----

|   | Delaware                                       |   |                                                            |   | 04-3445675                  |   |
|--------|------------------------------------------------|--------|-----------------------------------------------------------------|--------|-----------------------------|--------|
|   | (State      or Other Jurisdiction of           |   |                                                            |   | (I.R.S      Employer        |   |
|   | Incorporation      or Organization)            |   |                                                            |   | Identification      No.)    |   |
|   |                                           |   |                                                            |   |                        |   |
|   | One Conant Street, Danvers,      Massachusetts |   |                                                            |   | 01923                       |   |
|   | (Address      of Principal Executive Officers) |   |                                                            |   |   (Zip      Code) |   |
|   |                                           |   |                                                            |   |                        |   |
|   |                                           |   |        (978) 777-2200                                      |        |                        |   |
|   |                                           |   | (Registrant’s      telephone number, including area code) |   |                             |   |

| Large      accelerated filer o | Accelerated      filer x |
|--------------------------------|--------------------------|

| Non-accelerated      filer o (Do      not check if smaller reporting company) | Smaller      reporting company o |
|-------------------------------------------------------------------------------|----------------------------------|

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TABLE OF CONTENTS

|                                          |                                                                                  |
|-----------------------------------------------|---------------------------------------------------------------------------------------|
|                                          |                                                                                  |   | Page |
| PART      I.  FINANCIAL INFORMATION |                                                                                  |
|                                          |                                                                                  |   |   |
| Item 1.                                       | Financial Statements (Unaudited)                                                      |   |
|                                          | -                                                                                     | Consolidated Balance Sheets as of September 30, 2009 and      December 31, 2008 | 3 |
|                                          |                                                                                  |   |   |
|                                          | -                                                                                     | Consolidated Statements of Operations for the Three and      Nine Months Ended |   |
|                                          |                                                                                  | September 30, 2009 and 2008 | 4 |
|                                          |                                                                                  |   |   |
|                                          | -                                                                                     | Consolidated Statements of Changes in      Stockholders' Equity for the |   |
|                                          |                                                                                  | Nine Months Ended September 30, 2009 and      2008 | 5 |
|                                          |                                                                                  |   |   |
|                                          | -                                                                                     | Consolidated Statements of Cash Flows for the Nine      Months Ended |   |
|                                          |                                                                                  | September 30, 2009 and 2008 | 6 |
|                                          |                                                                                  |   |   |
|                                          | -                                                                                     | Notes to Consolidated Financial      Statements | 8 |
|                                          |                                                                                  |   |   |
| Item 2.                                       | Management’s Discussion and Analysis of Financial Condition      and Results of |   |
|                                          | Operations                                                                            | 20 |
|                                          |                                                                                  |   |   |
| Item 3.                                       | Quantitative and Qualitative Disclosures About Market      Risk                       | 35 |
|                                          |                                                                                  |   |   |
| Item 4.                                       | Controls and Procedures                                                               | 37 |
|                                          |                                                                                  |   |   |
| PART      II.  OTHER INFORMATION    |                                                                                  |
|                                          |                                                                                  |   |   |
| Item 1.                                       | Legal Proceedings                                                                     | 38 |
|                                          |                                                                                  |   |   |
| Item 1A.                                      | Risk Factors                                                                          | 38 |
|                                          |                                                                                  |   |   |
| Item 2.                                       | Unregistered Sales of Equity Securities      and Use of Proceeds                      | 39 |
|                                          |                                                                                  |   |   |
| Item 3.                                       | Defaults Upon Senior Securities                                                       | 39 |
|                                          |                                                                                  |   |   |
| Item 4.                                       | Submission of Matters to a Vote of Security      Holders                              | 40 |
|                                          |                                                                                  |   |   |
| Item 5.                                       | Other Information                                                                     | 40 |
|                                          |                                                                                  |   |   |
| Item 6.                                       | Exhibits                                                                              | 41 |

