 | ) |   | (440 | ) |
| Total                    stockholders' equity                             |   |   | 10,531 |   |   | 9,700 |   |
|                                                                      |   |   |   |   |   |   |   |
| **Total                    liabilities and stockholders' equity**         |   | $ | 193,147 |   | $ | 160,926 |   |

----

**Consolidated            Statements of            Income**

|                                                                       |   | For                    the Years Ended December                    31,   |      |
|----------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|-----------|
|                                                                       |   | 2006                                                                               |      | 2005 |   | 2004 |   |
|                                                                       |   | *(in                    thousands except share data)*                              |      |
| **Interest                    income**                                     |   |                                                                               |      |   |   |   |   |   |   |   |
| Interest                    on loans                                       |   | $                                                                                  | 9,022     |   | $ | 6,014 |   | $ | 4,561 |   |
| Interest                    and dividends on investments and deposits      |   |                                                                               | 1,754     |   |   | 1,585 |   |   | 1,357 |   |
| Total                    interest income                                   |   |                                                                               | 10,776    |   |   | 7,599 |   |   | 5,918 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Interest                    expense**                                    |   |                                                                               |      |   |   |   |   |   |   |   |
| Deposits                    and escrow                                     |   |                                                                               | 4,196     |   |   | 2,259 |   |   | 1,475 |   |
| Borrowed                    money                                          |   |                                                                               | 771       |   |   | 467 |   |   | 268 |   |
| Total                    interest expense                                  |   |                                                                               | 4,967     |   |   | 2,726 |   |   | 1,743 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Net                    interest income**                                 |   |                                                                               | 5,809     |   |   | 4,873 |   |   | 4,175 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Provision                    for loan losses**                           |   |                                                                               | 321       |   |   | 348 |   |   | 353 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Net                    interest income after provision for loan losses** |   |                                                                               | 5,488     |   |   | 4,525 |   |   | 3,822 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Noninterest                    income**                                  |   |                                                                               |      |   |   |   |   |   |   |   |
| Service                    charges and other fees                          |   |                                                                               | 492       |   |   | 385 |   |   | 327 |   |
| Realized                    gains (losses) on investments                  |   |                                                                               | (86       | ) |   | - |   |   | 6 |   |
| Total                    noninterest income                                |   |                                                                               | 406       |   |   | 385 |   |   | 333 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Noninterest                    expense**                                 |   |                                                                               |      |   |   |   |   |   |   |   |
| Salaries                                                                   |   |                                                                               | 2,196     |   |   | 1,736 |   |   | 1,528 |   |
| Employee                    benefits and taxes                             |   |                                                                               | 428       |   |   | 347 |   |   | 306 |   |
| Occupancy                    and equipment                                 |   |                                                                               | 791       |   |   | 655 |   |   | 671 |   |
| Professional                    fees                                       |   |                                                                               | 206       |   |   | 139 |   |   | 145 |   |
| Marketing                                                                  |   |                                                                               | 132       |   |   | 106 |   |   | 104 |   |
| Office                    supplies                                         |   |                                                                               | 74        |   |   | 74 |   |   | 67 |   |
| Outside                    service fees                                    |   |                                                                               | 179       |   |   | 225 |   |   | 146 |   |
| Organizational                    costs                                    |   |                                                                               | -         |   |   | 98 |   |   | - |   |
| Merger                    related expenses                                 |   |                                                                               | 345       |   |   | - |   |   | - |   |
| Other                                                                      |   |                                                                               | 396       |   |   | 329 |   |   | 249 |   |
| Total                    noninterest expense                               |   |                                                                               | 4,747     |   |   | 3,709 |   |   | 3,216 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Income                    before income tax expense**                    |   |                                                                               | 1,147     |   |   | 1,201 |   |   | 939 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| **Income                    tax expense**                                  |   |                                                                               | 574       |   |   | 452 |   |   | 367 |   |
| **Net                    income**                                          |   | $                                                                                  | 573       |   | $ | 749 |   | $ | 572 |   |
|                                                                       |   |                                                                               |      |   |   |   |   |   |   |   |
| Basic                    income per share                                  |   | $                                                                                  | 0.48      |   | $ | 0.63 |   | $ | 0.49 |   |
| Diluted                    income per share                                |   |                                                                               | 0.45      |   |   | 0.60 |   |   | 0.47 |   |
| Weighted-average                    shares outstanding - basic             |   |                                                                               | 1,191,018 |   |   | 1,184,930 |   |   | 1,178,639 |   |
| Weighted-average                    shares outstanding - diluted           |   |                                                                               | 1,261,859 |   |   | 1,239,000 |   |   | 1,207,895 |   |

----

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

|                                                |
|-----------------------------------------------------|
|                                                | Common                    Stock  |  Additional                    Paid-in                    Capital | Retained                    Earnings                    (deficit) |   | Accumulated                    Other Comprehensive                    Income (Loss)  |   | Total                    Stockholders' Equity  |   |
|                                                |  *(in                    thousands)* |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                    at December 31, 2003** | $ | 884 |   | $ | 8,090 |   | $ | (267 | ) | $ | (62 | ) | $ | 8,645 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    income                       |   | - |   |   | - |   |   | 572 |   |   | - |   |   | 572 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                    issued under stock        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| compensation                    plan                |   | 3 |   |   | 36 |   |   | - |   |   | - |   |   | 39 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    unrealized gains (losses) on |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale                    securities    |   | - |   |   | - |   |   | - |   |   | (97 | ) |   | (97 | ) |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                    at December 31, 2004** | $ | 887 |   | $ | 8,126 |   | $ | 305 |   | $ | (159 | ) | $ | 9,159 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    income                       |   | - |   |   | - |   |   | 749 |   |   | - |   |   | 749 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                    issued under stock        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| compensation                    plan                |   | 5 |   |   | 68 |   |   | - |   |   | - |   |   | 73 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    unrealized gains (losses) on |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale                    securities    |   | - |   |   | - |   |   | - |   |   | (281 | ) |   | (281 | ) |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                    at December 31, 2005** | $ | 892 |   | $ | 8,194 |   | $ | 1,054 |   | $ | (440 | ) | $ | 9,700 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    income                       |   | - |   |   | - |   |   | 573 |   |   | - |   |   | 573 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                    issued under stock        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| compensation                    plan                |   | 2 |   |   | 38 |   |   | - |   |   | - |   |   | 40 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                    issued through exercise   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                    stock options                 |   | 5 |   |   | 41 |   |   | - |   |   | - |   |   | 46 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    unrealized gains (losses) on |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available-for-sale                    securities    |   | - |   |   | - |   |   | - |   |   | 172 |   |   | 172 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                    at December 31, 2006** | $ | 899 |   | $ | 8,273 |   | $ | 1,627 |   | $ | (268 | ) | $ | 10,531 |   |

