EXHIBIT 13

                          ANNUAL REPORT TO STOCKHOLDERS

<PAGE>

ANNUAL REPORT - 2006

                                [GRAPHIC OMITTED]

                                                                  [LOGO]
                                                                Georgetown
                                                               Bancorp, Inc.

--------------------------------------------------------------------------------

                                                          THERE IS A DIFFERENCE.

--------------------------------------------------------------------------------

<PAGE>

MISSION STATEMENT

GEORGETOWN SAVINGS BANK IS COMMITTED TO ENHANCING ITS PROFESSIONAL IMAGE AND
UNIQUE POSITION AS "THE" COMMUNITY BANK BY OPERATING A WELL-CAPITALIZED,
PROFITABLE, AND INDEPENDENT, COMMUNITY-ORIENTED FINANCIAL INSTITUTION, DEDICATED
TO PROVIDING EXCEPTIONAL PERSONAL SERVICE.

ITS VALUED STAFF IS COMPRISED OF COMMITTED, LOCAL DECISION MAKERS. THE BANK
SEEKS TO CONTINUE ITS GROWTH IN ITS MARKET AREA BY PROVIDING AN ARRAY OF
FINANCIAL SERVICES AND DELIVERY CHANNELS THAT MEET THE NEEDS OF RETAIL AND SMALL
BUSINESS CONSUMERS.

--------------------------------------------------------------------------------

                                                          THERE IS A DIFFERENCE.

--------------------------------------------------------------------------------

<PAGE>

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

   MESSAGE FROM THE PRESIDENT..................................................4

   SELECTED FINANCIAL INFORMATION AND FINANCIAL RATIOS.........................6

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS................................................7

   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM...................F-2

   CONSOLIDATED BALANCE SHEETS...............................................F-3

   CONSOLIDATED STATEMENTS OF OPERATIONS.....................................F-4

   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY................F-5

   CONSOLIDATED STATEMENTS OF CASH FLOWS.....................................F-6

   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................................F-8

<PAGE>

MESSAGE FROM THE PRESIDENT

[PHOTO OMITTED]

On behalf of the Board of Directors, senior management, and all of our dedicated
employees, I am pleased to present the 2006 Annual Report of Georgetown Bancorp,
Inc.

The past year has been one of many challenges for Georgetown Bancorp, Inc. and
its wholly owned subsidiary, Georgetown Savings Bank. We continued to position
ourselves for the future with the opening, in December 2005, of our newest
branch office in North Andover, Massachusetts. We have been encouraged by the
positive reception we have experienced from the North Andover/Andover community
and are working extremely hard at building strong relationships with local
businesses, town government, educational institutions, and local non-profit
organizations. At June 30, 2006, the branch had accumulated total deposits of
$5.2 million. While we are encouraged by this trend, we remain focused on
achieving a level of deposit growth and mix of deposits sufficient to bring the
North Andover branch into a profitable status.

Financial performance in fiscal 2006 was adversely affected by rising short-term
interest rates, operating costs associated with becoming a public company, the
newly opened North Andover branch, and costs associated with the sale of low
yielding investment securities.

As a result, the Bank experienced a net loss of $380,000 for the year ended June
30, 2006 versus net income of $228,000 for the year ended June 30, 2005.

Georgetown Savings Bank continues to operate under our core strategic values of
being a community bank providing exceptional personal service. Our strategic
focus continues to be on deposit growth in our core personal and business
checking accounts and commercial loan growth while we also continue to support
organizations and causes in our local communities.

In 2006, we began to aggressively market a new line of personal checking
accounts designed to meet the varied needs of the marketplace. WOW! Checking is
the Bank's premier relationship checking account opening the door to preferred
deposit and loan pricing. GO! and SNAP! round out our personal checking product
line and provide customers with simple and straightforward solutions to their
checking account needs.

<PAGE>

In fiscal 2007, we will introduce a new line of business checking accounts. Main
Street Checking and Corporate Checking have been designed to meet the needs of
local businesses. Both products will offer a comprehensive array of services,
such as Merchant Services, Cash Management, and Lock Box that can be customized
to meet each business' individual banking needs.

Consistent with our goal to expand our business banking services, we are also in
the process of expanding and strengthening our commercial lending team.
Attracting and retaining the highest quality personnel to lead and carry out our
strategic mission is a top priority.

While the challenges ahead are formidable, we remain optimistic about our future
success. We look forward to the challenges ahead with great anticipation and
remain committed to serving the needs of both individual consumers and
businesses in our market area. Our employees are working very hard to deliver
exceptional personal service and we are aggressively reaching out to our local
communities in an effort to demonstrate the variety of ways that the "WOW!"
difference of banking can be experienced at the Georgetown Savings Bank. We
believe that straight talk, simple banking coupled with competitive products and
services and friendly, helpful employees will set us apart. We want every
customer to describe his or her banking experience with Georgetown Savings Bank
as, "WOW! There is a difference!"

On behalf of all of the employees and Directors of Georgetown Bancorp, Inc.,
thank you and we look forward to your continued support in the coming year.

Sincerely,


/s/ Robert E. Balletto

Robert E. Balletto
President/Chief Executive Officer

--------------------------------------------------------------------------------

                                                      EXPERIENCE THE DIFFERENCE.

--------------------------------------------------------------------------------

<PAGE>

SELECTED FINANCIAL DATA
-----------------------

<TABLE>
<CAPTION>
                                                                                         AT JUNE 30,
                                                                                        (IN THOUSANDS)
                                                                                   2006                2005
                                                                                   ----                ----
<S>                                                                              <C>                 <C>
SELECTED FINANCIAL CONDITION DATA:
TOTAL ASSETS                                                                     $168,915            $159,027
CASH AND CASH EQUIVALENTS                                                           3,977               5,078
LOANS RECEIVABLE, NET                                                             128,778             114,781
INVESTMENT SECURITIES                                                              25,288              29,194
DEPOSITS                                                                           96,571              90,336
BORROWINGS(1)                                                                      51,983              47,807
TOTAL STOCKHOLDERS' EQUITY                                                         18,659              19,285

<CAPTION>
                                                                                   FISCAL YEARS ENDED JUNE 30,
                                                                           (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                                   2006                2005
                                                                                   ----                ----
<S>                                                                              <C>                 <C>
SELECTED OPERATING DATA:
INTEREST AND DIVIDEND INCOME                                                     $  8,127            $  7,129
INTEREST EXPENSE                                                                    4,078               2,733
                                                                                 --------            --------
NET INTEREST INCOME                                                                 4,049               4,396
PROVISION FOR LOAN LOSSES                                                             108                 114
                                                                                 --------            --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                 3,941               4,282
NON-INTEREST INCOME                                                                   454                 401
NON-INTEREST EXPENSE                                                                4,948               4,346
                                                                                 --------            --------
(LOSS) INCOME BEFORE INCOME TAXES                                                    (553)                337
INCOME TAX (BENEFIT) EXPENSE                                                         (173)                109
                                                                                 --------            --------
NET (LOSS) INCOME                                                                $   (380)           $    228
                                                                                 ========            ========
BASIC AND DILUTED NET LOSS PER SHARE                                             $  (0.14)                N/A

<CAPTION>
                                                                           AT OR FOR THE FISCAL YEARS ENDED JUNE 30,
                                                                                   2006                2005
                                                                                   ----                ----
<S>                                                                                <C>                  <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:
PERFORMANCE RATIOS:
RETURN ON ASSETS (RATIO OF NET INCOME TO AVERAGE TOTAL ASSETS)                      (0.23%)              0.15%
RETURN ON EQUITY (RATIO OF NET INCOME TO AVERAGE EQUITY)                            (1.98%)              1.65%
INTEREST RATE SPREAD(2)                                                              2.19%               2.85%
NET INTEREST MARGIN(3)                                                               2.63%               3.11%
EFFICIENCY RATIO(4)                                                                109.88%              90.60%
OPERATING EXPENSE TO AVERAGE TOTAL ASSETS                                            3.03%               2.89%
AVERAGE INTEREST-EARNING ASSETS TO AVERAGE INTEREST-BEARING LIABILITIES            116.29%             113.70%

ASSET QUALITY RATIOS:
NON-PERFORMING ASSETS TO TOTAL ASSETS                                                0.67%               0.39%
NON-PERFORMING LOANS TO TOTAL LOANS                                                  0.87%               0.54%
ALLOWANCE FOR LOAN LOSSES TO NON-PERFORMING LOANS                                   90.23%             140.67%
ALLOWANCE FOR LOAN LOSSES TO TOTAL LOANS                                             0.78%               0.76%

CAPITAL RATIOS:
STOCKHOLDERS' EQUITY TO TOTAL ASSETS AT END OF PERIOD                               11.05%              12.13%
TOTAL CAPITAL TO RISK-WEIGHTED ASSETS                                               18.10%              23.30%
TIER 1 CAPITAL TO RISK-WEIGHTED ASSETS                                              17.20%              22.30%
TIER 1 CAPITAL TO AVERAGE ASSETS                                                    11.60%              12.90%
</TABLE>

1. INCLUDES SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

2. THE INTEREST RATE SPREAD REPRESENTS THE DIFFERENCE BETWEEN THE
WEIGHTED-AVERAGE YIELD ON INTEREST-EARNING ASSETS AND THE WEIGHTED-AVERAGE COST
OF INTEREST-BEARING LIABILITIES FOR THE PERIOD.

3. THE NET INTEREST MARGIN REPRESENTS NET INTEREST INCOME AS A PERCENT OF
AVERAGE INTEREST-EARNING ASSETS FOR THE PERIOD.

4. THE EFFICIENCY RATIO REPRESENTS NON-INTEREST EXPENSE DIVIDED BY THE SUM OF
NET INTEREST INCOME AND NON-INTEREST INCOME.


                                        6
<PAGE>

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

Overview

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

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

Critical Accounting Policies

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

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

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


                                       7
<PAGE>

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

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

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

Comparison of Financial Condition at June 30, 2006 and 2005

      Our total assets increased by $9.9 million,  or 6.2%, to $168.9 million at
June 30,  2006,  from $159.0  million at June 30,  2005.  The  increase in total
assets resulted from an increase in net loans  receivable,  partially  offset by
decreases in investment securities and in short-term  investments.  The increase
in net loans  receivable of $14.0 million,  or 12.2%,  to $128.8 million at June
30, 2006,  reflected  increases in one to four family  residential loans of $8.2
million  or  9.4%,  which  included  an  increase  of $4.0  million  or 14.2% in
adjustable  rate loans.  Also reflected in the increase in net loans  receivable
were the following increases, multi-family and commercial loans, $2.0 million or
20.8%,  home  equity  loans  and  lines of  credit,  $2.0  million  or 23.6% and
construction loans, $1.6 million or 20.1%. The decrease in investment securities
held to maturity of $2.6  million,  or 20.7%,  to $9.8 million at June 30, 2006,
reflected  maturity  proceeds  being  used to fund  loan  growth in an effort to
improve interest  margins.  Investment  securities  available for sale decreased
$1.3  million,  or 8.0%,  to $15.5  million at June 30,  2006.  Included  in the
decrease  was a sale of $2.9  million of  securities  with an  average  yield of
3.68%.  Proceeds from this sale were used to pay down  maturing  FHLB  advances,
whose  reinvestment  rate would have been higher  than the current  yield on the
securities. Short-term investments


                                       8
<PAGE>

decreased $2.5 million,  or 77.4%,  to $720,000 at June 30, 2006 and provided an
additional source of loan funding.