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Table of Contents

PART

|                                                                                     |   | September      30,  |      |   | December      31, |   |
|------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|-------------------|--------|
|                                                                                     |   | 2009                |      |   | 2008              |   |
|                                                                                     |   | (In      thousands) |      |
| ASSETS                                                                                   |   |
| Cash      and cash equivalents                                                           |   | $                   | 37,603    |   |              | $      | 33,129 |   |
| Certificates      of deposit                                                             |   |                | 10,588    |   |              |   | 10,291 |   |
| Securities      available for sale, at fair value                                        |   |                | 509,091   |   |              |   | 490,845 |   |
| Securities      held to maturity, at cost                                                |   |                | 10,000    |   |              |   | - |   |
| Loans      held for sale                                                                 |   |                | 1,625     |   |              |   | - |   |
| Loans                                                                                    |   |                | 1,243,409 |   |              |   | 1,118,948 |   |
| Less      allowance for loan losses                                                      |   |                | (13,878   | )      |              |   | (12,133 | ) |
| Loans,      net                                                                          |   |                | 1,229,531 |   |              |   | 1,106,815 |   |
|                                                                                     |   |                |      |   |              |   |   |   |
| Federal      Home Loan Bank stock, at cost                                               |   |                | 14,001    |   |              |   | 14,001 |   |
| Premises      and equipment, net                                                         |   |                | 26,616    |   |              |   | 22,877 |   |
| Bank-owned      life insurance                                                           |   |                | 25,379    |   |              |   | 24,826 |   |
| Other      real estate owned                                                             |   |                | 1,867     |   |              |   | 1,158 |   |
| Accrued      interest receivable                                                         |   |                | 8,250     |   |              |   | 7,457 |   |
| Deferred      tax asset, net                                                             |   |                | 7,312     |   |              |   | 6,955 |   |
| Other      assets                                                                        |   |                | 10,997    |   |              |   | 9,455 |   |
|                                                                                     |   | $                   | 1,892,860 |   |              | $      | 1,727,809 |   |
|                                                                                     |   |                |      |   |              |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                |   |
| Deposits:                                                                                |   |                |      |   |              |   |   |   |
| Demand      deposits                                                                     |   | $                   | 132,910   |   |              | $      | 123,414 |   |
| Savings      and NOW accounts                                                            |   |                | 207,198   |   |              |   | 176,365 |   |
| Money      market accounts                                                               |   |                | 568,177   |   |              |   | 440,931 |   |
| Term      certificates over $100,000                                                     |   |                | 284,410   |   |              |   | 242,846 |   |
| Other      term certificates                                                             |   |                | 181,354   |   |              |   | 134,727 |   |
| Total      deposits                                                                      |   |                | 1,374,049 |   |              |   | 1,118,283 |   |
| Short-term      borrowings                                                               |   |                | 87,104    |   |              |   | 168,276 |   |
| Long-term      debt                                                                      |   |                | 161,867   |   |              |   | 163,022 |   |
| Subordinated      debt                                                                   |   |                | 29,965    |   |              |   | 29,965 |   |
| Accrued      expenses and other liabilities                                              |   |                | 13,731    |   |              |   | 15,255 |   |
| Total      liabilities                                                                   |   |                | 1,666,716 |   |              |   | 1,494,801 |   |
| Stockholders'      equity:                                                               |   |                |      |   |              |   |   |   |
| Preferred      stock; $0.01 par value, 10,000,000 shares authorized;                     |   |                |      |   |              |   |   |   |
| none      issued                                                                         |   |                | -         |   |              |   | - |   |
| Common      stock; $0.01 par value, 60,000,000 shares authorized; 17,842,500      shares |   |                |      |   |              |   |   |   |
| issued                                                                                   |   |                | 178       |   |              |   | 178 |   |
| Additional      paid-in capital                                                          |   |                | 175,124   |   |              |   | 174,510 |   |
| Retained      earnings                                                                   |   |                | 69,558    |   |              |   | 67,854 |   |
| Accumulated      other comprehensive income                                              |   |                | 6,194     |   |              |   | 4,026 |   |
| Unearned      restricted shares                                                          |   |                | (7,209    | )      |              |   | - |   |
| Unearned      compensation - ESOP; 1,302,503 and 1,356,030 shares at                     |   |                |      |   |              |   |   |   |
| September      30, 2009 and December 31, 2008, respectively                              |   |                | (13,025   | )      |              |   | (13,560 | ) |
| Treasury      stock, at cost; 362,793 and 0 shares at September 30, 2009    and          |   |                |      |   |              |   |   |   |
| December      31, 2008, respectively                                                     |   |                | (4,676    | )      |              |   | - |   |
| Total      stockholders' equity                                                          |   |                | 226,144   |   |              |   | 233,008 |   |
|                                                                                     |   | $                   | 1,892,860 |   |              | $      | 1,727,809 |   |