----

**Consolidated          Statements of Cash          Flows**

|                                                                    |   | For                  the Years Ended December                  31,  |    |
|-------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|---------|
|                                                                    |   | 2006                                                                     |    | 2005 |   | 2004 |   |
|                                                                    |   |  *(in                  thousands)*                                  |    |
| **Cash                  flows from operating activities**               |   |                                                                     |    |   |   |   |   |   |   |   |
| Net                  income                                             |   | $                                                                        | 573     |   | $ | 749 |   | $ | 572 |   |
| Adjustments                  to reconcile net income to net cash        |   |                                                                     |    |   |   |   |   |   |   |   |
| provided                  by operating activities:                      |   |                                                                     |    |   |   |   |   |   |   |   |
| Provision                  for loan losses                              |   |                                                                     | 321     |   |   | 348 |   |   | 353 |   |
| Depreciation                                                            |   |                                                                     | 235     |   |   | 232 |   |   | 218 |   |
| Provision                  for deferred taxes                           |   |                                                                     | (258    | ) |   | (92 | ) |   | (110 | ) |
| Realized                  losses (gains) on investments                 |   |                                                                     | 86      |   |   | - |   |   | (6 | ) |
| Realized                  losses (gains) on premises and equipment      |   |                                                                     | 5       |   |   | - |   |   | - |   |
| Amortization                  (accretion) of premiums (discounts), net  |   |                                                                     | 98      |   |   | 171 |   |   | 209 |   |
| Amortization                  of debt issuance costs                    |   |                                                                     | 6       |   |   | 2 |   |   | - |   |
| Common                  stock issued as compensation                    |   |                                                                     | 40      |   |   | 73 |   |   | 39 |   |
| Net                  change in:                                         |   |                                                                     |    |   |   |   |   |   |   |   |
| Deferred                  loan fees                                     |   |                                                                     | 23      |   |   | 20 |   |   | 49 |   |
| Accrued                  income receivable                              |   |                                                                     | (185    | ) |   | (120 | ) |   | (159 | ) |
| Other                  assets                                           |   |                                                                     | (116    | ) |   | (266 | ) |   | (14 | ) |
| Other                  liabilities                                      |   |                                                                     | 4       |   |   | 1,527 |   |   | 320 |   |
| **Net                  cash provided by operating activities**          |   |                                                                     | 832     |   |   | 2,644 |   |   | 1,471 |   |
|                                                                    |   |                                                                     |    |   |   |   |   |   |   |   |
| **Cash                  flows from investing activities**               |   |                                                                     |    |   |   |   |   |   |   |   |
| Proceeds                  from maturities, calls and                    |   |                                                                     |    |   |   |   |   |   |   |   |
| paydowns                  of available-for-sale securities              |   |                                                                     | 11,711  |   |   | 24,081 |   |   | 17,472 |   |
| Proceeds                  sales of available-for-sale securities        |   |                                                                     | 3,121   |   |   | - |   |   | 509 |   |
| Purchase                  of available-for-sale securities              |   |                                                                     | (7,500  | ) |   | (19,072 | ) |   | (23,651 | ) |
| Loan                  originations net of principal payments            |   |                                                                     | (25,108 | ) |   | (32,664 | ) |   | (18,762 | ) |
| Redemption                  (purchase) of Federal Home Loan Bank        |   |                                                                     |    |   |   |   |   |   |   |   |
| of                  Boston Stock                                        |   |                                                                     | 136     |   |   | (128 | ) |   | (108 | ) |
| Proceeds                  from sale of premises and equipment           |   |                                                                     | 17      |   |   | - |   |   | - |   |
| Purchase                  of premises and equipment                     |   |                                                                     | (1,142  | ) |   | (143 | ) |   | (762 | ) |
| **Net                  cash used by investing activities**              |   |                                                                     | (18,765 | ) |   | (27,926 | ) |   | (25,302 | ) |
|                                                                    |   |                                                                     |    |   |   |   |   |   |   |   |
| **Cash                  flows from financing activities**               |   |                                                                     |    |   |   |   |   |   |   |   |
| Change                  in DDA, NOW, money market, and savings accounts |   |                                                                     | (12,640 | ) |   | 6,763 |   |   | 12,068 |   |
| Change                  in time deposit accounts                        |   |                                                                     | 48,198  |   |   | 14,691 |   |   | 14,413 |   |
| Proceeds                  from borrowed funds                           |   |                                                                     | 25,000  |   |   | 16,046 |   |   | 8,875 |   |
| Repayments                  of borrowed funds                           |   |                                                                     | (29,171 | ) |   | (9,610 | ) |   | (8,576 | ) |
| Change                  in mortgagors' escrow accounts                  |   |                                                                     | (7      | ) |   | 26 |   |   | 10 |   |
| Proceeds                  from issuance of common stock                 |   |                                                                     | 46      |   |   | - |   |   | - |   |
| **Net                  cash provided by financing activities**          |   |                                                                     | 31,426  |   |   | 27,916 |   |   | 26,790 |   |
|                                                                    |   |                                                                     |    |   |   |   |   |   |   |   |
| Net                  change in cash and cash equivalents                |   |                                                                     | 13,493  |   |   | 2,634 |   |   | 2,959 |   |
| Cash                  and cash equivalents at beginning of year         |   |                                                                     | 12,667  |   |   | 10,033 |   |   | 7,074 |   |
| **Cash                  and cash equivalents at end of year**           |   | $                                                                        | 26,160  |   | $ | 12,667 |   | $ | 10,033 |   |
| ***Supplemental                  disclosures***                         |   |                                                                     |    |   |   |   |   |   |   |   |
| Cash                  paid during the year for:                         |   |                                                                     |    |   |   |   |   |   |   |   |
| Interest                                                                |   | $                                                                        | 5,028   |   | $ | 2,542 |   | $ | 1,621 |   |
| Income                  taxes                                           |   | $                                                                        | 835     |   | $ | 604 |   | $ | 397 |   |