      Total deposits increased $6.2 million, or 6.9%, to $96.6 million at June
30, 2006, from $90.3 million at June 30, 2005. The increase in deposits resulted
primarily from a $7.1 million, or 21.1%, increase in term certificates and a
$2.9 million or 62.1% in NOW accounts partially offset by a $5.5 million, or
26.7%, decrease in savings accounts. Our advances from the FHLBB increased $4.4
million, or 9.4%, to $51.2 million at June 30, 2006, from $46.8 million at June
30, 2005, as increases were used to fund growth in loans. Short-term FHLB
advances decreased $6.1 million or 21.3% and long-term advances increased $10.5
million or 56.6%, as the company extended the maturities of FHLB advances to
take advantage of the flatten yield curve environment.

      Stockholders' equity decreased $626,000 or 3.3%, to $18.7 million at June
30, 2006, from $19.3 million at June 30, 2005. The decrease was primarily due to
the net loss for the period and the impact of adjusting the market value of
available for sale securities due to market interest rate changes. The decrease
in stockholders' equity reflected the net operating loss of $380,000 for the
fiscal year ended June 30, 2006. Additionally, accumulated other comprehensive
loss increased $313,000 to $330,000 at June 30, 2006, from $17,000 at June 30,
2005, reflecting $523,000 in net pre tax unrealized losses on securities
available for sale for the fiscal year ended June 30, 2006, compared to $22,000
for the fiscal year ended June 30, 2005. Offsetting the decrease in
stockholders' equity was a $74,000 adjustment related to ESOP expenses.

Comparison of Operating Results for the Years Ended June 30, 2006 and 2005

      General. The net loss for the fiscal year ended June 30, 2006 was
$380,000, compared to net income of $228,000 for the fiscal year ended June 30,
2005, resulting in a $608,000 or 266.7% reduction in net income. The decrease
was primarily related to a decrease in net interest income and an increase in
non-interest expenses, being partially offset by an increase in non-interest
income.

      Interest Income. Interest income increased by $998,000, or 14.0%, to $8.1
million for the fiscal year ended June 30, 2006, from $7.1 million for the
fiscal year ended June 30, 2005. The increase in interest income resulted
primarily from an increase in interest income from loans receivable and an
increase in interest and dividend income from securities. The increase in
interest income reflected a $12.9 million, or 9.1% increase in the average
balance of interest-earning assets to $154.2 million, for the fiscal year ended
June 30, 2006, from $141.3 million for the fiscal year ended June 30, 2005, as
well as a 22 basis point increase in the average yield on interest-earning
assets to 5.27% for the fiscal year ended June 30, 2006, from 5.05% for the
fiscal year ended June 30, 2005, reflecting an increase in market interest
rates.

      Interest income from loans receivable increased $779,000, or 13.3%, to
$6.7 million for the fiscal year ended June 30, 2006, from $5.9 million for the
fiscal year ended June 30, 2005. The increase was due to an $11.9 million or
11.1% increase in the average balance of loans receivable during 2006 to $119.4
million from $107.5 million,


                                       9
<PAGE>

as well as, an increase in the average yield to 5.57% from 5.46%. The increase
in the average balance of loans receivable reflected an increase in our loan
originations due to the continued low mortgage interest rate environment and
moderate housing growth in our market area, as well as the company's efforts to
originate short-term, adjustable rate loans. These originations more than offset
loan repayments in 2006. Interest and dividend income from investment securities
increased $216,000, or 19.0%, to $1.4 million for the fiscal year ended June 30,
2006, from $1.1 million for the fiscal year ended June 30, 2005. The increase
resulted from an increase in the average yield to 4.28% from 4.05%, and by a
$3.5 million or 12.6% increase in the average balance of investment securities
to $31.7 million for the fiscal year ended June 30, 2006, from $28.1 million for
the fiscal year ended June 30, 2005. Interest income from interest-earning
deposits increased $3,000, or 2.5%, to $122,000 for the fiscal year ended June
30, 2006, from $119,000 for the fiscal year ended June 30, 2005. The increase
resulted from an increase in the average yield to 3.90% from 2.10%,
substantially offset by a $2.5 million, or 44.9.0% decrease in the average
balance of interest-earning deposits to $3.1 million for the fiscal year ended
June 30, 2006, from $5.7 million for the fiscal year ended June 30, 2005. The
decrease in average balances reflected short-term investment balances being used
to fund loan originations.

      Interest Expense. Interest expense increased $1.3 million, or 49.2%, to
$4.1 million for fiscal 2006, from $2.7 million for fiscal 2005. The increase in
interest expense resulted from an increase in the average cost of liabilities to
3.07% from 2.20%, reflecting rising short-term interest rates during 2006, and
by a $8.3 million, or 6.7%, increase in the average balance of interest-bearing
liabilities to $132.6 million for the fiscal year ended June 30, 2006, from
$124.3 million for the fiscal year ended June 30, 2005. Interest expense on
FHLBB advances increased $806,000, or 60.5%, reflecting a $8.5 million, or 20.0%
increase in the average balance of FHLBB advances, and by a 105 basis point
increase in the average rate paid on such advances, which increased to 4.18% for
the fiscal year ended June 30, 2006, from 3.13% for the fiscal year ended June
30, 2005. The increase reflects the company's use of short-term advances in a
rising interest rate environment. Interest expense on money market deposits
increased $281,000, or 107.3%, due to a 98 basis point increase in the average
rate paid on such deposits and by a $4.4 million, or 24.6%, increase in the
average balance of money market deposits. The increase reflected the impact of
the company's new product, WOW! Money Market Account, which offered a premium
rate to attract new customer relationships. Interest expense on certificates of
deposit increased $251,000, or 24.0%, reflecting a 65 basis point increase in
the average rate and a $704,000, or 2.0%, increase in the average balance of
such deposits. Additionally, the average balance of savings accounts decrease
$6.2 million, or 26.3% to $17.4 million for the fiscal year ended June 30, 2006,
from $23.6 million for the fiscal year ended June 30, 2005. This decrease
negatively impacted interest expense, as the average rate paid for the fiscal
year ended June 30, 2006 was .30%.

      Net Interest Income. Net interest income decreased $347,000, or 7.9%, to
$4.0 million for the fiscal year ended June 30, 2006, from $4.4 million for the
fiscal year ended June 30, 2005. The decrease was the result of a decline of our
net interest margin, partially offset by an increase of net interest-earning
assets. The decline in our net


                                       10
<PAGE>

interest margin reflected the more rapid re-pricing of our interest-bearing
liabilities as compared to our interest-earning assets in a rising interest rate
environment. Our net interest margin decreased to 2.63% during fiscal 2006, from
3.11% during fiscal 2005.

      Provision for Loan Losses. We establish provisions for loan losses, which
are charged to operations, at a level necessary to absorb known and inherent
losses that are both probable and reasonably estimable at the date of the
financial statements. In evaluating the level of the allowance for loan losses,
management analyzes several qualitative loan portfolio risk factors including
but not limited to, charge-off history, changes in management or underwriting
policies, current economic conditions, delinquency statistics, geographic and
industry concentrations, the adequacy of the underlying collateral, the
financial strength of the borrower, results of internal and external loan
reviews. This evaluation is inherently subjective, as it requires estimates that
are susceptible to significant revision as more information becomes available.
After an evaluation of these factors, management made a provision of $108,000
for the fiscal year ended June 30, 2006, as compared to a $114,000 provision for
the fiscal year ended June 30, 2005. We used the same methodology and generally
similar assumptions in assessing the allowance for both years. The allowance for
loan losses was $1,016,000, or 0.78% of loans outstanding at June 30, 2006, as
compared with $882,000, or 0.76% of loans outstanding at June 30, 2005. The
level of the allowance is based on estimates, and the ultimate losses may vary
from the estimates.

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

      While loan quality has been stable in recent years, with loan charge-offs
of $8,000 for the fiscal year ended June 30, 2006 and $110,000 for the fiscal
year ended June 30, 2005, the balance of loans and risks in the loan portfolio
has increased. We have allocated the allowance among categories of loan types,
as well as classification status at each period-end date. Assumptions and
allocation percentages based on loan types and classification status have been
consistently applied. Non-performing loans are assigned a higher percentage of
allowance allocation.

      Although we believe that we use the best information available to
establish the allowance for loan losses, future additions to the allowance may
be necessary, based on estimates that are susceptible to change as a result of
changes in economic conditions and other factors. In addition, the OTS, as an
integral part of its examination process, will


                                       11
<PAGE>

periodically review our allowance for loan losses. Such agency may require us to
recognize adjustments to the allowance, based on its judgments about information
available to it at the time of its examination.

      Non-interest Income. Non-interest income increased $53,000, or 13.2% to
$454,000 for the fiscal year ended June 30, 2006, as compared to $401,000 for
the fiscal year ended June 30, 2005. The increase was primarily due to increases
in income from our financial services program and fees charged from our new
overdraft privilege program, partially offset by the loss on sale of securities
available for sale. Financial services income increased $70,000, or 276.2%, as
the company restructured the program. The overdraft privilege program began in
April 2006 and as a result, associated income increased $27,000, or 19.2%. In
June 2006 the company sold $2.9 million of investment securities available for
sale, which resulted in a $56,000 loss. Proceeds from this sale were used to pay
down maturing FHLB advances, whose reinvestment rate would have been higher than
the current yield on the securities.

      Non-interest Expense. Non-interest expense increased $602,000, or 13.9%,
to $4.9 million for the fiscal year ended June 30, 2006, compared to $4.3
million for the fiscal year ended June 30, 2005. Compensation and employee
benefits increased $400,000, or 17.1%, primarily due to additional staff added
for the North Andover office, increases in director fees due to increased
meeting frequency, increases in health insurance from head count additions and
premium increases, and increases in payroll taxes, partially offset by a
reduction in ESOP expense of $105,000, as a prepayment of the ESOP loan of
$143,000 was made in fiscal 2005. Occupancy expense increased $164,000, or
25.5%, primarily due to the opening of the North Andover office in December
2005. Data processing expenses decreased $50,000, or 17.4% primarily due to
one-time credits totaling $41,000 related to our core processing conversion in
June 2005. Professional fees increased $93,000, or 35.4%, due to increases in
audit and legal fees associated with being a public company, as the company
became public in January 2005. Advertising expenses increased $107,000, or
88.4%, primarily due to promotions for the opening of our North Andover office.
Our other general and administrative expense decreased $112,000, or 16.3%, to
$576,000 for the fiscal year ended June 30, 2006, from $688,000 for the prior
fiscal year. The decrease was primarily due to one-time core processing system
conversion expense of $111,000, which was incurred in fiscal 2005.