----

Table of Contents

CONSOLIDATED

|                                                                      |   | Three      Months Ended                               |       |   | Nine      Months Ended |   |
|---------------------------------------------------------------------------|--------|-------------------------------------------------------|------------|--------|------------------------|--------|
|                                                                      |   | September      30,                                    |       |   | September      30,     |   |
|                                                                      |   | 2009                                                  |       |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
|                                                                      |   | (Dollars      in thousands, except per share amounts) |       |
| Interest      and dividend income:                                        |   |                                                  |       |   |                   |   |   |   |   |   |   |   |
| Interest      and fees on loans                                           |   | $                                                     | 17,448     |   |                   | $      | 16,247 |   |   | $ | 49,767 |   |   | $ | 47,665 |   |
| Interest      on debt securities:                                         |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                   |   |                                                  | 5,262      |   |                   |   | 4,183 |   |   |   | 15,780 |   |   |   | 13,863 |   |
| Non-taxable                                                               |   |                                                  | 235        |   |                   |   | 195 |   |   |   | 658 |   |   |   | 578 |   |
| Dividends      on equity securities                                       |   |                                                  | -          |   |                   |   | 91 |   |   |   | 1 |   |   |   | 301 |   |
| Interest      on cash equivalents and certificates of deposit             |   |                                                  | 97         |   |                   |   | 276 |   |   |   | 292 |   |   |   | 959 |   |
| Total      interest and dividend income                                   |   |                                                  | 23,042     |   |                   |   | 20,992 |   |   |   | 66,498 |   |   |   | 63,366 |   |
|                                                                      |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                                                    |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      on deposits:                                                |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      and NOW accounts                                             |   |                                                  | 647        |   |                   |   | 551 |   |   |   | 1,842 |   |   |   | 1,762 |   |
| Money      market accounts                                                |   |                                                  | 2,828      |   |                   |   | 2,692 |   |   |   | 8,711 |   |   |   | 8,716 |   |
| Term      certificates                                                    |   |                                                  | 3,069      |   |                   |   | 3,333 |   |   |   | 9,100 |   |   |   | 10,927 |   |
| Interest      on short-term borrowings                                    |   |                                                  | 62         |   |                   |   | 108 |   |   |   | 269 |   |   |   | 427 |   |
| Interest      on long-term debt and subordinated debt                     |   |                                                  | 2,291      |   |                   |   | 2,423 |   |   |   | 6,916 |   |   |   | 7,035 |   |
| Total      interest expense                                               |   |                                                  | 8,897      |   |                   |   | 9,107 |   |   |   | 26,838 |   |   |   | 28,867 |   |
| Net      interest income                                                  |   |                                                  | 14,145     |   |                   |   | 11,885 |   |   |   | 39,660 |   |   |   | 34,499 |   |
| Provision      for loan losses                                            |   |                                                  | 1,400      |   |                   |   | 1,050 |   |   |   | 3,360 |   |   |   | 2,725 |   |
| Net      interest income, after provision for loan losses                 |   |                                                  | 12,745     |   |                   |   | 10,835 |   |   |   | 36,300 |   |   |   | 31,774 |   |
|                                                                      |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      income:                                                 |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Service      charges on deposits                                          |   |                                                  | 869        |   |                   |   | 686 |   |   |   | 2,503 |   |   |   | 1,972 |   |