----

**Notes        to Consolidated Financial Statements**

**1.            Summary of Significant Accounting Policies**

| *Business*First                    Valley Bancorp, Inc. (the Company) is a state chartered holding                    company                    formed in 2005 for the purpose of acquiring all of the common                    stock of                    Valley Bank. Existing shares in Valley Bank common stock were                    exchanged                    for an equal and proportionate amount of shares of Company                    stock. Valley                      Bank (the Bank) is a state chartered commercial bank which                      commenced                      operations on November 15, 1999. The Bank is engaged principally                      in the                      business of attracting deposits from the general public and                      investing                      those deposits in small business, real estate, residential                      and consumer                      loans. The Bank is subject to competition from other financial                      institutions throughout the region. Both                      the Company and the Bank are subject to                      the regulations of certain state and federal agencies and undergoes                      periodic examinations by those regulatory authorities. *Basis                        of presentation and principles of consolidation*The                        consolidated financial statements include the accounts of                        First Valley                        Bancorp, Inc. and its wholly-owned subsidiary, Valley Bank.                        Significant                        intercompany accounts and transactions have been eliminated                        in                        consolidation. Prior to the formation of the Company the                        amounts reflected                        are those of the Bank. The                        accounting and reporting policies of the Company conform                        to generally                        accepted accounting principles in the United States of America                        and to                        general practices within the banking industry. Such policies                        have been                        followed on a consistent basis.   |   | In                    preparing the consolidated financial                    statements, management is required to make estimates and assumptions                    that                    affect the reported amounts of assets and liabilities as of the                    date of                    the balance sheet, and income and expenses for the period. Actual                    results                    could differ from those estimates. Material                      estimates that are particularly susceptible to significant                      change in the                      near-term relate to the determination of the allowance for                      losses on                      loans. While management uses available information to recognize                      losses on                      loans, future additions to the allowance may be necessary based                      on changes                      in economic conditions, particularly in Connecticut. *Cash                      and cash equivalents*For                      purposes of reporting cash flows, cash and cash equivalents                      include cash                      and amounts due from depository institutions, federal funds                      sold, and                      money market accounts. *Investment                      securities*The                      Company's investments are categorized as available-for-sale.                      Available-for-sale securities are securities that are held                      for indefinite                      periods of time and are carried at fair value with unrealized                      gains and                      losses reported as a separate component of capital, net of                      estimated                      income taxes.Mortgage-backed                      securities, which include collateralized mortgage obligations                      (CMO's), are                      either U.S. Government Agency securities or are rated in one                      of the top                      two ratings categories by at least one of the major rating                      agencies at the                      time of purchase. One of the risks inherent when investing                      in                      mortgage-backed securities and CMO's is the ability of such                      instruments to                      incur prepayments of principal prior to maturity. Because of                      prepayments,                      the weighted-average yield of these securities may also change,                      which                      could affect earnings. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Gains                      or losses on the sales of securities are recognized at trade                      date                      utilizing the specific identification method.  *Loans                      receivable and allowance for loan losses*Loans                      receivable are stated at unpaid principal balance less deferred                      loan fees,                      and the allowance for loan losses.Uncollected                      interest on loans receivable is accrued as earned based on                      rates applied                      to principal amounts outstanding. Recognition of income on                      the accrual                      basis is generally discontinued after 90 days past due. Payments                      ultimately collected are allocated to reduce principal and                      accrued                      interest unless there are doubts concerning collectibility.                      If there are                      any doubts regarding collectibility all payments are used to                      reduce                      principal and any accrued interest is reversed to reduce interest                      income.Loan                      origination fees and certain direct loan origination costs                      are being                      deferred and the net amount amortized on a level-yield basis                      as an                      adjustment to the related loan yield over its contractual life.                      Unamortized net fees are recognized upon early repayment of                      the                      loans.The                      allowance for loan losses is established by a provision charged                      to                      earnings and is maintained at a level considered adequate to                      provide for                      potential loan losses based on management's evaluation of known                      and                      inherent risks in the loan portfolio. When a loan or portion                      of a loan is                      considered uncollectible, it is charged against the allowance                      for loan                      losses. Recoveries of loans previously charged-off are credited                      to the                      allowance when collected.Management                      makes regular evaluations of the loan portfolio to determine                      the adequacy                      of the level of the allowance for loan losses. Numerous factors                      are                      considered in the evaluation, including a review of certain                      borrowers'                      current financial status and credit standing, available collateral,                      loss                      experience in relation to outstanding loans, the overall loan                      portfolio                      quality, management's judgment regarding prevailing and anticipated                      economic conditions, and other relevant factors. |   | In                      addition, various regulatory agencies, as an integral part                      of their                      examination process, periodically review the Bank's allowance                      for loan                      losses. Such agencies may require the Bank to recognize additions                      to the                      allowance based on their judgments about information available                      to them at                      the time of their examination. *Loans                      held-for-sale*Loans                      held-for-sale are valued at the lower of cost or market as                      determined by                      outstanding commitments from investors. All loans sold by the                      Company are                      sold on a non-recourse basis. Gains or losses on the sale of                      loans are                      determined using the specific identification method.  *Premises                      and equipment*Premises                      and equipment are stated at cost less accumulated depreciation                      computed on                      the straight-line method at rates based on estimated useful                      lives.                      Estimated lives are 39 years for buildings and 3 to 10 years                      for                      furniture, fixtures and equipment. Expenditures for replacements                      or major                      improvements are capitalized. Expenditures for normal maintenance                      and                      repairs are charged to expense as incurred. Upon the sale or                      retirement of                      premises and equipment, the cost and accumulated depreciation                      are removed                      from the respective accounts and any gain or loss is included                      in income.                       *Computation                      of fair values*The                      calculation of fair value estimates of financial instruments                      is dependent                      upon certain subjective assumptions and involves significant                      uncertainties. Changes in assumptions could significantly affect                      the                      estimates. These estimates do not reflect any possible tax                      ramifications,                      estimated transaction costs or any premium or discount that                      could result                      from offering the Company’s entire holdings of a particular financial                      instrument. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes        to Consolidated Financial Statements**

**1.     Summary        of        Significant Accounting Policies**
* (Continued)*

| The                    following methods and assumptions were utilized by the Company                    in                    estimating the fair values of its on-balance sheet financial                    instruments:Cash                    and cash equivalents - The carrying amounts reported in the statement                    of                    financial condition approximate these assets' fair value.Investment                    securities - Fair values for investment securities are based                    on quoted                    market prices.Loans                    receivable - For variable rate loans that reprice frequently                    and without                    significant change in credit risk, fair values are based on carrying                    values. The fair value of other loans is estimated by discounted                    cash flow                    analyses using interest rates currently being offered for loans                    with                    similar terms to borrowers of similar credit quality. Accrued                    income receivable - The carrying value of accrued income receivable                    approximates fair value.Deposits                    - For the present value calculation of non-maturity deposits,                    an                    assumption is required as to the maturity, or life, of these                    deposits. The                    Company is currently using the FDICIA 305 proposal recommended                    for this                    purpose. On non-maturity deposits, fair value is based on using                    a                    discounted cash flow technique that uses current interest rates                    and                    applies interest expense into the future compared to Federal                    Home Loan                    Bank current loan interest rates. Fair values for time certificates                    of                    deposit are estimated using a discounted cash flow technique                    that applies                    interest rates currently being offered to a schedule of aggregated                    expected monthly maturities on time deposits.FHLBB                    Advances - Fair values are estimated using discounted cash flow                    analyses                    based on the Bank's current incremental borrowing rates for similar                    types                    of borrowing arrangements.  |   | Subordinated                    debts - Fair value is determined using quoted market prices.Mortgagors'                    escrow accounts - The carrying value of escrow accounts approximates                    fair                    value. *Income                    taxes*The                    Bank accounts for certain income and expense items differently                    for                    financial reporting purposes than for income tax purposes. Provisions                    for                    deferred taxes are being made in recognition of these temporary                    differences.*Earnings                    per share*Basic                    earnings per share is computed by dividing income available to                    common                    stockholders by the weighted average number of common shares                    outstanding                    for the period. Diluted earnings per share reflect the potential                    dilution                    that could occur if securities or other contracts to issue common                    stock                    were exercised or converted into common stock or resulted in                    the issuance                    of common stock that then shared in the earnings of the entity.                    *Related                    party transactions*Directors                    and officers of the Company and their affiliates have been customers                    of                    and have had transactions with the Bank, and it is expected that                    such                    persons will continue to have such transactions in the future.                    Management                    believes that all deposit accounts, loans, services and commitments                    comprising such transactions, were made in the ordinary course                    of                    business, on substantially the same terms, including interest                    rates and                    collateral, as those prevailing at the time for comparable transactions                    with other customers who are not directors or officers. In the                    opinion of                    management, the transactions with related parties did not involve                    more                    than normal risks of collectibility or favored treatment or terms,                    or                    present other unfavorable                    features. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes        to Consolidated Financial        Statements**