      Income Tax Expense. The loss before income taxes of $553,000 for the
fiscal year ended June 30, 2006 resulted in an income tax benefit of $173,000
for the fiscal year ended June 30, 2006, as compared to income before income
taxes of $337,000 and a provision for income taxes of $109,000 for the fiscal
year ended June 30, 2005. The effective tax rates for the fiscal years ended
June 30, 2006 and 2005 were 31.3% and 32.3%, respectively. The lower effective
tax rate in fiscal 2006 was primarily due to a lower level of state income
taxes.


                                       12
<PAGE>

Average Balance Sheet

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

<TABLE>
<CAPTION>
                                                                                     Fiscal Years Ended June 30,
                                                     At          -------------------------------------------------------------------
                                               June 30, 2006                  2006                              2005
                                          ---------------------  -----------------------------   -----------------------------------
                                                       Weighted    Average                         Average
                                          Outstanding   Average  Outstanding            Yield/   Outstanding                Average
                                            Balance      Rate      Balance    Interest   Rate      Balance    Interest    Yield/Rate
                                          -----------  --------  -----------  --------  ------   -----------  --------    ----------
                                                                           (Dollars in thousands)
<S>                                         <C>           <C>      <C>        <C>         <C>      <C>         <C>           <C>
Assets:
Loans ..................................    $129,794      5.82%    $119,428   $  6,650    5.57%    $107,506    $  5,871      5.46%
Investment securities (1) ..............      28,193      4.83       31,667      1,355    4.28       28,122       1,139      4.05
Interest-earning deposits ..............         720      5.23        3,129        122    3.90        5,674         119      2.10
                                            --------               --------   --------             --------    --------
  Total interest-earning assets ........     158,707      5.64      154,224      8,127    5.27      141,302       7,129      5.05
Non-interest-earning assets ............      10,208                  9,192         --                8,879          --
                                            --------               --------   --------             --------    --------
  Total assets .........................    $168,915               $163,416   $  8,127             $150,181    $  7,129
                                            ========               ========   ========             ========    ========

Liabilities and equity:
Savings deposits .......................    $ 15,008      0.29     $ 17,405         53    0.30     $ 23,612          74      0.31
NOW accounts ...........................       7,562      1.04        6,164         40    0.65        5,097          10      0.20
Money market accounts ..................      21,706      3.01       22,061        543    2.46       17,709         262      1.48
Certificates of deposit ................      41,010      4.13       35,150      1,297    3.69       34,446       1,046      3.04
                                            --------               --------   --------             --------    --------
  Total interest-bearing deposits ......      85,286      2.90       80,780      1,933    2.39       80,864       1,392      1.72
FHLBB advances .........................      51,221      4.61       51,094      2,138    4.18       42,585       1,332      3.13
Repurchase agreements ..................         762      1.00          751          7    0.93          828           9      1.09
                                            --------               --------   --------             --------    --------
  Total interest-bearing liabilities ...     137,269      3.53      132,625      4,078    3.07      124,277       2,733      2.20

Non-interest-bearing liabilities:
  Demand Deposits ......................      11,285                 10,295                           9,728
  Other non-interest-bearing
     liabilities .......................       1,702                  1,288                           2,358
  Total liabilities ....................     150,256                144,208                         136,363
Stockholders' equity ...................      18,659                 19,208                          13,818
                                            --------               --------                        --------
   Total liabilities and equity ........    $168,915               $163,416                        $150,181
                                            ========               ========                        ========

Net interest income ....................                                      $  4,049                         $  4,396
                                                                              ========                         ========
Net interest rate spread (2) ...........                  2.11%                           2.20%                              2.85%
Net interest-earning assets (3) ........    $ 21,438               $ 21,599                        $ 17,025
                                            ========               ========                        ========
Net interest margin (4) ................                                                  2.63%                              3.11%
Average of interest-earning
   assets to interest-bearing
   liabilities .........................                115.62%                         116.29%                            113.70%
</TABLE>

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

(2)   Net interest rate spread represents the difference between the yield on
      average interest-earning assets and the cost of average interest-bearing
      liabilities.

(3)   Net interest-earning assets represents total interest-earning assets less
      total interest-bearing liabilities.

(4)   Net interest margin represents net interest income divided by average
      total interest-earning assets.


                                       13
<PAGE>

Rate/Volume Analysis

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

                                             Fiscal Years Ended June 30,
                                                    2006 vs. 2005
                                        ---------------------------------------
                                        Increase (Decrease) Due to
                                        --------------------------
                                         Volume             Rate         Net
                                        ---------        ---------     --------
                                                      (In thousands)

      Interest-earning assets:
         Loans .......................  $     651        $     128     $    779
         Investment securities (1) ...        144               72          216
         Interest-earning deposits ...        (53)              56            3
                                        ---------        ---------     --------

            Total interest-earning
              assets .................        742              256          998
                                        ---------        ---------     --------

      Interest-bearing liabilities:
         Savings deposits ............        (19)              (2)         (21)
         NOW accounts ................          2               28           30
         Money market accounts .......         64              217          281
         Certificates of deposit .....         21              230          251
                                        ---------        ---------     --------
            Total interest-bearing
              deposits ...............         68              473          541

         FHLBB advances ..............        266              540          806
         Repurchase agreements .......         (1)              (1)          (2)
                                        ---------        ---------     --------

            Total interest-bearing
                 liabilities .........        333            1,012        1,345
                                        ---------        ---------     --------

      Change in net interest income ..  $     409        $    (756)    $   (347)
                                        =========        =========     ========

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

Management of Market Risk

      General. The majority of our assets and liabilities are monetary in
nature. Consequently, our most significant form of market risk is interest rate
risk (IRR). Our assets, consisting primarily of mortgage loans, have longer
maturities than our liabilities, consisting primarily of deposits. As a result,
a principal part of our business strategy is to manage IRR and reduce the
exposure of our net interest income to changes in market interest rates.
Accordingly, our Board of Directors has established an Asset/Liability
Management Committee, which is responsible for evaluating the IRR inherent in
our assets and liabilities, for determining the level of risk that is
appropriate, given our business strategy, operating environment, capital,
liquidity and performance objectives, and for managing this risk consistent with
the guidelines approved by the Board of Directors. Senior management monitors
the level of IRR on a regular basis and the


                                       14
<PAGE>

Asset/Liability Committee meets at least on a quarterly basis to review our
asset/liability policies and position, IRR position and to discuss and implement
IRR strategies.

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

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

The following table presents, as of June 30, 2006 the estimated changes in net
interest income that would result from changes in market interest rates over the
next twelve-month period.

          For the Twelve Months Ending June 30, 2006
                    (Dollars in thousands)

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

          200                  $3,865             -6.1%
           0                   $4,117              0.0%
         -200                  $4,226              2.6%

Certain shortcomings are inherent in the methodology used in the above IRR
measurement. Modeling changes in net interest income simulation require making
certain assumptions that may or may not reflect the manner in which actual
yields and


                                       15
<PAGE>

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

Liquidity and Capital Resources

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

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

      Our most liquid assets are cash and cash equivalents. The levels of these
assets are dependent on our operating, financing, lending and investing
activities during any given period. At June 30, 2006, cash and cash equivalents
totaled $4.0 million. Securities classified as available-for-sale, which provide
additional sources of liquidity, totaled $15.5 million at June 30, 2006. In
addition, at June 30, 2006, we had the ability to borrow a total of
approximately $65.0 million from the FHLBB. On that date, we had $51.2 million
in advances outstanding.

      At June 30, 2006, we had $3.3 million in loan commitments outstanding. In
addition to commitments to originate loans, we had $16.4 million in unadvanced
funds to borrowers. Certificates of deposit due within one year of June 30, 2006
totaled $23.0 million, or 23.8% of total deposits. If these deposits do not
remain with us, we will be required to seek other sources of funds, including
other certificates of deposit and FHLBB advances. Depending on market
conditions, we may be required to pay higher rates on such deposits or other
borrowings than we currently pay on the certificates of deposit due on or before
June 30, 2006. We believe, however, based on past experience that a significant
portion of our certificates of deposit will remain with us. We have the ability
to attract and retain deposits by adjusting the interest rates offered.

      We have no material commitments or demands that are likely to affect our
liquidity other than set forth below. In the event loan demand were to increase
at a pace


                                       16
<PAGE>

greater than expected, or any unforeseen demand or commitment were to occur, we
would access our borrowing capacity with the FHLBB.

      Our primary investing activities are the origination of loans and the
purchase of securities. In fiscal 2006, we originated $ 44.0 million of loans
and purchased $5.9 million of securities. In fiscal 2005, we originated $37.1
million of loans and purchased $19.2 million of securities.

      Financing activities consist primarily of activity in deposit accounts and
FHLBB advances. We experienced a net increase in total deposits of $6.2 million
and $3.1 million for the fiscal years ended June 30, 2006 and 2005,
respectively. Deposit flows are affected by the overall level of interest rates,
the interest rates and products offered by us and our local competitors and
other factors. We generally manage the pricing of our deposits to be
competitive. In addition, since our conversion to a federally chartered savings
bank, we no longer have excess deposit insurance coverage, which was provided to
us, as a Massachusetts savings bank, through the Depositors Insurance Fund. We
do not anticipate any material run-off of deposits due to the loss of this
excess deposit insurance coverage.

      FHLBB advances reflected net increases of $4.4 million and $19.5 million
during the fiscal years ended June 30, 2006 and 2005, respectively. FHLBB
advances have primarily been used to fund loan demand and purchase securities.

Georgetown Savings Bank is subject to various regulatory capital requirements
administered by the Federal Deposit Insurance Corporation (FDIC), including a
risk-based capital measure. The risk-based capital guidelines include both a
definition of capital and a framework for calculating risk-weighted assets by
assigning balance sheet assets and off-balance sheet items to broad risk
categories. At June 30, 2006, Georgetown Savings Bank exceeded all of the FDIC
regulatory capital requirements. Georgetown Savings Bank is considered "well
capitalized" under regulatory guidelines. See Note 12 of the Notes to the
consolidated financial statements. At June 30, 2006, Georgetown Savings Bank
exceeded all of the regulatory capital requirements applicable under the
regulations of the OTS, our primary regulator.