| Loan      servicing fees                                                  |   |                                                  | 34         |   |                   |   | 56 |   |   |   | 63 |   |   |   | 167 |   |
| Gain      on sales of loans                                               |   |                                                  | 87         |   |                   |   | 90 |   |   |   | 772 |   |   |   | 186 |   |
| Net      gain (loss) on sales of securities                               |   |                                                  | 4          |   |                   |   | (26 | ) |   |   | 4 |   |   |   | 887 |   |
| Net      increase in cash surrender value of bank-owned life    insurance |   |                                                  | 231        |   |                   |   | 241 |   |   |   | 553 |   |   |   | 841 |   |
| Other      operating income                                               |   |                                                  | 442        |   |                   |   | 394 |   |   |   | 1,284 |   |   |   | 1,308 |   |
| Total      non-interest income                                            |   |                                                  | 1,667      |   |                   |   | 1,441 |   |   |   | 5,179 |   |   |   | 5,361 |   |
|                                                                      |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      expenses:                                               |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                                       |   |                                                  | 7,397      |   |                   |   | 5,855 |   |   |   | 21,618 |   |   |   | 21,495 |   |
| Occupancy                                                                 |   |                                                  | 1,372      |   |                   |   | 1,270 |   |   |   | 4,254 |   |   |   | 3,765 |   |
| Equipment                                                                 |   |                                                  | 877        |   |                   |   | 811 |   |   |   | 2,464 |   |   |   | 2,358 |   |
| Outside      services                                                     |   |                                                  | 328        |   |                   |   | 295 |   |   |   | 1,140 |   |   |   | 846 |   |
| Contribution      to the Danversbank Charitable Foundation                |   |                                                  | -          |   |                   |   | - |   |   |   | - |   |   |   | 6,850 |   |
| Other      real estate owned expense                                      |   |                                                  | 159        |   |                   |   | 225 |   |   |   | 426 |   |   |   | 1,911 |   |
| Deposit      insurance expense                                            |   |                                                  | 415        |   |                   |   | 179 |   |   |   | 2,115 |   |   |   | 521 |   |
| Other      operating expense                                              |   |                                                  | 2,496      |   |                   |   | 2,018 |   |   |   | 6,398 |   |   |   | 5,300 |   |
| Total      non-interest expenses                                          |   |                                                  | 13,044     |   |                   |   | 10,653 |   |   |   | 38,415 |   |   |   | 43,046 |   |
| Income      (loss) before income taxes                                    |   |                                                  | 1,368      |   |                   |   | 1,623 |   |   |   | 3,064 |   |   |   | (5,911 | ) |
| Provision      (benefit) for income taxes                                 |   |                                                  | 205        |   |                   |   | 1,575 |   |   |   | 383 |   |   |   | (3,245 | ) |
| Net      income (loss)                                                    |   | $                                                     | 1,163      |   |                   | $      | 48 |   |   | $ | 2,681 |   |   | $ | (2,666 | ) |
|                                                                      |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average      shares outstanding:                                 |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                     |   |                                                  | 15,662,796 |   |                   |   | 16,450,979 |   |   |   | 15,993,596 |   |   |   | N/A |   |
| Diluted                                                                   |   |                                                  | 15,734,543 |   |                   |   | 16,450,979 |   |   |   | 16,038,584 |   |   |   | N/A |   |
|                                                                      |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share:                                                  |   |                                                  |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                     |   | $                                                     | 0.074      |   |                   | $      | 0.003 |   |   | $ | 0.168 |   |   |   | N/A |   |
| Diluted                                                                   |   | $                                                     | 0.074      |   |                   | $      | 0.003 |   |   | $ | 0.167 |   |   |   | N/A |   |