| *Stock                    Based Compensation*As                    more fully described in Note 12, the Bank has a long-term incentive                    plan                    authorizing various types of market and performance based incentive                    awards                    that may be granted to directors, officers and employees. In                    December                    2004, the Financial Accounting Standards Board revised Statement                    of                    Financial Accounting Standards No. 123, “Accounting for Stock-Based                    Compensation” (“SFAS 123R”). This Statement eliminated the alternative                    intrinsic value method of accounting, in accordance with the                    Accounting                    Principles Board Opinion No. 25, “Accounting for Stock Issued to                    Employees” for recognizing the cost of employee services received in                    share-based payment transactions, thereby reflecting the economic                    consequences of those transactions in the financial statements.                    SFAS 123R                    requires all entities to follow the   |   | same                    accounting standard and account for such transactions using the                    fair-value-based method. On March 29, 2005, the SEC staff issued                    Staff                    Accounting Bulletin No. 107 (“SAB 107”). SAB 107 expresses the views of                    the SEC staff regarding SFAS 123R and certain rules and regulations                    and                    provides the SEC’s views regarding the valuation of share-based payment                    arrangements for public companies. On April 14, 2005, the Securities                    and                    Exchange Commission (the “SEC”) delayed the effective date for SFAS 123R,                    which allows companies to implement the statement at the beginning                    of                    their first fiscal year beginning after June 15, 2005, which                    would be                    January 1, 2006 for the Company. Previously, the Company applied                    APB                    Opinion 25, “Accounting for Stock Issued to Employees,” and related                    interpretations in accounting for its long-term incentive                    plan. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   |
|------------------------------------------------------------|--------|
|                                                       |   |  For                    The Years Ended December 31, |   |
| *(in                    thousands except share data)*      |   | 2006 |   | 2005 |   | 2004 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |
| Net                    income, as reported                 |   | $ | 573 |   | $ | 749 |   | $ | 572 |   |
| Stock-based                    employee compensation       |   |   |   |   |   |   |   |   |   |   |
| included                    in net income                  |   |   | - |   |   | - |   |   | - |   |
| Total                    stock-based employee compensation |   |   |   |   |   |   |   |   |   |   |
| expense                    determined under the fair value |   |   |   |   |   |   |   |   |   |   |
| based                    method for all awards             |   |   | - |   |   | - |   |   | (20 | ) |
| Pro                    forma net income                    |   | $ | 573 |   | $ | 749 |   | $ | 552 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |
| Earnings                    per share:                     |   |   |   |   |   |   |   |   |   |   |
| Basic,                    as reported                      |   | $ | 0.48 |   | $ | 0.63 |   | $ | 0.49 |   |
| Diluted,                    as reported                    |   |   | 0.45 |   |   | 0.60 |   |   | 0.47 |   |
| Basic,                    pro forma                        |   |   | 0.48 |   |   | 0.63 |   |   | 0.47 |   |
| Diluted,                    pro forma                      |   |   | 0.45 |   |   | 0.60 |   |   | 0.45 |   |

----

**Notes        to Consolidated Financial Statements**

**1.             Summary of Significant Accounting Policies**
*        (Continued)*

| *Recent                  Accounting Pronouncements*In                  July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB                  Interpretation No. 48, “Accounting for Uncertainty in Income Tax                  Positions.” This interpretation clarifies the application of SFAS. No.                  109, “Accounting for Income Taxes,” by establishing a threshold condition                  that a tax position must meet for any part of the benefit of that                  position                  to be recognized in the financial statements. In addition to recognition,                  FASB Interpretation No. 48 provides guidance concerning measurement,                  derecognition, classification, and disclosure of tax positions                  and is                  effective for fiscal years ending after December 15, 2006. Adoption                  of                  this Interpretation is not expected to have a significant impact                  on the                  results of operations and financial condition. In                  March 2006, the Financial Accounting Standards Board issued Statement                  No.                  156,   |   | “Accounting                  for Servicing of Financial Assets.”                  Statement 156, which is an amendment to SFAS No. 140, simplifies                  the                  accounting for servicing assets and liabilities, such as those                  common with                  mortgage securitization activities. The new Standard clarifies                  when an                  obligation to service financial assets should be separately recognized                  as                  a servicing asset or a servicing liability; requires that a separately                  recognized servicing asset or servicing liability be initially                  measured at                  fair value, if practicable; and permits an entity with a separately                  recognized servicing asset or servicing liability to choose either                  the                  Amortization Method or Fair Value Method for subsequent measurement.                  Statement No. 156 is effective for separately recognized servicing                  assets                  and liabilities acquired or issued after the beginning of an entity's                  fiscal year that begins after September 15, 2006, with early adoption                  permitted. Adoption of this statement is not expected to have a                  material                  effect on results of operations or financial condition. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes        to Consolidated Financial Statements**

**2.           Investment Securities**

|                                                       | December                    31, 2006 |                                      |
|------------------------------------------------------------|--------------------------------------|-------------------------------------------|
|                                                       |                                 | Amortized                                 |   | Gross                    Unrealized |   | Fair |   |
|                                                       | Cost                    Basis        |                                      | Gains |   | Losses |   | Value |   |
|                                                       |                                 |  *(in                    thousands)* |   |
| **Available-for-sale                    securities:**      |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Debt                    securities:                        |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                    government and agency obligations: |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    in less than one year               |                                 | $                                         | 3,500 |   | $ | - |   | $ | (29 | ) | $ | 3,471 |   |
| Due                    from one through five years         |                                 |                                      | 4,000 |   |   | - |   |   | (73 | ) |   | 3,927 |   |
|                                                       |                                 |                                      | 7,500 |   |   | - |   |   | (102 | ) |   | 7,398 |   |
|                                                       |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Corporate                    bonds:                        |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    in less than one year               |                                 |                                      | 506 |   |   | - |   |   | (2 | ) |   | 504 |   |
| Due                    from one through five years         |                                 |                                      | 1,554 |   |   | - |   |   | (48 | ) |   | 1,506 |   |
|                                                       |                                 |                                      | 2,060 |   |   | - |   |   | (50 | ) |   | 2,010 |   |
|                                                       |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Municipal                    bonds:                        |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    after five years through ten years  |                                 |                                      | 1,179 |   |   | - |   |   | - |   |   | 1,179 |   |
| Due                    after ten years                     |                                 |                                      | 1,383 |   |   | - |   |   | (6 | ) |   | 1,377 |   |
|                                                       |                                 |                                      | 2,562 |   |   | - |   |   | (6 | ) |   | 2,556 |   |
|                                                       |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                    securities              |                                 |                                      | 12,986 |   |   | 4 |   |   | (282 | ) |   | 12,708 |   |
|                                                       |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                    debt securities                   |                                 |                                      | 25,108 |   |   | 4 |   |   | (440 | ) |   | 24,672 |   |
|                                                       |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Equity                    securities:                      |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Variable                    rate preferred securities      |                                 |                                      | 2,000 |   |   | - |   |   | - |   |   | 2,000 |   |
|                                                       |                                 |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Total                    available-for-sale securities** |                                 | $                                         | 27,108 |   | $ | 4 |   | $ | (440 | ) | $ | 26,672 |   |