Impact of Inflation and Changing Prices

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


                                       17
<PAGE>

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

                                                                        Page

Report of Independent Registered Public Accounting Firm                  F-2

Consolidated Balance Sheets                                              F-3

Consolidated Statements of Operations                                    F-4

Consolidated Statements of Changes in Stockholders' Equity               F-5

Consolidated Statements of Cash Flows                                    F-6

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


                                      F-1
<PAGE>

                      [LETTERHEAD OF WOLF & COMPANY, P.C]

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have  audited the  accompanying  consolidated  balance  sheets of  Georgetown
Bancorp,  Inc. and  subsidiaries  as of June 30, 2006 and 2005,  and the related
consolidated statements of operations,  changes in stockholders' equity and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Georgetown Bancorp,
Inc.  and  subsidiaries  as of June 30, 2006 and 2005,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.


/s/ Wolf & Company, P.C

Boston, Massachusetts
July 28, 2006


                                      F-2
<PAGE>

                            GEORGETOWN BANCORP, INC.

                           CONSOLIDATED BALANCE SHEETS

                             June 30, 2006 and 2005

<TABLE>
<CAPTION>
                                     ASSETS

                                                                            2006            2005
                                                                        -----------     -----------
                                                                               (In thousands)
<S>                                                                     <C>             <C>
Cash and due from banks                                                 $     3,257     $     1,887
Short-term investments                                                          720           3,191
                                                                        -----------     -----------
               Total cash and cash equivalents                                3,977           5,078

Securities available for sale, at fair value                                 15,465          16,814
Securities held to maturity, at amortized cost                                9,823          12,380
Federal Home Loan Bank stock, at cost                                         2,905           2,526
Loans, net of allowance for loan losses of $1,016,000
    at June 30, 2006 and $882,000 at June 30, 2005                          128,778         114,781
Premises and equipment                                                        5,230           4,885
Accrued interest receivable                                                     674             680
Bank-owned life insurance                                                     1,211           1,166
Other assets                                                                    852             717
                                                                        -----------     -----------

               Total assets                                             $   168,915     $   159,027
                                                                        ===========     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                                $    96,571     $    90,336
Short-term borrowings                                                        22,300          28,350
Long-term Federal Home Loan Bank advances                                    28,921          18,468
Securities sold under agreements to repurchase                                  762             989
Mortgagors' escrow accounts                                                     289             268
Accrued expenses and other liabilities                                        1,413           1,331
                                                                        -----------     -----------
               Total liabilities                                            150,256         139,742
                                                                        -----------     -----------

Commitments and Contingencies (Note 15)

Stockholders' equity:
Preferred stock, $0.10 par value per share: 1,000,000
shares authorized; none outstanding                                              --              --
Common stock, $0.10 par value per share: 10,000,000
shares authorized; 2,777,250 shares issued and outstanding                      278             278
Additional paid-in capital                                                   11,452          11,452
Retained earnings                                                             7,996           8,383
Accumulated other comprehensive loss                                           (330)            (17)
Unearned compensation - ESOP                                                   (737)           (811)
                                                                        -----------     -----------
               Total stockholders' equity                                    18,659          19,285
                                                                        -----------     -----------

               Total liabilities and stockholders' equity               $   168,915     $   159,027
                                                                        ===========     ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                            GEORGETOWN BANCORP, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                       Years Ended June 30, 2006 and 2005

<TABLE>
<CAPTION>
                                                            2006            2005
                                                        -----------     -----------
                                                              (In thousands)
<S>                                                     <C>             <C>
Interest and dividend income:
    Loans, including fees                               $     6,650     $     5,871
    Investment interest and dividends                         1,355           1,139
    Short-term investments                                      122             119
                                                        -----------     -----------
               Total interest and dividend income             8,127           7,129
                                                        -----------     -----------

Interest expense:
    Deposits                                                  1,933           1,392
    Short-term borrowings                                     1,084             581
    Long-term Federal Home Loan Bank advances                 1,054             751
    Securities sold under agreements to repurchase                7               9
                                                        -----------     -----------
               Total interest expense                         4,078           2,733
                                                        -----------     -----------

Net interest income                                           4,049           4,396
Provision for loan losses                                       108             114
                                                        -----------     -----------
Net interest income, after provision for loan losses          3,941           4,282
                                                        -----------     -----------

Non-interest income:
    Customer service fees                                       439             325
    Loss on sale of securities available for sale               (56)             (2)
    Income from bank-owned life insurance                        45              45
    Other                                                        26              33
                                                        -----------     -----------
               Total non-interest income                        454             401
                                                        -----------     -----------

Non-interest expenses:
    Salaries and employee benefits                            2,742           2,342
    Occupancy and equipment expenses                            808             644
    Data processing expenses                                    238             288
    Professional fees                                           356             263
    Advertising expense                                         228             121
    Other general and administrative expenses                   576             688
                                                        -----------     -----------
               Total non-interest expenses                    4,948           4,346
                                                        -----------     -----------

(Loss) income before income taxes                              (553)            337

Income tax (benefit) expense                                   (173)            109
                                                        -----------     -----------

Net (loss) income                                       $      (380)    $       228
                                                        ===========     ===========

Net loss per share:
   Basic and diluted                                         ($0.14)            N/A
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                       Years Ended June 30, 2006 and 2005

<TABLE>
<CAPTION>
                                                                                           Accumulated
                                                                   Additional                  Other        Unearned
                                                                    Paid-in     Retained   Comprehensive  Compensation-
                                                    Common Stock    Capital     Earnings   Income (Loss)      ESOP           Total
                                                      ---------    ----------  ---------   -------------  -------------   ---------
                                                                                      (In thousands)
<S>                                                   <C>           <C>        <C>           <C>            <C>           <C>
Balance at June 30, 2004                              $      --     $      --  $   8,171     $    (102)     $      --     $   8,069
                                                                                                                          ---------

Comprehensive income:
   Net income                                                --            --        228            --             --           228
   Change in net unrealized gain (loss) on
     securities available for sale, net of
     reclassification adjustments and
     tax effects                                             --            --         --            85             --            85
                                                                                                                          ---------
          Total comprehensive income                                                                                            313
                                                                                                                          ---------

Net proceeds from the issuance of common
   stock (2,775,250 shares)                                 278        11,452         --            --             --        11,730

Common stock acquired by ESOP (99,981 shares)                --            --         --            --         (1,000)       (1,000)
Common stock held by ESOP committed to
   be allocated (18,900 shares)                              --            --        (16)           --            189           173
                                                      ---------     ---------  ---------     ---------      ---------     ---------

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

Comprehensive loss:
   Net loss                                                  --            --       (380)           --             --          (380)
   Change in net unrealized gain (loss) on
     securities available for sale, net of
     reclassification adjustments and
     tax effects                                             --            --         --          (313)            --          (313)
                                                                                                                          ---------
          Total comprehensive loss                                                                                             (693)
                                                                                                                          ---------

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

Balance at June 30, 2006                              $     278     $  11,452  $   7,996     $    (330)     $    (737)    $  18,659
                                                      =========     =========  =========     =========      =========     =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                       Years Ended June 30, 2006 and 2005

<TABLE>
<CAPTION>
                                                                   2006           2005
                                                                ----------     ----------
                                                                     (In thousands)
<S>                                                             <C>            <C>
Cash flows from operating activities:
   Net (loss) income                                            $     (380)    $      228
    Adjustments to reconcile net (loss) income to net cash
      provided by operating activities:
        Provision for loan losses                                      108            114
        Loss on sale of securities available for sale                   56              2
        Accretion of securities, net                                   (44)           (19)
        (Accretion) amortization of deferred loan costs, net           (39)            25
        Depreciation and amortization expense                          436            375
        Decrease (increase)  in accrued interest receivable              6           (269)
        Income from bank-owned life insurance                          (45)           (45)
        Deferred tax benefit                                           (38)           (67)
        ESOP compensation expense                                       67            173
        Other, net                                                     173            245
                                                                ----------     ----------
           Net cash provided by operating activities                   300            762
                                                                ----------     ----------

Cash flows from investing activities:
    Activity in available-for-sale securities:
       Maturities, prepayments and calls                             3,759          1,649
       Purchases                                                    (5,888)        (8,236)
       Proceeds on sales of securities                               2,944            197
    Activity in held-to-maturity securities:
       Maturities, prepayments and calls                             2,578          2,248
       Purchases                                                        --        (10,917)
    Purchase of Federal Home Loan Bank stock                          (379)          (977)
    Loan originations, net of amortization and payoffs             (14,066)       (16,563)
    Purchase of premises and equipment                                (781)          (183)
                                                                ----------     ----------
           Net cash used by investing activities                   (11,833)       (32,782)
                                                                ----------     ----------
</TABLE>

                                   (continued)

See accompanying notes to consolidated financial statements.



                                      F-6
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

                       Years Ended June 30, 2006 and 2005

<TABLE>
<CAPTION>
                                                                      2006          2005
                                                                   ---------     ---------
                                                                        (In thousands)
<S>                                                                <C>           <C>
Cash flows from financing activities:
    Net increase in deposits                                           6,235         3,077
    Net (decrease) increase in securities sold under agreements
      to repurchase                                                     (227)           81
    Net change in borrowings with maturities of  three
      months or less                                                  (3,900)        8,010
    Proceeds of Federal Home Loan Bank advances
      with maturities greater than three months                       43,650        17,500
    Repayments of Federal Home Loan Bank advances
      with maturities greater than three months                      (35,347)       (6,044)
    Net change in mortgagors' escrow accounts                             21            36
 Proceeds from issuance of common stock                                   --        10,730
                                                                   ---------     ---------
            Net cash provided by financing activities                 10,432        33,390
                                                                   ---------     ---------

Net change in cash and cash equivalents                               (1,101)        1,370

Cash and cash equivalents at beginning of year                         5,078         3,708
                                                                   ---------     ---------

Cash and cash equivalents at end of year                           $   3,977     $   5,078
                                                                   =========     =========

Supplementary information:
    Interest paid on deposit accounts                              $   1,922     $   1,382
    Interest paid on Federal Home Loan Bank advances                   2,087         1,275
    Interest paid on securities sold under agreement
      to repurchase                                                        7             9
    Income taxes paid (recovered), net                                   (86)          248
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Years Ended June 30, 2006 and 2005

1.    CORPORATE STRUCTURE

      On January 5, 2005, in accordance with a reorganization and stock issuance
      plan,  Georgetown Savings Bank, a  Massachusetts-chartered  mutual savings
      bank, was reorganized into a  Federally-chartered  mutual holding company,
      Georgetown  Bancorp,  MHC  ("MHC").  Concurrent  with the  reorganization,
      Georgetown Bancorp, Inc. (the "Company") a Federally-chartered corporation
      was organized by the MHC for the purpose of owning all of the  outstanding
      capital   stock   of   Georgetown    Savings   Bank   (the   "Bank"),    a
      Federally-chartered   stock  savings   bank.   In   connection   with  the
      reorganization  and stock issuance plan the Company issued an aggregate of
      2,777,250  shares of common stock. The Company offered for sale, at $10.00
      per  share,  45.0% of the issued  shares of its  common  stock in a public
      offering to  eligible  depositors,  employees,  and members of the general
      public (the  "Offering").  The remaining 55.0% of the Company's  shares of
      common stock were issued to the MHC.