----

Table of Contents

CONSOLIDATED

|                                   |                        |       |    |   |       |   |     |          |   | Accumulated        |   |     |                |   |     |     |   |   |          |   |   |    |
|----------------------------------------|-----------------------------|------------|---------|--------|------------|--------|----------|---------------|--------|--------------------|--------|----------|---------------------|--------|----------|----------|--------|--------|---------------|--------|--------|---------|
|                                   |                        |       |    |   | Additional |   |     |          |   | Other              |   | Unearned |                |   | Unearned |     |   |   |          |   | Total  |    |
|                                   | Common      Stock           |       | Paid-In |   | Retained   |   |     | Comprehensive |   | Restricted         |   |     | Compensation      - |   |     | Treasury |   |   | Stockholders' |   |
|                                   | Shares                      |       | Amount  |   | Capital    |   | Earnings |          |   | Income      (Loss) |   | Shares   |                |   | ESOP     |     |   | Stock  |          |   | Equity |    |
|                                   | (Dollars      in thousands) |       |
|                                   |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |
| Balance      at December 31, 2007      |                        | -          |    | $      | -          |   | $        | -             |   | $                  | 71,213 |     |                | $      | 2,283    |     | $      | -      |          |   | $      | -       |   |   | $ | - |   |   | $ | 73,496 |   |
| Comprehensive      loss:               |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| Net      loss                          |                        | -          |    |   | -          |   |     | -             |   |               | (2,666 | )        |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | - |   |   |   | (2,666 | ) |
| Net      unrealized loss on securities |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| available      for sale, net of        |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| reclassification      adjustment       |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| and      tax effect                    |                        | -          |    |   | -          |   |     | -             |   |               | -      |     |                |   | (2,735   | )        |   | -      |          |   |   | -       |   |   |   | - |   |   |   | (2,735 | ) |
| Change      in fair value and          |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| amortization      of derivative used   |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |
| for      cash flow hedge, net of       |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| tax      effect                        |                        | -          |    |   | -          |   |     | -             |   |               | -      |     |                |   | (3       | )        |   | -      |          |   |   | -       |   |   |   | - |   |   |   | (3 | ) |
| Total      comprehensive loss          |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   | (5,404 | ) |
| Issuance      of common stock for      |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| initial      public offering, net of   |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| expenses      of $3,850                |                        | 17,192,500 |    |   | 172        |   |     | 167,902       |   |               | -      |     |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | - |   |   |   | 168,074 |   |
| Issuance      of common stock to       |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| the      Danversbank Charitable        |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| Foundation                             |                        | 650,000    |    |   | 6          |   |     | 6,494         |   |               | -      |     |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | - |   |   |   | 6,500 |   |
| Stock      purchased by ESOP           |                        | -          |    |   | -          |   |     | -             |   |               | -      |     |                |   | -        |     |   | -      |          |   |   | (14,274 | ) |   |   | - |   |   |   | (14,274 | ) |
| Common      stock held by ESOP         |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| committed      to be released          |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| (47,580      shares)                   |                        | -          |    |   | -          |   |     | 58            |   |               | -      |     |                |   | -        |     |   | -      |          |   |   | 476     |   |   |   | - |   |   |   | 534 |   |
| Dividends      paid                    |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| ($.02      per share)                  |                        | -          |    |   | -          |   |     | -             |   |               | (357   | )        |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | - |   |   |   | (357 | ) |
| Balance      at September 30, 2008     |                        | 17,842,500 |    | $      | 178        |   | $        | 174,454       |   | $                  | 68,190 |     |                | $      | (455     | )        | $      | -      |          |   | $      | (13,798 | ) |   | $ | - |   |   | $ | 228,569 |   |
|                                   |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008      |                        | 17,842,500 |    | $      | 178        |   | $        | 174,510       |   | $                  | 67,854 |     |                | $      | 4,026    |     | $      | -      |          |   | $      | (13,560 | ) |   | $ | - |   |   | $ | 233,008 |   |
| Comprehensive      income:             |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| Net      income                        |                        | -          |    |   | -          |   |     | -             |   |               | 2,681  |     |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | - |   |   |   | 2,681 |   |
| Net      unrealized gain on securities |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| available      for sale, net of        |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| reclassification      adjustment       |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| and      tax effect                    |                        | -          |    |   | -          |   |     | -             |   |               | -      |     |                |   | 2,171    |     |   | -      |          |   |   | -       |   |   |   | - |   |   |   | 2,171 |   |
| Change      in fair value and          |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| amortization      of derivative used   |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |
| for      cash flow hedge, net of       |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| tax      effect                        |                        | -          |    |   | -          |   |     | -             |   |               | -      |     |                |   | (3       | )        |   | -      |          |   |   | -       |   |   |   | - |   |   |   | (3 | ) |
| Total      comprehensive income        |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   | 4,849 |   |
| Purchase      of shares for incentive  |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| plans      (713,700 shares)            |                        | -          |    |   | -          |   |     | (8,667        | )      |               | -      |     |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | (1,001 | ) |   |   | (9,668 | ) |
| Restricted      stock awards           |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| (639,807      shares)                  |                        | -          |    |   | -          |   |     | 8,317         |   |               | -      |     |                |   | -        |     |   | (8,317 | )             |   |   | -       |   |   |   | - |   |   |   | - |   |
| Purchase      of shares for Stock      |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| Repurchase      plan (288,900 shares)  |                        | -          |    |   | -          |   |     | -             |   |               | -      |     |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | (3,675 | ) |   |   | (3,675 | ) |
| Equity      incentive shares earned    |                        | -          |    |   | -          |   |     | 786           |   |               | -      |     |                |   | -        |     |   | 1,108  |          |   |   | -       |   |   |   | - |   |   |   | 1,894 |   |
| Common      stock held by ESOP         |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| committed      to be released          |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| (53,527      shares)                   |                        | -          |    |   | -          |   |     | 178           |   |               | -      |     |                |   | -        |     |   | -      |          |   |   | 535     |   |   |   | - |   |   |   | 713 |   |
| Dividends      paid                    |                        |       |    |   |       |   |     |          |   |               |   |     |                |   |     |     |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |
| ($.06      per share)                  |                        | -          |    |   | -          |   |     | -             |   |               | (977   | )        |                |   | -        |     |   | -      |          |   |   | -       |   |   |   | - |   |   |   | (977 | ) |
| Balance      at September 30, 2009     |                        | 17,842,500 |    | $      | 178        |   | $        | 175,124       |   | $                  | 69,558 |     |                | $      | 6,194    |     | $      | (7,209 | )             |   | $      | (13,025 | ) |   | $ | (4,676 | ) |   | $ | 226,144 |   |