----

**Notes        to Consolidated Financial Statements**

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

|                                                       |   | December                    31, 2005      |   |
|------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                       |   | Amortized                                 |   | Gross                    Unrealized |   | Fair |   |
|                                                       |   | Cost                    Basis             |   | Gains |   | Losses |   | Value |   |
|                                                       |   |  *(in                    thousands)* |   |
| **Available-for-sale                    securities:**      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Debt                    securities:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                    government and agency obligations: |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    in less than one year               |   | $                                         | 1,509  |   | $ | - |   | $ | (23 | ) | $ | 1,486 |   |
| Due                    from one through five years         |   |                                      | 7,499  |   |   | - |   |   | (168 | ) |   | 7,331 |   |
|                                                       |   |                                      | 9,008  |   |   | - |   |   | (191 | ) |   | 8,817 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Corporate                    bonds:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    from one through five years         |   |                                      | 2,095  |   |   | - |   |   | (75 | ) |   | 2,020 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Municipal                    bonds:                        |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Due                    after ten years                     |   |                                      | 2,564  |   |   | - |   |   | (15 | ) |   | 2,549 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                    securities              |   |                                      | 20,456 |   |   | 1 |   |   | (436 | ) |   | 20,021 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                    debt securities                   |   |                                      | 34,123 |   |   | 1 |   |   | (717 | ) |   | 33,407 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Equity                    securities:                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Variable                    rate preferred securities      |   |                                      | 500    |   |   | - |   |   | - |   |   | 500 |   |
|                                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| **Total                    available-for-sale securities** |   | $                                         | 34,623 |   | $ | 1 |   | $ | (717 | ) | $ | 33,907 |   |

----

**Notes        to Consolidated Financial        Statements**

|                                               |
|----------------------------------------------------|
|                                               |  **Length                    of Time in Continuous Unrealized Loss                    Position** |   |   |   |   |
|                                               |   | Less                    than 12 months |   | 12                    months or more |   | Total |   |
|                                               |   | Market |   | Unrealized |   | Market |   | Unrealized |   | Market |   | Unrealized |   |
| *(in                    thousands)*                |   | Value |   | Losses |   | Value |   | Losses |   | Value |   | Losses |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                    agency obligations         |   | $ | - |   | $ | - |   | $ | 7,398 |   | $ | (102 | ) | $ | 7,398 |   | $ | (102 | ) |
| Corporate                    bonds                 |   |   | - |   |   | - |   |   | 2,010 |   |   | (51 | ) |   | 2,010 |   |   | (51 | ) |
| Municipal                    bonds                 |   |   | 1,320 |   |   | (3 | ) |   | 551 |   |   | (2 | ) |   | 1,871 |   |   | (5 | ) |
| Mortgage-backed                    securities      |   |   | - |   |   | - |   |   | 11,852 |   |   | (282 | ) |   | 11,852 |   |   | (282 | ) |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                    investment securities** |   | $ | 1,320 |   | $ | (3 | ) | $ | 21,811 |   | $ | (437 | ) | $ | 23,131 |   | $ | (440 | ) |

**3.             Loans**

|   |                                                |   |                                          |
|--------|-----------------------------------------------------|--------|-----------------------------------------------|
|   |                                                |   | 2006                                          |   | 2005 |   |   |
|   |                                                |   | *(dollars                      in thousands)* |   |   |
|   | Commercial                      mortgages           |   | $                                             | 69,603 |   | $ | 54,653 |   |   |
|   | Commercial                      loans               |   |                                          | 30,162 |   |   | 22,726 |   |   |
|   | Residential                      mortgages          |   |                                          | 22,925 |   |   | 22,848 |   |   |
|   | Consumer                      and home equity loans |   |                                          | 13,127 |   |   | 11,317 |   |   |
|   |                                                |   |                                          | 135,817 |   |   | 111,544 |   |   |
|   | Less:                                               |   |                                          |   |   |   |   |   |   |
|   | Deferred                      loan origination fees |   |                                          | 248 |   |   | 225 |   |   |
|   | Allowance                      for loan losses      |   |                                          | 1,860 |   |   | 1,546 |   |   |
|   |                                                |   |                                          |   |   |   |   |   |   |
|   | **Loans                      receivable, net**      |   | $                                             | 133,709 |   | $ | 109,773 |   |   |
|   |                                                |   |                                          |   |   |   |   |   |   |
|   | **Weighted                      average yield**     |   |                                          | 7.24 | % |   | 6.66 | % |   |

----

**Notes        to Consolidated Financial        Statements**

**3.            Loans**
*(Continued)*

|   |                                        |   |
|--------|---------------------------------------------|--------|
|   |                                        |   | 2006 |   | 2005 |   |   |
|   |                                        |   | *(in                    thousands)* |   |   |
|   | Fixed                    rate:              |   |   |   |   |   |   |   |   |
|   | Term                    to maturity         |   |   |   |   |   |   |   |   |
|   | 1                    month through 1 year   |   | $ | 7,389 |   | $ | 4,064 |   |   |
|   | 1                    year through 3 years   |   |   | 4,010 |   |   | 4,643 |   |   |
|   | 3                    years through 5 years  |   |   | 13,644 |   |   | 10,192 |   |   |
|   | 5                    years through 10 years |   |   | 9,538 |   |   | 12,691 |   |   |
|   | Over                    10 years            |   |   | 4,887 |   |   | 4,724 |   |   |
|   |                                        |   |   | 39,468 |   |   | 36,314 |   |   |
|   | Adjustable                    rate:         |   |   |   |   |   |   |   |   |
|   | Rate                    adjustment          |   |   |   |   |   |   |   |   |
|   | 1                    month through 1 year   |   |   | 39,102 |   |   | 22,409 |   |   |
|   | 1                    year through 3 years   |   |   | 21,383 |   |   | 15,594 |   |   |
|   | 3                    years through 5 years  |   |   | 33,148 |   |   | 29,948 |   |   |
|   | 5                    years through 10 years |   |   | 2,716 |   |   | 7,279 |   |   |
|   |                                        |   |   | 96,349 |   |   | 75,230 |   |   |
|   | **Total                    loans**          |   | $ | 135,817 |   | $ | 111,544 |   |   |

|   |                                              |   |
|--------|---------------------------------------------------|--------|
|   |                                              |   | 2006 |   | 2005 |   |   |
|   |                                              |   | *(in                    thousands)* |   |
|   | Balance                    at beginning of period |   | $ | 1,546 |   | $ | 1,295 |   |   |
|   | Provision                    for loan losses      |   |   | 321 |   |   | 348 |   |   |
|   | Charge                    offs                    |   |   | (11 | ) |   | (114 | ) |   |
|   | Recoveries                                        |   |   | 4 |   |   | 17 |   |   |
|   |                                              |   |   |   |   |   |   |   |   |
|   | **Balance                    at end of period**   |   | $ | 1,860 |   | $ | 1,546 |   |   |
|   |                                              |   |   |   |   |   |   |   |   |