      In addition,  the Bank adopted an Employee  Stock  Ownership Plan ("ESOP")
      which purchased 99,981 shares of the common stock at $10.00 per share. The
      net  proceeds,  after the  purchase  of the ESOP  shares in the  amount of
      $1,000,000 and Offering expenses of $718,000, amounted to $10,730,000.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of presentation and consolidation

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

      Nature of operations

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


                                      F-8
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Segment reporting

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

      Use of estimates

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

      Cash and cash equivalents

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

      Reclassifications

      Certain amounts in the 2005  consolidated  financial  statements have been
      reclassified to conform to the 2006 presentation.

      Securities

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


                                      F-9
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Securities (concluded)

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

      Loans

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

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

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

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


                                      F-10
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Allowance for loan losses

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

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

      The allowance  consists of specific,  general and unallocated  components.
      The  specific  component  relates to loans that are  classified  as either
      doubtful,  substandard  or special  mention.  For such loans that are also
      classified as impaired,  an allowance is  established  when the observable
      market price of the impaired loan is lower than the carrying value of that
      loan. The general  component covers  non-classified  loans and is based on
      historical  loss  experience   adjusted  for   qualitative   factors.   An
      unallocated  component is  maintained  to cover  uncertainties  that could
      affect management's estimate of probable losses. The unallocated component
      of the  allowance  reflects  the  margin of  imprecision  inherent  in the
      underlying  assumptions used in the methodologies for estimating losses in
      the  portfolio,  because  regardless  of the  extent  of our  analysis  of
      customer  performance,  portfolio  trends  or risk  management  processes,
      certain  inherent  but  undetected  losses  are  probable  within our loan
      portfolio.  This is due to several factors,  including  inherent delays in
      obtaining  information  regarding  a  customer's  financial  condition  or
      changes in a customer's unique business conditions,  the judgmental nature
      of  individual   loan   evaluations,   collateral   assessments   and  the
      interpretation   of   economic   trends.   Volatility   of   economic   or
      customer-specific  conditions  affecting the identification and estimation
      of losses  from larger  non-homogeneous  credits  and the  sensitivity  of
      assumptions  utilized to establish  allowances for  homogeneous  groups of
      loans, loan portfolio concentrations,  and other subjective considerations
      are among other  factors.  Because of the  imprecision  surrounding  these
      factors,  we maintain an unallocated  component that is not allocated to a
      specific loan category.


                                      F-11
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Allowance for loan losses (concluded)

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

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

      Premises and equipment

      Land is carried at cost. Buildings,  leasehold  improvements and equipment
      are  stated  at  cost  less  accumulated  depreciation  and  amortization.
      Depreciation and amortization is computed principally on the straight-line
      method over the  estimated  useful lives of the assets or the terms of the
      leases, if shorter.

      Bank-owned life insurance

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

      Transfers of financial assets

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


                                      F-12
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Income taxes

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

      Advertising costs

      Advertising costs are expensed when incurred.

      Employee Stock Ownership Plan ("ESOP")

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

      Earnings per share

      Basic  earnings  (loss)  per  share  represents  income  (loss)  available
      (attributable)  to common  stockholders  divided  by the  weighted-average
      number of common shares  outstanding  during the period.  Diluted earnings
      per share reflects  additional  common shares  (common stock  equivalents)
      that would have been  outstanding if dilutive  potential common shares had
      been issued,  as well as any  adjustment  to income that would result from
      the  assumed  issuance.  The  Company  has no  common  stock  equivalents.
      Earnings  per share is not  presented  for the year ended June 30, 2005 or
      for any  periods  beginning  prior to March 31,  2005  since  the  Company
      completed  its  Offering  on January 5, 2005 and,  accordingly,  such data
      would not be meaningful.

      Comprehensive income/loss

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


                                      F-13
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Comprehensive income/loss (concluded)

      The  components  of the  change  in other  comprehensive  income/loss  and
      related tax effects are as follows:

                                                        Years Ended June 30,
                                                       -----------------------
                                                          2006          2005
                                                       ---------     ---------
                                                            (In thousands)
       Change in unrealized holding gains (losses)
         on available-for-sale securities              $    (557)    $     135
       Reclassification adjustment for losses
         realized in income                                   56             2
                                                       ---------     ---------
       Net unrealized gains (losses)                        (501)          137
       Tax effect                                            188           (52)
                                                       ---------     ---------

       Net-of-tax amount                               $    (313)    $      85
                                                       =========     =========

Recent accounting pronouncements

In  March,  2006  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 156, "Accounting for Servicing
of Financial Assets" (SFAS 156). The Statement amends SFAS No. 140,  "Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities," with respect to the accounting for separately recognized servicing
assets  and  servicing  liabilities.  Consistent  with  SFAS No.  140,  SFAS 156
requires  companies to recognize a servicing  asset or servicing  liability each
time it undertakes an obligation to service a financial asset by entering into a
servicing  contract.  However,  the Statement permits a company to choose either
the  amortized  cost method or fair value  measurement  method for each class of
separately  recognized  servicing  assets.  The Statement is effective as of the
beginning of a company's  first fiscal year after  September  15, 2006.  Earlier
adoption is permitted as of the beginning of an entity's  fiscal year,  provided
the entity has not yet issued financial statements,  including interim financial
statements.  The Company plans to adopt SFAS 156 at the beginning of fiscal 2008
and does not expect the adoption of this Statement to have a material  impact on
its consolidated financial statements.


                                      F-14
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)

      Recent accounting pronouncements (concluded)

      In June 2006,  FASB issued FASB  Interpretation  No. 48,  "Accounting  for
      Uncertainty in Income Taxes," which is an interpretation of FASB Statement
      No. 109, "Accounting for Income Taxes." This Interpretation  clarifies the
      accounting  for  uncertainty  in income  taxes  recognized  in a company's
      financial  statements,  prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of a tax
      position  in the  tax  return  and  provides  guidance  on  derecognition,
      classification,  interest and  penalties,  accounting in interim  periods,
      disclosures and transition.  The effective date of this  Interpretation is
      for fiscal years  beginning  after December 15, 2006. The Company does not
      expect  this  Interpretation  to have a material  impact on the  Company's
      consolidated financial statements.

3.    RESTRICTIONS ON CASH AND AMOUNTS DUE FROM BANKS

      The Company is required to maintain  average  balances on hand or with the
      Federal  Reserve Bank. At June 30, 2006 and 2005,  these reserve  balances
      amounted to $1,110,000 and $1,107,000, respectively.

4.    SHORT-TERM INVESTMENTS

      A summary of short-term investments follows:

                                                        June 30,
                                                 ----------------------
                                                    2006         2005
                                                 ---------    ---------
                                                    (In thousands)

      FHLB Ideal Way                             $       6    $      12
      FHLB overnight funds                              --        3,146
      Federal funds sold                               668           --
      Shay asset management fund                        46           33
                                                 ---------    ---------

                                                 $     720    $   3,191
                                                 =========    =========


                                      F-15
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.    SECURITIES

      A summary of securities follows:

<TABLE>
<CAPTION>
                                                              June 30, 2006
                                           -----------------------------------------------------
                                                            Gross        Gross
                                           Amortized     Unrealized    Unrealized        Fair
                                              Cost          Gains        Losses          Value
                                           ----------    ----------    ----------     ----------
                                                                   (In thousands)
<S>                                        <C>           <C>           <C>            <C>
      Securities available for sale
      -----------------------------

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

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

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

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

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


                                      F-16
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SECURITIES (continued)

<TABLE>
<CAPTION>
                                                                     June 30, 2005
                                                   -----------------------------------------------------
                                                                   Gross         Gross
                                                    Amortized    Unrealized    Unrealized         Fair
                                                      Cost         Gains         Losses          Value
                                                   ----------    ----------    ----------     ----------
                                                                      (In thousands)
<S>                                                <C>           <C>           <C>            <C>
      Securities available for sale
      -----------------------------

          Government-sponsored
              enterprises                          $    4,994    $        2    $      (44)    $    4,952
          Mortgage-backed securities                   11,842            82           (62)        11,862
                                                   ----------    ----------    ----------     ----------

                 Total securities
                     available for sale            $   16,836    $       84    $     (106)    $   16,814
                                                   ==========    ==========    ==========     ==========

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

          Government-sponsored
              enterprises                          $    1,000    $       --    $       (5)    $      995
          Mortgage-backed securities                   11,380           105           (18)        11,467
                                                   ----------    ----------    ----------     ----------

                 Total securities
                     held to maturity              $   12,380    $      105    $      (23)    $   12,462
                                                   ==========    ==========    ==========     ==========
</TABLE>


                                      F-17
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SECURITIES (continued)

      The  amortized  cost  and  estimated  fair  value  of debt  securities  by
      contractual  maturity at June 30, 2006 follows.  Expected  maturities will
      differ from contractual  maturities  because issuers may have the right to
      call or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                  Available for Sale           Held to Maturity
                              ------------------------    ------------------------
                               Amortized       Fair       Amortized        Fair
                                 Cost          Value        Cost           Value
                              ----------    ----------    ----------    ----------
                                                (In thousands)
<S>                           <C>           <C>           <C>           <C>
      Within 1 year           $    1,500    $    1,484    $       --    $       --
      After 1 year through
          5 years                  2,500         2,437           500           488
                              ----------    ----------    ----------    ----------
                                   4,000         3,921           500           488
      Mortgage-backed
          securities              11,988        11,544         9,323         8,965
                              ----------    ----------    ----------    ----------

                              $   15,988    $   15,465    $    9,823    $    9,453
                              ==========    ==========    ==========    ==========
</TABLE>

      For the years  ended  June 30,  2006 and 2005,  proceeds  from the sale of
      securities  available  for  sale  amounted  to  $2,944,000  and  $197,000,
      respectively, with realized losses of $56,000 and $2,000, respectively.

      At June 30, 2006 and 2005,  the carrying  amount of securities  pledged to
      secure repurchase agreements was $2,473,000 and $1,989,000, respectively.