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Table of Contents

CONSOLIDATED

|                                                                                            |   | Nine      Months Ended |     |
|-------------------------------------------------------------------------------------------------|--------|------------------------|----------|
|                                                                                            |   | September      30,     |     |
|                                                                                            |   | 2009                   |     |   | 2008 |   |
|                                                                                            |   | (In      thousands)    |     |
| Cash      flows from operating activities:                                                      |   |                   |     |   |   |   |
| Net      income (loss)                                                                          |   | $                      | 2,681    |   |   | $ | (2,666 | ) |
| Adjustments      to reconcile net income (loss) to net cash provided by                         |   |                   |     |   |   |   |   |   |
| operating      activities:                                                                      |   |                   |     |   |   |   |   |   |
| Provision      for loan losses                                                                  |   |                   | 3,360    |   |   |   | 2,725 |   |
| Write-down      of other real estate owned net of gain on sales of other real estate      owned |   |                   | 74       |   |   |   | 1,387 |   |
| Depreciation      and amortization                                                              |   |                   | 2,629    |   |   |   | 2,682 |   |
| Accretion      of net deferred loan fees and costs                                              |   |                   | (465     | ) |   |   | (391 | ) |
| Deferred      tax benefit                                                                       |   |                   | (1,867   | ) |   |   | (1,873 | ) |
| Amortization      of core deposit intangible and servicing rights                               |   |                   | 311      |   |   |   | 157 |   |
| Amortization      of stock-based compensation and ESOP expense                                  |   |                   | 2,607    |   |   |   | 534 |   |
| Amortization      of securities, net                                                            |   |                   | 282      |   |   |   | 209 |   |
| Net      gain on sales of securities                                                            |   |                   | (4       | ) |   |   | (887 | ) |
| Loans      originated for sale                                                                  |   |                   | (62,556  | ) |   |   | (14,341 | ) |
| Proceeds      from sales of loans originated for sale                                           |   |                   | 60,931   |   |   |   | 13,519 |   |
| Issuance      of common stock to Danversbank Charitable Foundation                              |   |                   | -        |   |   |   | 6,500 |   |
| Changes      in other assets and liabilities:                                                   |   |                   |     |   |   |   |   |   |
| Accrued      interest receivable                                                                |   |                   | (793     | ) |   |   | 187 |   |
| Other      assets and bank-owned life insurance                                                 |   |                   | (2,412   | ) |   |   | (4,071 | ) |
| Accrued      expenses and other liabilities                                                     |   |                   | (1,524   | ) |   |   | (2,836 | ) |
| Net      cash provided by operating activities                                                  |   |                   | 3,254    |   |   |   | 835 |   |
| Cash      flows from investing activities:                                                      |   |                   |     |   |   |   |   |   |
| Activity      in available-for-sale securities:                                                 |   |                   |     |   |   |   |   |   |
| Sales                                                                                           |   |                   | 6,803    |   |   |   | 106,014 |   |
| Maturities,      prepayments and calls                                                          |   |                   | 139,852  |   |   |   | 142,245 |   |
| Purchases                                                                                       |   |                   | (161,495 | ) |   |   | (216,826 | ) |
| Activity      in held-to-maturity securities:                                                   |   |                   |     |   |   |   |   |   |
| Purchases                                                                                       |   |                   | (10,000  | ) |   |   | - |   |
| Purchases      of certificates of deposit                                                       |   |                   | (297     | ) |   |   | - |   |
| Purchase      of Federal Home Loan Bank stock                                                   |   |                   | -        |   |   |   | (849 | ) |
| Funds      advanced on other real estate owned                                                  |   |                   | (384     | ) |   |   | (795 | ) |
| Proceeds      from sales of other real estate owned                                             |   |                   | 1,766    |   |   |   | 2,839 |   |
| Net      loan originations                                                                      |   |                   | (127,776 | ) |   |   | (165,830 | ) |
| Purchase      of premises and equipment                                                         |   |                   | (6,368   | ) |   |   | (6,131 | ) |
| Proceeds      from sale of premises and equipment                                               |   |                   | -        |   |   |   | 100 |   |
| Net      cash used in investing activities                                                      |   |                   | (157,899 | ) |   |   | (139,233 | ) |

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Table of Contents

|                                                    |   | Nine      Months Ended |    |
|---------------------------------------------------------|--------|------------------------|---------|
|                                                    |   | September      30,     |    |
|                                                    |   | 2009                   |    |   | 2008 |   |
|                                                    |   | (In      thousands)    |    |
| Cash      flows from financing activities:              |   |                   |    |   |   |   |
| Net      increase (decrease) in:                        |   |                   |    |   |   |   |
| Term      certificates                                  |   | $                      | 88,191  |   |   | $ | 28,581 |   |
| Other      deposits                                     |   |                   | 167,575 |   |   |   | 98,643 |   |
| Short-term      borrowings                              |   |                   | (81,172 | ) |   |   | 11,241 |   |
| Stock      subscriptions                                |   |                   | -       |   |   |   | (162,859 | ) |
| Activity      in long-term debt:                        |   |                   |    |   |   |   |   |   |
| Proceeds      from advances                             |   |                   | -       |   |   |   | 25,000 |   |
| Payment      of advances                                |   |                   | (1,155  | ) |   |   | (6,334 | ) |
| Net      proceeds from issuance of common stock         |   |                   | -       |   |   |   | 168,074 |   |
| Acquisition      of common stock by ESOP                |   |                   | -       |   |   |   | (14,274 | ) |
| Purchase      of shares for incentive plans             |   |                   | (13,343 | ) |   |   | - |   |
| Dividends      paid                                     |   |                   | (977    | ) |   |   | (357 | ) |
| Net      cash provided by financing activities          |   |                   | 159,119 |   |   |   | 147,715 |   |
| Change      in cash and cash equivalents                |   |                   | 4,474   |   |   |   | 9,317 |   |
| Cash      and cash equivalents at beginning of period   |   |                   | 33,129  |   |   |   | 65,862 |   |
| Cash      and cash equivalents at end of period         |   | $                      | 37,603  |   |   | $ | 75,179 |   |
|                                                    |   |                   |    |   |   |   |   |   |
| Supplementary      disclosure of cash flow information: |   |                   |    |   |   |   |   |   |
| Cash      paid during the period for:                   |   |                   |    |   |   |   |   |   |
| Interest                                                |   | $                      | 26,768  |   |   | $ | 28,675 |   |
| Income      taxes                                       |   |                   | 1,068   |   |   |   | 1,141 |   |
| Non-cash      financing and investing activities:       |   |                   |    |   |   |   |   |   |
| Unsettled      securities transactions                  |   |                   | -       |   |   |   | 5,500 |   |
| Transfers      from loans to other real estate owned    |   |                   | 2,165   |   |   |   | 700 |   |