----

**Notes        to Consolidated Financial Statements**

**4.           Premises and Equipment**

|   |                                                 |   |
|--------|------------------------------------------------------|--------|
|   |                                                 |   | 2006 |   | 2005 |   |   |
|   |                                                 |   | *(in                    thousands)* |   |   |
|   | Office                    building                   |   | $ | 658 |   | $ | 650 |   |   |
|   | Leasehold                    improvements            |   |   | 783 |   |   | 757 |   |   |
|   | Furniture,                    fixtures and equipment |   |   | 1,016 |   |   | 767 |   |   |
|   | Construction                    in progress          |   |   | 828 |   |   | 10 |   |   |
|   |                                                 |   |   | 3,285 |   |   | 2,184 |   |   |
|   | Accumulated                    depreciation          |   |   | 964 |   |   | 749 |   |   |
|   |                                                 |   |   |   |   |   |   |   |   |
|   | **Premises                    and equipment, net**   |   | $ | 2,321 |   | $ | 1,435 |   |   |

|   |       |   |                                                                                                                                             |   |
|--------|------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |       |   | *(in                    thousands)*                                                                                                              |   |
|   | 2007       |   | $                                        283 |   |
|   | 2008       |   | 335                                                                                                                                              |   |
|   | 2009       |   | 363                                                                                                                                              |   |
|   | 2010       |   | 376                                                                                                                                              |   |
|   | 2011       |   | 397                                                                                                                                              |   |
|   | Thereafter |   | 1,717                                                                                                                                            |   |
|   | Total      |   | $                                   3,471                             |   |

----

**Notes          to Consolidated Financial Statements**

**5.             Deposits**

|                                                 |
|------------------------------------------------------|
|                                                 | 2006 |   | 2005 |   |
|                                                 | *(dollars                    in thousands)*  |   |
|                                                 | Amount  | Weighted                    Average                    Rate |   | Amount  | WeightedAverageRate |   |
| Non-interest                    checking             | $ | 18,225 |   | - | % | $ | 17,166 |   | - | % |
| Regular                    savings                   |   | 17,782 |   | 0.79 |   |   | 22,575 |   | 0.77 |   |
| Money                    market savings              |   | 15,309 |   | 2.71 |   |   | 23,154 |   | 2.23 |   |
| NOW                    accounts                      |   | 3,646 |   | 1.25 |   |   | 4,707 |   | 0.47 |   |
|                                                 |   | 54,962 |   | 1.09 |   |   | 67,602 |   | 1.05 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| Certificate                    accounts maturing in: |   |   |   |   |   |   |   |   |   |   |
| Under                    12 months                   |   | 95,730 |   | 4.77 |   |   | 34,187 |   | 3.42 |   |
| 12                    to 24 months                   |   | 11,066 |   | 4.47 |   |   | 21,003 |   | 3.52 |   |
| 24                    to 36 months                   |   | 839 |   | 4.47 |   |   | 4,000 |   | 3.68 |   |
| 36                    to 48 months                   |   | 1,271 |   | 4.88 |   |   | 852 |   | 4.43 |   |
| 48                    to 60 months                   |   | 890 |   | 4.88 |   |   | 1,556 |   | 4.89 |   |
|                                                 |   | 109,796 |   | 4.74 |   |   | 61,598 |   | 3.52 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| **Total                    deposits**                | $ | 164,758 |   | 3.52 |   | $ | 129,200 |   | 2.23 |   |

----

**Notes        to Consolidated Financial Statements**

**6.             Borrowed Funds**

|                     |
|----------------------------------------------|
|                                         |   |  2006 |   |  2005 |   |
| Year                  of Maturity:           |   |  Amount                    Due |   | Weighted                    Average                    Rate |   |  Amount                    Due |   | Weighted                    Average                    Rate |   |
|                                         |   |   |  *(dollars                    in thousands)*  |   |
| *FHLBB                    Advances:*         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2006                                         |   | $ | - |   |   | - | % | $ | 9,875 |   |   | 4.35 | % |
| 2007                                         |   |   | 8,567 |   |   | 5.11 |   |   | 2,653 |   |   | 4.49 |   |
| 2008                                         |   |   | 815 |   |   | 2.95 |   |   | 872 |   |   | 2.95 |   |
| 2012                                         |   |   | 493 |   |   | 4.72 |   |   | 568 |   |   | 4.72 |   |
| 2016                                         |   |   | 973 |   |   | 4.77 |   |   | 1,050 |   |   | 4.77 |   |
| Subtotal                    - FHLBB Advances |   |   | 10,848 |   |   | 4.90 |   |   | 15,019 |   |   | 4.34 |   |
| *Subordinated                    Debt:*      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2035                                         |   |   | 4,104 |   |   | 6.42 |   |   | 4,098 |   |   | 6.42 |   |
|                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                    borrowed funds**  |   | $ | 14,952 |   |   | 5.32 |   | $ | 19,117 |   |   | 4.79 |   |

----

**Notes        to Consolidated Financial        Statements**

**7.             Income Taxes**

|   |                                      |   |
|--------|-------------------------------------------|--------|
|   |                                      |   | 2006 |   | 2005 |   | 2004 |   |   |
|   |                                      |   | *(in                    thousands)* |   |   |
|   | Current:                                  |   |   |   |   |   |   |   |   |   |   |   |
|   | Federal                                   |   | $ | 630 |   | $ | 431 |   | $ | 385 |   |   |
|   | State                                     |   |   | 202 |   |   | 113 |   |   | 92 |   |   |
|   | Total                    current          |   |   | 832 |   |   | 544 |   |   | 477 |   |   |
|   | Deferred:                                 |   |   |   |   |   |   |   |   |   |   |   |
|   | Federal                                   |   |   | (208 | ) |   | (73 | ) |   | (99 | ) |   |
|   | State                                     |   |   | (50 | ) |   | (19 | ) |   | (11 | ) |   |
|   | Total                    deferred         |   |   | (258 | ) |   | (92 | ) |   | (110 | ) |   |
|   | **Income                    tax expense** |   | $ | 574 |   | $ | 452 |   | $ | 367 |   |   |

|                                                       |
|------------------------------------------------------------|
|                                                       |   | 2006 |   | 2005 |   | 2004 |   |
|                                                       |   | *(in                      thousands)* |   |
| Tax                      on income at statutory rates      |   | $ | 390 |   | $ | 408 |   | $ | 319 |   |
| Increase                      (decrease) resulting from:   |   |   |   |   |   |   |   |   |   |   |
| State                      tax, net of federal tax benefit |   |   | 101 |   |   | 61 |   |   | 53 |   |
| Non                      deductible merger expenses        |   |   | 117 |   |   | - |   |   | - |   |
| Tax-exempt                      municipal income           |   |   | (34 | ) |   | - |   |   | - |   |
| Other                      items, net                      |   |   | - |   |   | (17 | ) |   | (5 | ) |
| **Income                      tax expense**                |   | $ | 574 |   | $ | 452 |   | $ | 367 |   |

|   |                                                          |   |
|--------|---------------------------------------------------------------|--------|
|   |                                                          |   | 2006 |   | 2005 |   |   |
|   |                                                          |   | *(in                    thousands)* |   |   |
|   | Deferred                    tax receivable:                   |   |   |   |   |   |   |   |   |
|   | Reserve                    for loan losses                    |   | $ | 705 |   | $ | 579 |   |   |
|   | Deferred                    income for books previously taxed |   |   | 96 |   |   | 88 |   |   |
|   | Deferred                    compensation                      |   |   | 87 |   |   | - |   |   |
|   | Organizational                    costs                       |   |   | 38 |   |   | - |   |   |
|   | Available-for-sale                    securities              |   |   | 167 |   |   | 277 |   |   |
|   |                                                          |   |   | 1,093 |   |   | 944 |   |   |
|   | Deferred                    tax payable:                      |   |   |   |   |   |   |   |   |
|   | Depreciation                                                  |   |   | (41 | ) |   | (40 | ) |   |
|   |                                                          |   |   | (41 | ) |   | (40 | ) |   |
|   | **Net                    deferred tax receivable**            |   | $ | 1,052 |   | $ | 904 |   |   |