                                      F-18
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SECURITIES (continued)

      Information  pertaining to securities with gross unrealized losses at June
      30, 2006 and 2005,  aggregated by  investment  category and length of time
      that  individual  securities  have  been in a  continuous  loss  position,
      follows:

<TABLE>
<CAPTION>
                                                Less Than Twelve Months    Greater Than Twelve Months
                                               ------------------------    --------------------------
                                                 Gross                       Gross
                                               Unrealized        Fair      Unrealized         Fair
                                                 Losses         Value        Losses           Value
                                               ----------    ----------    ----------      ----------
                                                                   (In thousands)
<S>                                            <C>           <C>           <C>             <C>
      June 30, 2006:
      --------------

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

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

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

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

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


                                      F-19
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      SECURITIES (concluded)


<TABLE>
<CAPTION>
                                                 Less Than Twelve Months     Greater Than Twelve Months
                                               --------------------------    --------------------------
                                                 Gross                         Gross
                                               Unrealized          Fair      Unrealized        Fair
                                                 Losses           Value        Losses          Value
                                               ----------      ----------    ----------      ----------
                                                                   (In thousands)
<S>                                            <C>             <C>           <C>             <C>
      June 30, 2005:
      --------------

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

          Government-sponsored
              enterprises                      $       17      $    2,481    $       27      $    1,972
          Mortgage-backed securities                   17           2,096            45           2,716
                                               ----------      ----------    ----------      ----------
                 Total securities available
                     for sale                          34           4,577            72           4,688
                                               ----------      ----------    ----------      ----------

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

          Government-sponsored
              enterprises                               4             495             1             499
          Mortgage-backed securities                   18           1,127            --              --
                                               ----------      ----------    ----------      ----------
                 Total securities held
                     to maturity                       22           1,622             1             499
                                               ----------      ----------    ----------      ----------

                 Total temporarily impaired
                     securities                $       56      $    6,199    $       73      $    5,187
                                               ==========      ==========    ==========      ==========
</TABLE>

      At   June   30,   2006,    eighteen   debt   securities    classified   as
      available-for-sale    and   twelve   debt    securities    classified   as
      held-to-maturity,  have unrealized  losses with aggregate  depreciation of
      3.6% from the Company's  amortized  cost basis.  Because these  unrealized
      losses  relate   principally  to   government-sponsored   enterprises  and
      mortgage-backed  securities,  are the result of  fluctuations  in interest
      rates and  management  has the  intent  and  ability  to hold  these  debt
      securities for the foreseeable  future, no declines are deemed to be other
      than temporary.


                                      F-20
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.    LOANS

      A summary of loans follows:

                                                            June 30,
                                                   ---------------------------
                                                       2006            2005
                                                   -----------     -----------
                                                          (In thousands)
      Mortgage loans on real estate:
          One to four family residential           $    95,478     $    87,277
          Multi-family and commercial                   11,891           9,847
          Construction                                   9,529           7,931
          Home equity loans and lines of credit         10,614           8,589
                                                   -----------     -----------
                    Total mortgage loans               127,512         113,644
                                                   -----------     -----------

      Other loans:
          Consumer                                         617             372
          Commercial loans                               1,486           1,510
                                                   -----------     -----------
                    Total other loans                    2,103           1,882
                                                   -----------     -----------

                    Total loans                        129,615         115,526
          Allowance for loan losses                     (1,016)           (882)
          Net deferred loan costs                          179             137
                                                   -----------     -----------

                    Loans, net                     $   128,778     $   114,781
                                                   ===========     ===========

      An analysis of the allowance for loan losses follows:

                                                       Years Ended June 30,
                                                   ---------------------------
                                                       2006            2005
                                                   -----------     -----------
                                                         (In thousands)

      Balance at beginning of year                 $       882     $       876
      Provision for loan losses                            108             114
      Recoveries                                            34               2
      Charge-offs                                           (8)           (110)
                                                   -----------     -----------

      Balance at end of year                       $     1,016     $       882
                                                   ===========     ===========


                                      F-21
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      LOANS (concluded)

      The  following  is a summary of  information  pertaining  to impaired  and
      non-accrual loans:

<TABLE>
<CAPTION>
                                                                              June 30,
                                                                     --------------------------
                                                                         2006           2005
                                                                     -----------    -----------
                                                                           (In thousands)
<S>                                                                  <C>            <C>
      Impaired loans without a valuation allowance                   $        --    $       627

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

      Total impaired loans                                           $     1,479    $       627
                                                                     ===========    ===========

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

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

      Total loans past-due ninety days or more and still accruing    $        60    $       397
                                                                     ===========    ===========

<CAPTION>
                                                                        Years Ended June 30,
                                                                     --------------------------
                                                                         2006           2005
                                                                     -----------    -----------
                                                                          (In thousands)
<S>                                                                  <C>            <C>
      Average investment in impaired loans                           $       559    $       756
                                                                     ===========    ===========

      Interest income recognized on impaired loans                   $        20    $        26
                                                                     ===========    ===========

      Interest income recognized on a cash basis
          on impaired loans                                          $         8    $         2
                                                                     ===========    ===========
</TABLE>

      No  additional  funds are  committed  to be  advanced in  connection  with
      impaired loans.

      At June 30, 2006 and 2005,  mortgage loans serviced for others amounted to
      approximately $558,000 and $683,000,  respectively. All loans serviced for
      others were sold without recourse provisions.


                                      F-22
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.    PREMISES AND EQUIPMENT

      A summary of premises and equipment follows:

<TABLE>
<CAPTION>
                                                          June 30,
                                                  -------------------------      Estimated
                                                     2006           2005       Useful Lives
                                                  ----------     ----------    ------------
                                                       (In thousands)
<S>                                               <C>            <C>           <C>
      Premises:
          Land                                    $      279     $      279
          Buildings and improvements                   4,742          4,130     5 - 40 years
      Equipment                                        1,844          1,614     3 - 7 years
      Construction in progress                            --             61
                                                  ----------     ----------
                                                       6,865          6,084
      Less accumulated depreciation
          and amortization                            (1,635)        (1,199)
                                                  ----------     ----------

                                                  $    5,230     $    4,885
                                                  ==========     ==========
</TABLE>

      Depreciation  and  amortization  expense for the years ended June 30, 2006
      and 2005 amounted to $436,000 and $375,000, respectively.

      Construction  in  progress  was  related to a new branch  located in North
      Andover, Massachusetts which was completed during fiscal year 2006.

8.    DEPOSITS

      A summary of deposit balances follows:

                                                                 June 30,
                                                        ------------------------
                                                           2006          2005
                                                        ----------    ----------
                                                              (In thousands)

      Demand                                            $   11,285    $   10,388
      NOW                                                    7,562         4,665
      Money market deposits                                 21,706        20,954
      Regular and other savings                             15,008        20,460
                                                        ----------    ----------
              Total non-certificate accounts                55,561        56,467
                                                        ----------    ----------

      Term certificates less than $100,000                  26,715        21,877
      Term certificates of $100,000 or more                 14,295        11,992
                                                        ----------    ----------
              Total certificate accounts                    41,010        33,869
                                                        ----------    ----------

              Total deposits                            $   96,571    $   90,336
                                                        ==========    ==========


                                      F-23
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      DEPOSITS (concluded)

      A summary of certificate accounts, by maturity, at June 30, 2006 and 2005,
      are as follows:

                                          2006                 2005
                                 --------------------  ---------------------
                                            Weighted                Weighted
                                             Average                Average
                                   Amount     Rate       Amount       Rate
                                ----------  --------   ----------   --------
                                           (Dollars in thousands)

      Within 1 year             $   22,957    4.31%    $   10,781     2.35%
      Over 1 year to 3 years        15,332    3.83         19,064     3.81
      Over 3 years                   2,721    4.33          4,024     3.55
                                ----------             ----------

                                $   41,010    4.13%    $   33,869     3.31%
                                ==========             ==========

      At June 30, 2006,  included in certificates of deposit maturing within one
      year are brokered  certificates of deposit  amounting to $2,005,000 with a
      weighted average rate of 5.39%.

9.    BORROWED FUNDS

      Short-term borrowings

      Short-term borrowings consist of FHLB advances maturing within one year at
      a  weighted  average  rate of 4.91% and  3.32% at June 30,  2006 and 2005,
      respectively.

      The Company also has a $3,780,000 line-of-credit with the FHLB. There were
      no amounts  outstanding at June 30, 2006 and 2005. All FHLB borrowings are
      secured  by a  blanket  lien  on  certain  qualified  collateral,  defined
      principally  as 75% of the  carrying  value  of  first  mortgage  loans on
      owner-occupied residential property.


                                      F-24
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      BORROWED FUNDS (concluded)

      Long-term Federal Home Loan Bank advances

      At June 30, 2006 and 2005, long-term FHLB advances are as follows:

<TABLE>
<CAPTION>
                                         June 30, 2006                    June 30, 2005
                                    ------------------------       -------------------------
                                                    Weighted                        Weighted
                                                     Average                        Average
                                      Amount          Rate           Amount           Rate
                                    ---------       --------       ---------        --------
                                     (Dollars in thousands)        (Dollars in thousands)
<S>                                 <C>                <C>         <C>                <C>
      Fixed maturity:
                2006                $      --            --%       $   2,500          3.02%
                2007                    3,500          3.44            2,500          3.14
                2008*                   4,100          4.25            1,500          2.80
                2009*                  15,500          4.44            4,100          3.19
                2010*                   1,000          5.62            1,000          5.62
                2011*                   4,500          4.72            6,500          4.81
                                    ---------                      ---------
                                       28,600          4.38           18,100          3.84
      Amortizing advance,
          due March 5, 2012,
          requiring monthly
          principal and interest
          of $5,300                       321          4.90              368          4.90
                                    ---------                      ---------

                                    $  28,921          4.38%       $  18,468          3.87%
                                    =========                      =========
</TABLE>

      *     Includes  advances  callable in 2007  aggregating  $8,500,000 with a
            weighted average rate of 4.23%.