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Table of Contents

NOTES

| 1. | Basis      of Presentation |
|----|----------------------------|

| 2. | Derivative      Financial Instruments and HedgingActivities |
|----|-------------------------------------------------------------|

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Table of Contents

|                                       | September      30, 2009 |   | December      31, 2008 |   |
|--------------------------------------------|-------------------------|--------|------------------------|--------|
|                                       | Balance      Sheet      |   | Fair                   |   | Balance      Sheet |   | Fair |   |
|                                       | Location                |   | Value                  |   | Location |   | Value |   |
|                                       | (In      thousands)     |   |
| Derivatives      not designated as hedging |                    |   |                   |   |   |   |   |   |
| Instruments Under ASC Topic      815:      |                    |   |                   |   |   |   |   |   |
|                                       |                    |   |                   |   |   |   |   |   |
| Interest      rate swap agreements         | Other      assets       |   | $                      | 1,350  |   | Other      assets |   | $ | 1,761 |   |
| Interest      rate cap agreements          | Other      assets       |   |                   | 144    |   | Other      assets |   |   | - |   |
| Total      interest rate products          |                    |   | $                      | 1,494  |   |   |   | $ | 1,761 |   |
|                                       |                    |   |                   |   |   |   |   |   |   |   |
| Interest      rate swap agreements         | Other      liabilities  |   | $                      | 1,368  |   | Other      liabilities |   | $ | 1,796 |   |
| Interest      rate cap agreements          | Other      liabilities  |   |                   | 139    |   | Other      liabilities |   |   | - |   |
| Total      interest rate products          |                    |   | $                      | 1,507  |   |   |   | $ | 1,796 |   |

|                                                                |                                          |   | Amount      Recognized   |   |   | Amount Recognized        |    |
|---------------------------------------------------------------------|-----------------------------------------------|--------|--------------------------|--------|--------|--------------------------|---------|
|                                                                |                                          |   | in Income on             |   |   | in      Income on        |    |
|                                                                |                                          |   | Derivatives      for the |   |   | Derivatives      for the |    |
|  Derivatives      Not Designated as Hedging                    |  Location      of Gain (Loss) Recognized |   | Three      Months Ended  |   |   | Nine      Months Ended   |    |
|  Instruments      Under ASC Topic 815                          |  in      Income on Derivative            |   | September      30, 2009  |   |   | September      30, 2009  |    |
|                                                                |                                          |   | (In    thousands)        |   |
|  Interest rate      swap agreements                            |  Other      income                       |   |  $                  | 1      |   |                     |  $ | 18 |   |
|  Interest rate      cap agreements                             |  Other      income                       |   |                     | (1     | )      |                     |    | 4 |   |
|     Total income on      interest rate products |                                          |   |  $                  | -      |   |                     |  $ | 22 |   |
|                                                                |                                          |   |                     |   |   |                     |    |   |   |