----

**Notes        to Consolidated Financial        Statements**

**8.             Regulatory Matters**

*Regulatory        Capital*

|                                                |
|-----------------------------------------------------|
|                                                |   |                    2006 |   |                    2005 |   |
| ***First                    Valley Bancorp, Inc.*** |   | Amount |   | Ratio |   | Amount  |   | Ratio |   |
|                                                |   |   | *(dollars                    in thousands) *  |   |
| Tier                    1 leverage                  |   | $ | 13,940 |   |   | 7.49                    % |   | $ | 13,340 |   |   | 8.80                    % |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                    1 risk-based capital        |   |   | 13,940 |   |   | 9.52 |   |   | 13,340 |   |   | 11.58 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    risk-based capital         |   |   | 15,770 |   |   | 10.77 |   |   | 14,780 |   |   | 12.83 |   |

----

**Notes            to Consolidated Financial Statements**

**8.                  Regulatory Matters**
*(Continued)*

|                                           |
|------------------------------------------------|
|                                           |   | 2006 |   | 2005 |   |
| ***Valley                      Bank***         |   | Amount |   |  Ratio |   | Amount |   |  Ratio |   |
|                                           |   | *(dollars                      in thousands)*  |
| Tier                      1 leverage           |   | $ | 14,449 |   |   | 7.77                    % |   | $ | 13,355 |   |   | 8.81                    % |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                      1 risk-based capital |   |   | 14,449 |   |   | 9.87 |   |   | 13,355 |   |   | 11.60 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      risk-based capital  |   |   | 16,279 |   |   | 11.12 |   |   | 14,795 |   |   | 12.86 |   |

**9.               Employee Benefits**

**10.              Comprehensive Income**

|                                                                                    |
|-----------------------------------------------------------------------------------------|
|                                                                                    |   | 2006 |   | 2005 |   | 2004 |   |
|                                                                                    |   |   | *(in                    thousands)*  |   |
| **Net                    income**                                                       |   | $ | 573 |   | $ | 749 |   | $ | 572 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |
| **Other                    comprehensive income (loss):**                               |   |   |   |   |   |   |   |   |   |   |
| Unrealized                    holding gains (losses) on securities available-for-sale   |   |   | 195 |   |   | (461 | ) |   | (149 | ) |
| Reclassification                    adjustment for loss (gain) recognized in net income |   |   | 86 |   |   | - |   |   | (6 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |
| **Other                    comprehensive income (loss) before tax expense**             |   |   | 281 |   |   | (461 | ) |   | (155 | ) |
| Income                    tax expense related to items of other                         |   |   |   |   |   |   |   |   |   |   |
| comprehensive                    income (loss)                                          |   |   | (109 | ) |   | 180 |   |   | 58 |   |
| **Other                    comprehensive income (loss) net of tax**                     |   |   | 172 |   |   | (281 | ) |   | (97 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |
| **Total                    comprehensive income**                                       |   | $ | 745 |   | $ | 468 |   | $ | 475 |   |

----

**Notes        to Consolidated Financial        Statements**

**11.             Financial Instruments **

|   |                                             |   |
|--------|--------------------------------------------------|--------|
|   |                                             |   | 2006 |   | 2005 |   |   |
|   |                                             |   | *(in                    thousands)* |   |   |
|   | Commitments                    to extend credit: |   |   |   |   |   |   |   |   |
|   | Loan                    commitments              |   | $ | 8,759 |   | $ | 11,184 |   |   |
|   | Unadvanced                    lines of credit    |   |   | 21,992 |   |   | 21,931 |   |   |
|   | Standby                    letters of credit     |   |   | 2,139 |   |   | 1,089 |   |   |
|   |                                             |   |   |   |   |   |   |   |   |
|   | **Outstanding                    commitments**   |   | $ | 32,890 |   | $ | 34,204 |   |   |

----

**Notes        to Consolidated Financial        Statements**

**11.             Financial Instruments**
*(Continued)*

|                                           |
|------------------------------------------------|
|                                           |   | 2006 |   | 2005 |   |
|                                           |   | Carrying                    Amount |   | Fair                    Value |   | CarryingAmount |   | Fair                    Value |   |
|                                           |   |   | *(in                    thousands)*  |   |
| Financial                    assets            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                    and cash equivalents   |   | $ | 26,160 |   | $ | 26,160 |   | $ | 12,667 |   | $ | 12,667 |   |
| Investment                    securities       |   |   | 26,672 |   |   | 26,672 |   |   | 33,907 |   |   | 33,907 |   |
| Loans                    receivable            |   |   | 133,709 |   |   | 132,445 |   |   | 109,773 |   |   | 109,466 |   |
| Accrued                    income receivable   |   |   | 865 |   |   | 865 |   |   | 680 |   |   | 680 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial                    liabilities       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                       |   |   | 164,758 |   |   | 160,056 |   |   | 129,200 |   |   | 123,759 |   |
| Borrowed                    funds              |   |   | 14,952 |   |   | 14,844 |   |   | 19,117 |   |   | 18,963 |   |
| Mortgagors'                    escrow accounts |   |   | 169 |   |   | 169 |   |   | 176 |   |   | 176 |   |

**12.             Employee and Director Benefit Plan**

----

**Notes        to Consolidated Financial        Statements**

|                                                      |
|-----------------------------------------------------------|
|                                                      |   | **2006** |   | **2005** |   | **2004** |   |
|                                                      |   | Numberof                    shares |   | Weighted                    AverageExercisePrice |   | Numberof                    shares |   | Weighted                    AverageExercisePrice |   | Number                    ofshares |   | Weighted                    AverageExercisePrice |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding                    at beginning of year       |   |   | 124,050 |   | $ | 8.21 |   |   | 124,050 |   | $ | 8.21 |   |   | 118,000 |   | $ | 8.14 |   |
| Granted                                                   |   |   | - |   |   | - |   |   | - |   |   | 9.50 |   |   | 6,050 |   |   | 9.50 |   |
| Exercised                                                 |   |   | 5,808 |   |   | 8.00 |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Forfeited                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding                    at end of year             |   |   | 118,242 |   | $ | 8.22 |   |   | 124,050 |   | $ | 8.21 |   |   | 124,050 |   | $ | 8.21 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Options                    exercisable at end of year** |   |   | 118,242 |   | $ | 8.22 |   |   | 124,050 |   | $ | 8.21 |   |   | 124,050 |   | $ | 8.21 |   |