                                      F-25
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.   SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

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

                                                           Years Ended June 30,
                                                         ----------------------
                                                            2006         2005
                                                         ---------    ---------
                                                          (Dollars in thousands)

      Balance at year-end                                $     762    $     989
      Average balance during the year                          751          828
      Maximum month-end balance during the year                899          989
      Average interest rate during the year                   1.00%        1.00%

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

          Carrying value                                 $   2,473    $   1,989
          Estimated fair value                               2,462        1,984

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

11.   INCOME TAXES

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

                                                          Years Ended June 30,
                                                      -------------------------
                                                         2006           2005
                                                      ----------     ----------
                                                            (In thousands)
      Current tax (benefit) expense:
          Federal                                     $     (153)    $      162
          State                                               18             14
                                                      ----------     ----------
                                                            (135)           176
                                                      ----------     ----------
      Deferred tax (benefit) expense:
          Federal                                            (40)           (66)
          State                                                2             (1)
                                                      ----------     ----------
                                                             (38)           (67)
                                                      ----------     ----------

                   Total tax (benefit) expense        $     (173)    $      109
                                                      ==========     ==========


                                      F-26
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      INCOME TAXES (continued)

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

                                                         Years Ended June 30,
                                                       ------------------------
                                                          2006           2005
                                                       ---------      ---------

      Statutory rate                                       (34.0)%         34.0%
      Increase (decrease) resulting from:
          State taxes, net of federal tax benefit            2.4            2.6
          Bank-owned life insurance                         (2.5)          (4.1)
          Other, net                                         2.8           (0.2)
                                                       ---------      ---------

      Effective tax rates                                  (31.3)%         32.3%
                                                       =========      =========

      The components of the net deferred tax (asset)  liability at June 30, 2006
      and 2005, included in other (assets) liabilities, are as follows:

                                                          2006           2005
                                                       ---------      ---------
                                                            (In thousands)

      Deferred tax liability:
          Federal                                      $     455      $     457
          State                                              113            101
                                                       ---------      ---------
                                                             568            558
                                                       ---------      ---------
      Deferred tax asset:
          Federal                                           (551)          (351)
          State                                             (153)          (117)
                                                       ---------      ---------
                                                            (704)          (468)
                                                       ---------      ---------

      Net deferred tax (asset) liability               $    (136)     $      90
                                                       =========      =========


                                      F-27
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      INCOME TAXES (concluded)

      At June 30, 2006 and 2005, the tax effects of each item that gives rise to
      deferred taxes are as follows:


                                                         2006           2005
                                                      ----------     ----------
                                                           (In thousands)

      Cash basis of accounting                        $      (34)    $      (44)
      Net unrealized gain/loss on securities
          available for sale                                (193)            (5)
      Depreciation and amortization                          455            469
      Allowance for loan losses                             (398)          (356)
      Other                                                   34             26
                                                      ----------     ----------

      Net deferred tax (asset) liability              $     (136)    $       90
                                                      ==========     ==========

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

                                                         Years Ended June 30,
                                                      -------------------------
                                                         2006           2005
                                                      ----------     ----------
                                                            (In thousands)

      Balance at beginning of year                    $       90     $      105
      Deferred tax benefit                                   (38)           (67)
      Deferred tax effects on net unrealized
          gain/loss on securities available for sale        (188)            52
                                                      ----------     ----------

      Balance at end of year                          $     (136)    $       90
                                                      ==========     ==========

      At June 30,  2006,  the Bank has a capital loss  carryover of $61,000,  of
      which $10,000  expires on June 30, 2010,  and $51,000  expires on June 30,
      2011.

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


                                      F-28
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.   MINIMUM REGULATORY CAPITAL REQUIREMENTS

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

      Quantitative measures established by regulation to ensure capital adequacy
      require the Company and the Bank to maintain minimum amounts and ratios of
      Total  and  Tier 1  capital  (as  defined)  to  risk-weighted  assets  (as
      defined),  Tier 1 capital (as defined) to average  assets (as defined) and
      the Bank to maintain a minimum  amount and ratio of  tangible  capital (as
      defined) to tangible assets (as defined).  Management believes, as of June
      30,  2006 and  2005,  that the  Company  and the Bank  meets  all  capital
      adequacy requirements to which it is subject.


                                      F-29
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      MINIMUM REGULATORY CAPITAL REQUIREMENTS (continued)

      As of June 30,  2006,  the most  recent  notification  from the  Office of
      Thrift  Supervision  categorized  the Bank as well  capitalized  under the
      regulatory  framework for prompt  corrective  action. To be categorized as
      well capitalized,  the Bank must maintain minimum Total risk-based, Tier 1
      risk-based,  Tier 1  leverage  and  tangible  ratios  as set  forth in the
      following table. There are no conditions or events since that notification
      that management  believes have changed the Bank's category.  The Company's
      and the Bank's actual  capital  amounts and ratios as of June 30, 2006 and
      2005 are also presented in the table.

<TABLE>
<CAPTION>
                                                                                                                Minimum
                                                                                                               To Be Well
                                                                                       Minimum             Capitalized Under
                                                                                       Capital             Prompt Corrective
                                                           Actual                    Requirement           Action Provisions
                                                     --------------------        -------------------     --------------------
                                                     Amount         Ratio        Amount        Ratio     Amount         Ratio
                                                     ------         -----        ------        -----     ------         -----
                                                                               (Dollars in thousands)
<S>                                                 <C>             <C>         <C>              <C>     <C>             <C>
      June 30, 2006:

      Total Capital to Risk Weighted Assets
          Company                                   $ 20,005        18.1%       $  8,857         8.0%         N/A         N/A
          Bank                                        16,454        14.9           8,857         8.0     $ 11,071        10.0%
      Tier 1 Capital to Risk Weighted Assets
          Company                                     18,989        17.2           4,428         4.0          N/A         N/A
          Bank                                        15,441        13.9           4,428         4.0        6,642         6.0
      Tier 1 Capital to Average Assets
          Company                                     18,989        11.6           6,537         4.0          N/A         N/A
          Bank                                        15,441         9.4           6,537         4.0        8,171         5.0
      Tangible Capital to Tangible Assets:
          Company                                        N/A         N/A             N/A         N/A          N/A         N/A
          Bank                                        15,441         9.4           3,268         2.0          N/A         N/A

      June 30, 2005:

      Total Capital to Risk Weighted Assets:
          Company                                   $ 20,184        23.3%       $  6,939         8.0%         N/A         N/A
          Bank                                        16,618        19.2           6,939         8.0     $  8,674        10.0%
      Tier 1 Capital to Risk Weighted Assets:
          Company                                     19,302        22.3           3,469         4.0          N/A         N/A
          Bank                                        15,736        18.1           3,469         4.0        5,204         6.0
      Tier 1 Capital to Average Assets:
          Company                                     19,302        12.9           6,007         4.0          N/A         N/A
          Bank                                        15,736        10.4           6,048         4.0        7,560         5.0
      Tangible Capital to Tangible Assets:
          Company                                        N/A         N/A             N/A         N/A          N/A         N/A
          Bank                                        15,736        10.4           3,024         2.0          N/A         N/A
</TABLE>


                                      F-30
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      MINIMUM REGULATORY CAPITAL REQUIREMENTS (concluded)

      Other capital restrictions

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

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

<TABLE>
<CAPTION>
                                                                       June 30,
                                                               ----------------------
                                                                  2006         2005
                                                               ---------    ---------
                                                                    (In thousands)
<S>                                                            <C>          <C>
      Consolidated GAAP capital                                $  18,659    $  19,285
      Less: Unrealized losses on certain available-for-sale
            securities, net of tax                                   330           17
                                                               ---------    ---------
      Tier 1 capital                                              18,989       19,302
      Plus: Allowance for loan losses                              1,016          882
                                                               ---------    ---------

      Total regulatory capital                                 $  20,005    $  20,184
                                                               =========    =========
</TABLE>

13.   EMPLOYEE BENEFIT PLANS

      401(k) plan

      The Bank provides for a savings and  retirement  plan for employees  which
      qualifies  under Section  401(k) of the Internal  Revenue  Code.  The plan
      provides for voluntary  contributions by participating  employees  ranging
      from one  percent to fifteen  percent  of their  compensation,  subject to
      certain  limitations.   In  addition,   the  Bank  will  make  a  matching
      contribution, equal to 50% of the employee's contribution not to exceed 6%
      of an employee's  salary.  In addition,  the Bank may make a discretionary
      contribution not to exceed 3% of an employee's  salary. For the year ended
      June 30,  2006 and 2005,  expense  attributable  to the plan  amounted  to
      $83,000 and $75,000, respectively.


                                      F-31
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      EMPLOYEE BENEFIT PLANS (concluded)

      Incentive plan

      The Company has an Incentive  Plan (the "Plan")  whereby all employees are
      eligible to receive a bonus if the Company  meets or exceeds  certain base
      standards of performance for its fiscal year. The structure of the Plan is
      to be reviewed  on an annual  basis by the Board of  Directors.  Incentive
      compensation  expense for the years ended June 30, 2006 and 2005  amounted
      to $50,000 and $80,000, respectively.

      Executive supplemental retirement agreements

      The Bank has entered into supplemental  retirement agreements with certain
      executive officers.  These agreements provide for the payment of specified
      benefits.  In connection  with these  agreements the Bank has entered into
      split-dollar collateral assignments of life insurance policies included in
      other assets, on behalf of the executives. It was determined that the cash
      surrender  values of such policies  would not be sufficient to fulfill the
      entire liability under these agreements. For the years ended June 30, 2006
      and 2005, compensation expense applicable to these agreements and recorded
      in the accompanying  financial statements amounted to $33,000 and $32,000,
      respectively.

14.   EMPLOYEE STOCK OWNERSHIP PLAN

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

      The ESOP has a loan agreement with Georgetown Funding  Corporation whereby
      $1,000,000  was  borrowed  for the  purpose  of  purchasing  shares of the
      Company's common stock. The loan requires nine additional annual principal
      and  interest  payments of $117,000  and one payment of $57,000 due on the
      last business day of each year. The loan  documents  provide that the loan
      may be repaid over a shorter period, without penalty for prepayments.

      The Bank has  committed to make  contributions  to the ESOP  sufficient to
      support  the debt  service  of the loan.  The loan is only  secured by the
      shares purchased which are held in a suspense account for allocation among
      the  participants  as  the  loan  is  paid.  Total  compensation   expense
      applicable to the ESOP amounted to $67,000 and $173,000 for the year ended
      June 30, 2006 and 2005, respectively.


                                      F-32
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      EMPLOYEE STOCK OWNERSHIP PLAN (concluded)

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

      Allocated                                     22,229
      Committed to be allocated                      4,099
      Unallocated                                   73,653
                                                 ---------

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

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

15.   OTHER COMMITMENTS AND CONTINGENCIES

      Loan commitments

      The Company is a party to financial  instruments  with  off-balance  sheet
      risk in the normal course of business to meet the  financing  needs of its
      customers.  These  financial  instruments  include  commitments  to extend
      credit,  which involve elements of credit and interest rate risk in excess
      of the amount recognized in the accompanying  consolidated balance sheets.
      The Company's  exposure to credit loss is represented  by the  contractual
      amount of the  instruments.  The Company uses the same credit  policies in
      making commitments as it does for  on-balance-sheet  instruments.  At June
      30, 2006 and 2005, financial  instruments whose contract amounts represent
      credit risk consist of the following:


                                                            2006         2005
                                                         ---------    ---------
                                                            (In thousands)

      Commitments to grant loans                         $   3,279    $   3,498
      Unadvanced funds on home equity lines of credit       11,761       10,190
      Unadvanced funds on commercial lines of credit         1,242          722
      Unadvanced funds on construction loans                 2,861        3,451
      Unadvanced funds on other unsecured personal
           lines of credit                                     532          474

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


                                      F-33
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      OTHER COMMITMENTS AND CONTINGENCIES (concluded)

      Lease commitment

      Pursuant to the terms of noncancelable  lease agreements in effect at June
      30, 2006, pertaining to branch facilities, future minimum rent commitments
      are as follows:

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

                      2007                         $    152
                      2008                              152
                      2009                              155
                      2010                              157
                      2011                              167
                   Thereafter                         1,972
                                                   --------

                                                   $  2,755
                                                   ========

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

      Rent expense amounted to $113,000 and $50,000 for the years ended June 30,
      2006 and 2005, respectively.

      Employment agreement

      The Bank has entered into  employment  agreements with its Chief Executive
      Officer  ("CEO")  and Chief  Financial  Officer  ("CFO")  which  expire on
      January 5, 2008,  unless extended,  that generally provide for a specified
      minimum annual  compensation  and the  continuation of benefits  currently
      received.  The  employment  agreements  may be  terminated  for cause,  as
      defined, without incurring any continuing obligations.

      Other contingencies

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


                                      F-34
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.   LOANS TO RELATED PARTIES

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

                                                        Years Ended June 30,
                                                     -------------------------
                                                        2006           2005
                                                     ----------     ----------
                                                           (In thousands)

      Beginning balance                              $    2,264     $    2,057
      Originations                                           --            500
      Payments and change in status                        (192)          (293)
                                                     ----------     ----------

      Ending balance                                 $    2,072     $    2,264
                                                     ==========     ==========

17.   FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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


                                      F-35
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

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

            Loans: For variable-rate  loans that reprice  frequently and with no
            significant change in credit risk, fair values are based on carrying
            values.  Fair values for other loans are estimated using  discounted
            cash flow analyses, using interest rates currently being offered for
            loans with similar terms to borrowers of similar credit quality.

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

            Short-term borrowings: The carrying amounts of short-term borrowings
            approx-imate fair value.

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

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

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

            Off-balance-sheet  instruments:  Fair values for  off-balance-sheet,
            credit-related  financial  instruments  are based on fees  currently
            charged to enter into  similar  agreements,  taking into account the
            remaining  terms of the  agreements and the  counterparties'  credit
            standing.  At June 30, 2006 and 2005,  the fair value of commitments
            outstanding is not significant since fees charged are not material.


                                      F-36
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

      FAIR VALUE OF FINANCIAL INSTRUMENTS (concluded)

      The estimated fair values and related carrying  amounts,  of the Company's
      financial instruments are as follows:

<TABLE>
<CAPTION>
                                                                    June 30,
                                              ------------------------------------------------------
                                                        2006                         2005
                                              ------------------------      ------------------------
                                               Carrying        Fair          Carrying        Fair
                                                Amount         Value          Amount         Value
                                              ---------      ---------      ---------      ---------
                                                                 (In thousands)
<S>                                           <C>            <C>            <C>            <C>
      Financial assets:
        Cash and cash equivalents             $   3,977      $   3,977      $   5,078      $   5,078
        Securities available for sale            15,465         15,465         16,814         16,814
        Securities held to maturity               9,823          9,453         12,380         12,462
        Federal Home Loan Bank stock              2,905          2,905          2,526          2,526
        Loans, net                              128,778        119,501        114,781        110,105
        Accrued interest receivable                 674            674            680            680

      Financial liabilities:
        Deposits                                 96,571         98,990         90,336         92,420
        Short-term borrowings                    22,300         22,300         28,350         28,350
        Long-term FHLB advances                  28,921         28,624         18,468         18,356
        Securities sold under agreements
            to repurchase                           762            762            989            989
        Accrued interest payable                    206            206            139            139
</TABLE>


                                      F-37
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.   CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

      The condensed balance sheet of the Company is as follows:

<TABLE>
<CAPTION>
                                  BALANCE SHEET
                                                                             At June 30,
                                                                      ------------------------
                                                                         2006           2005
                                                                      ---------      ---------
                                                                            (In thousands)
<S>                                                                   <C>            <C>
      ASSETS

      Non-interest bearing deposit in Georgetown Savings Bank         $   2,592      $   2,562
      Investment in subsidiaries                                         16,153         16,742
                                                                      ---------      ---------

             Total assets                                             $  18,745      $  19,304
                                                                      =========      =========

                          LIABILITIES AND STOCKHOLDERS' EQUITY

      Other liabilities                                               $      86      $      19
      Stockholders' equity                                               18,659         19,285
                                                                      ---------      ---------

             Total liabilities and stockholders' equity               $  18,745      $  19,304
                                                                      =========      =========
</TABLE>

      The condensed statement of operations of the Company is as follows:

<TABLE>
<CAPTION>
                               STATEMENT OF OPERATIONS
                                                                         Years Ended June 30,
                                                                     -------------------------
                                                                        2006            2005
                                                                     ---------       ---------
                                                                          (In thousands)
<S>                                                                  <C>             <C>
      Non-interest expense                                           $      54       $      33
      Credit for income taxes                                               17              11
                                                                     ---------       ---------

      Loss before equity in undistributed net (loss) income
          of subsidiary                                                    (37)            (22)

      Equity in undistributed net (loss) income of subsidiary             (343)            250
                                                                     ---------       ---------

      Net (loss) income                                              $    (380)      $     228
                                                                     =========       =========
</TABLE>


                                      F-38
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

            CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (concluded)

            The condensed statement of cash flows of the Company is as follows:

<TABLE>
<CAPTION>
                                                                             Years Ended June 30,
                                                                        ---------------------------
                                                                            2006             2005
                                                                        ----------       ----------
                                                                              (In thousands)
<S>                                                                     <C>              <C>
      Cash flows from operating activities:
       Net (loss) income                                                $     (380)      $      228
        Adjustments to reconcile net (loss) income to net cash
          provided (used) by operating activities:
              Increase in other liabilities                                     67               19
              Equity in undistributed loss (income) of subsidiary              343             (250)
                                                                        ----------       ----------
                  Net cash provided (used) by operating activities              30               (3)
                                                                        ----------       ----------

      Cash flows from investing activities:
       Capital contribution to Georgetown Savings Bank                          --           (8,165)
                                                                        ----------       ----------
                  Net cash used by investing activities                         --           (8,165)
                                                                        ----------       ----------

      Cash flows from financing activities:
       Net proceeds from issuance of common stock                               --           10,730
                                                                        ----------       ----------
                  Net cash provided by financing activities                     --           10,730
                                                                        ----------       ----------

      Net change in cash and cash equivalents                                   30            2,562

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

      Cash and cash equivalents at end of year                          $    2,592       $    2,562
                                                                        ==========       ==========
</TABLE>


                                      F-39
<PAGE>

                    GEORGETOWN BANCORP, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded))

19.   QUARTERLY DATA (UNAUDITED)

      A summary of  consolidated  operating  results on a quarterly  basis is as
      follows:

<TABLE>
<CAPTION>
                                                                               Years Ended June 30,
                                           ----------------------------------------------------------------------------------------
                                                              2006                                           2005
                                           -------------------------------------------    -----------------------------------------
                                           Fourth       Third      Second       First     Fourth       Third      Second     First
                                           Quarter     Quarter     Quarter     Quarter    Quarter     Quarter    Quarter    Quarter
                                           -------     -------     -------     -------    -------     -------    -------    -------
                                                                     (In thousands, except per share data)
<S>                                        <C>         <C>         <C>         <C>        <C>         <C>        <C>        <C>
      Interest and dividend income         $ 2,088     $ 2,071     $ 2,012     $ 1,956    $ 1,931     $ 1,827    $ 1,738    $ 1,633
      Interest expense                       1,175       1,058         973         872        763         695        673        602
                                           -------     -------     -------     -------    -------     -------    -------    -------

      Net interest income                      913       1,013       1,039       1,084      1,168       1,132      1,065      1,031
      Provision for loan losses                 50          --          25          33         48          30         18         18
                                           -------     -------     -------     -------    -------     -------    -------    -------

      Net interest income, after
        provision for loan losses              863       1,013       1,014       1,051      1,120       1,102      1,047      1,013
      Other income                             104         134         107         109        104         100         98         99
      Other expense                          1,374       1,252       1,212       1,110      1,458       1,109        862        917
                                           -------     -------     -------     -------    -------     -------    -------    -------

      Income (loss) before income taxes       (407)       (105)        (91)         50       (234)         93        283        195

      Income tax expense (benefit)            (116)        (39)        (34)         16        (85)         27         99         68
                                           -------     -------     -------     -------    -------     -------    -------    -------

      Net income (loss)                    $  (291)    $   (66)    $   (57)    $    34    $  (149)    $    66    $   184    $   127
                                           =======     =======     =======     =======    =======     =======    =======    =======

      Earning (loss) per share:
        Basic and diluted                  $ (0.11)    $ (0.02)    $ (0.02)    $  0.01    $ (0.06)        n/a        n/a        n/a
</TABLE>


                                      F-40
<PAGE>

                             STOCKHOLDER INFORMATION

DIRECTORS

EDWARD G. WILLIAMS, CHAIRMAN             T. LOUIS HAMELIN
ROBERT E. BALLETTO                       THOMAS L. HAMELIN
ROY C. CARLSON                           CALVIN H. PINGREE
DAVID H. CONDON                          ARTHUR J. RAUSEO
ANTHONY S. CONTE, JR.                    ROBERT P. RUDOLPH
RAYMOND W. DEZENZO, JR.                  RICHARD F. SPENCER
STEPHEN L. FLYNN                         MARY L. WILLIAMS

SENIOR OFFICERS

ROBERT E. BALLETTO, PRESIDENT AND CHIEF EXECUTIVE OFFICER
JOSEPH W. KENNEDY, SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
WENDY A. GIRROIR, VICE PRESIDENT/HUMAN RESOURCES
HOLLY E. POULIOT, VICE PRESIDENT/MIS
JOSEPH R. POLLARD, VICE PRESIDENT/RETAIL BANKING
ROBERT G. RIVARD, VICE PRESIDENT/SENIOR LOAN OFFICER

INDEPENDENT AUDITORS                        LEGAL COUNSEL

WOLF & COMPANY, PC                          LUSE GORMAN POMERENK & SCHICK, P.C.
99 HIGH STREET                              5335 WISCONSIN AVENUE, N.W.
BOSTON, MA 02110                            SUITE 400
(617) 439-9700                              WASHINGTON, DC  20015-2035

REGISTRAR AND TRANSFER AGENT                STOCK LISTING

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

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

ANNUAL REPORT ON FORM 10-KSB

ADDITIONAL COPIES OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 2006, ARE AVAILABLE UPON WRITTEN REQUEST TO:

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

<PAGE>

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

GEORGETOWN

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

ROWLEY

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

NORTH ANDOVER

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

WWW.GEORGETOWNSB.COM

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

--------------------------------------------------------------------------------

                                                          THERE IS A DIFFERENCE.

--------------------------------------------------------------------------------