**13.             Stock Split**

**14.             Definitive Merger Agreement**

----

**Notes        to Consolidated Financial        Statements**

**15.             Parent Company Only Financial Statements**

**Statements        of Financial Condition**

|   |                                                              |   |   |
|--------|-------------------------------------------------------------------|--------|--------|
|   |                                                              |   | 2006   |   | 2005 |   |   |
|   |                                                              |   |   | *(in                    thousands)*  |   |   |
|   | **ASSETS**                                                        |   |   |   |   |   |   |   |   |
|   | Cash                    and due from depository institutions      |   | $      | 425 |   | $ | 714 |   |   |
|   | Investment                    in Valley Bank                      |   |   | 14,365 |   |   | 13,040 |   |   |
|   | Other                    assets                                   |   |   | 125 |   |   | 197 |   |   |
|   |                                                              |   |   |   |   |   |   |   |   |
|   | **Total                    assets**                               |   | $      | 14,915 |   | $ | 13,951 |   |   |
|   |                                                              |   |   |   |   |   |   |   |   |
|   |                                                              |   |   |   |   |   |   |   |   |
|   | **LIABILITIES                    AND STOCKHOLDERS' EQUITY**       |   |   |   |   |   |   |   |   |
|   | Liabilities                                                       |   |   |   |   |   |   |   |   |
|   | Subordinated                    debentures                        |   | $      | 4,104 |   | $ | 4,098 |   |   |
|   | Payable                    to Valley Bank                         |   |   | 113 |   |   | - |   |   |
|   | Other                    liabilities                              |   |   | 42 |   |   | 28 |   |   |
|   | Total                    liabilities                              |   |   | 4,259 |   |   | 4,126 |   |   |
|   |                                                              |   |   |   |   |   |   |   |   |
|   |                                                              |   |   |   |   |   |   |   |   |
|   | Stockholders'                    Equity                           |   |   | 10,656 |   |   | 9,825 |   |   |
|   |                                                              |   |   |   |   |   |   |   |   |
|   | **Total                    liabilities and stockholders' equity** |   | $      | 14,915 |   | $ | 13,951 |   |   |

----

**Notes        to Consolidated Financial Statements**

**Statements        of Income**

|   |                                                                    |   |
|--------|-------------------------------------------------------------------------|--------|
|   |                                                                    |   | 2006 |   | 2005 |   |   |
|   |                                                                    |   | *(in                    thousands)* |   |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   | Dividends                    from subsidiary                            |   | $ | - |   | $ | 125 |   |   |
|   | Interest                    and dividend income on investments          |   |   | 8 |   |   | 3 |   |   |
|   | Interest                    expense on borrowed money                   |   |   | 271 |   |   | 116 |   |   |
|   | Net                    interest income                                  |   |   | (263 | ) |   | 12 |   |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   | Organizational                    expenses                              |   |   | - |   |   | 98 |   |   |
|   | Professional                    services                                |   |   | 42 |   |   | 1 |   |   |
|   | Merger                    related expenses                              |   |   | 345 |   |   | - |   |   |
|   | Other                    noninterest expense                            |   |   | 10 |   |   | 1 |   |   |
|   | Total                    noninterest expense                            |   |   | 397 |   |   | 100 |   |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   | **Loss                    before income tax benefit and equity**        |   |   |   |   |   |   |   |   |
|   |  **in                    undistributed net income of subsidiary**  |   |   | (660 | ) |   | (88 | ) |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   | **Income                    tax benefit**                               |   |   | (107 | ) |   | (72 | ) |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   | **Loss                    before equity in undistributed net**          |   |   |   |   |   |   |   |   |
|   |  **income                    of subsidiary**                       |   |   | (553 | ) |   | (16 | ) |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   | **Equity                    in undistributed net income of subsidiary** |   |   | 1,126 |   |   | 765 |   |   |
|   |                                                                    |   |   |   |   |   |   |   |   |
|   | **Net                    income**                                       |   | $ | 573 |   | $ | 749 |   |   |

----

**Notes        to Consolidated Financial Statements**

**15.             Parent Company Only Financial Statements**
*(Continued)*

**Statements        of Cash flows**

|   |                                                                |   |     |
|--------|---------------------------------------------------------------------|--------|----------|
|   |                                                                |   | **2006** |   | **2005** |   |   |
|   |                                                                |   |     | *(in                    thousands)*  |   |   |
|   | **Cash                    flows from operating activities**         |   |     |   |   |   |   |   |   |
|   | Net                    income                                       |   | $        | 573 |   | $ | 749 |   |   |
|   | Adjustments                    to reconcile net income to cash      |   |     |   |   |   |   |   |   |
|   | provided                    by operating activities:                |   |     |   |   |   |   |   |   |
|   | Equity                    in undistributed net income of subsidiary |   |     | (1,126 | ) |   | (765 | ) |   |
|   | Amortization                    of discount on subordinated debt    |   |     | 6 |   |   | 2 |   |   |
|   | Net                    change in:                                   |   |     |   |   |   |   |   |   |
|   | Accrued                    interest receivable                      |   |     | - |   |   | (1 | ) |   |
|   | Payable                    to Valley Bank                           |   |     | 113 |   |   | - |   |   |
|   | Other                    assets                                     |   |     | 72 |   |   | (196 | ) |   |
|   | Other                    liabilities                                |   |     | 14 |   |   | 29 |   |   |
|   | **Net                    cash provided by operating activities**    |   |     | (348 | ) |   | (182 | ) |   |
|   |                                                                |   |     |   |   |   |   |   |   |
|   | **Cash                    flows from investing activities**         |   |     |   |   |   |   |   |   |
|   | Payments                    for investments in and advances         |   |     |   |   |   |   |   |   |
|   | to                    subsidiaries                                  |   |     | - |   |   | (3,200 | ) |   |
|   | **Net                    cash used by investing activities**        |   |     | - |   |   | (3,200 | ) |   |
|   |                                                                |   |     |   |   |   |   |   |   |
|   | **Cash                    flows from financing activities**         |   |     |   |   |   |   |   |   |
|   | Proceeds                    from borrowed funds                     |   |     | - |   |   | 4,096 |   |   |
|   | Proceeds                    from issuance of common stock           |   |     | 59 |   |   | - |   |   |
|   | **Net                    cash provided by financing activities**    |   |     | 59 |   |   | 4,096 |   |   |
|   | Net                    change in cash and cash equivalents          |   |     | (289 | ) |   | 714 |   |   |
|   | Cash                    and cash equivalents at beginning of year   |   |     | 714 |   |   | - |   |   |
|   | **Cash                    and cash equivalents at end of year**     |   | $        | 425 |   | $ | 714 |   |   |
|   |                                                                |   |     |   |   |   |   |   |   |
|   | ***Supplemental                    disclosures***                   |   |     |   |   |   |   |   |   |
|   | Cash                    paid during the year for:                   |   |     |   |   |   |   |   |   |
|   | Income                    taxes                                     |   | $        | - |   | $ | - |   |   |

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