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Table of Contents

|  3. | Securities |
|----------|------------|

|                                          |   | Amortized      Cost |    |   | Gross      Unrealized      Gains |   |   | Gross      Unrealized Losses |   |   | Fair      Value |   |
|-----------------------------------------------|--------|---------------------|---------|--------|----------------------------------|--------|--------|-----------------------------------|--------|--------|-----------------|--------|
|                                          |   | (In      thousands) |    |
| September      30, 2009:                      |   |                |    |   |                             |   |   |                              |   |   |            |   |
| Debt      securities:                         |   |                |    |   |                             |   |   |                              |   |   |            |   |
| Securities Available for    Sale              |   |                |    |   |                             |   |   |                              |   |   |            |   |
| Federal      Home Loan Mortgage Corporation   |   | $                   | 500     |   |                             | $      | -      |                              |   | $      | (1              | )      |   | $ | 499 |   |
| Other      government-sponsored enterprises:  |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Federal      National Mortgage Association    |   |                | 2,250   |   |                             |   | 2      |                              |   |   | (4              | )      |   |   | 2,248 |   |
| Federal      Home Loan Bank                   |   |                | 106,791 |   |                             |   | 1,965  |                              |   |   | (110            | )      |   |   | 108,646 |   |
| Federal      Farm Credit Bank                 |   |                | 106,869 |   |                             |   | 757    |                              |   |   | (823            | )      |   |   | 106,803 |   |
| Mortgage-backed:                              |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Federal      Home Loan Mortgage Corporation   |   |                | 82,619  |   |                             |   | 2,257  |                              |   |   | (181            | )      |   |   | 84,695 |   |
| Federal      National Mortgage Association    |   |                | 108,134 |   |                             |   | 3,475  |                              |   |   | (32             | )      |   |   | 111,577 |   |
| Government      National Mortgage Association |   |                | 66,805  |   |                             |   | 2,111  |                              |   |   | (78             | )      |   |   | 68,838 |   |
| Municipal      bonds                          |   |                | 24,385  |   |                             |   | 1,150  |                              |   |   | -               |   |   |   | 25,535 |   |
| Other      bonds                              |   |                | 250     |   |                             |   | -      |                              |   |   | -               |   |   |   | 250 |   |
|                                          |   | $                   | 498,603 |   |                             | $      | 11,717 |                              |   | $      | (1,229          | )      |   | $ | 509,091 |   |
|                                          |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Securities Held to Maturity                   |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Trust      Preferred                          |   | $                   | 10,000  |   |                             | $      | -      |                              |   | $      | -               |   |   | $ | 10,000 |   |
|                                          |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
|                                          |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| December      31, 2008:                       |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Debt      securities:                         |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Securities Available for    Sale              |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| U.S.      Government                          |   | $                   | 2,007   |   |                             | $      | 11     |                              |   | $      | -               |   |   | $ | 2,018 |   |
| Federal      Home Loan Mortgage Corporation   |   |                | 1,147   |   |                             |   | 1      |                              |   |   | -               |   |   |   | 1,148 |   |
| Other      government-sponsored enterprises:  |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Federal      Home Loan Bank                   |   |                | 141,120 |   |                             |   | 1,278  |                              |   |   | (129            | )      |   |   | 142,269 |   |
| Federal      Farm Credit Bank                 |   |                | 75,249  |   |                             |   | 3,105  |                              |   |   | -               |   |   |   | 78,354 |   |
| Mortgage-backed:                              |   |                |    |   |                             |   |   |                              |   |   |            |   |   |   |   |   |
| Federal      Home Loan Mortgage Corporation   |   |                | 76,011  |   |                             |   | 1,007  |                              |   |   | (366            | )      |   |   | 76,652 |   |
| Federal      National Mortgage Association    |   |                | 101,237 |   |                             |   | 1,445  |                              |   |   | (266            | )      |   |   | 102,416 |   |
| Government      National Mortgage Association |   |                | 67,841  |   |                             |   | 1,097  |                              |   |   | (16             | )      |   |   | 68,922 |   |
| Municipal      bonds                          |   |                | 19,179  |   |                             |   | 107    |                              |   |   | (470            | )      |   |   | 18,816 |   |
| Other      bonds                              |   |                | 250     |   |                             |   | -      |                              |   |   | -               |   |   |   | 250 |   |
|                                          |   | $                   | 484,041 |   |                             | $      | 8,051  |                              |   | $      | (1,247          | )      |   | $ | 490,845 |   |

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Table of Contents

|                                          |   | Less      Than Twelve Months |   |   | Over      Twelve Months |   |
|-----------------------------------------------|--------|-----------------------------------|--------|--------|-------------------------|--------|
|                                          |   | Gross      Unrealized Losses      |   |   | Fair Value         |   |   | Gross      Unrealized Losses |   |   | Fair Value |   |
|                                          |   | (In      thousands)               |   |
| September      30, 2009:                      |   |                              |   |   |                    |   |   |   |   |   |   |   |
| Debt      securities:                         |   |                              |   |   |                    |   |   |   |   |   |   |   |
| Securities Available for    Sale              |   |                              |   |   |                    |   |   |   |   |   |   |   |
| Federal      Home Loan Mortgage Corporation   |   | $                                 | 1      |   |                    | $      | 499 |   |   | $ | - |   |   | $ | - |   |
| Other      government-sponsored enterprises:  |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Federal      National Mortgage Association    |   |                              | 4      |   |                    |   | 496 |   |   |   | - |   |   |   | - |   |
| Federal      Home Loan Bank                   |   |                              | 110    |   |                    |   | 6,840 |   |   |   | - |   |   |   | - |   |
| Federal      Farm Credit Bank                 |   |                              | 823    |   |                    |   | 65,177 |   |   |   | - |   |   |   | - |   |
| Mortgage-backed:                              |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Federal      Home Loan Mortgage Corporation   |   |                              | 173    |   |                    |   | 16,533 |   |   |   | 8 |   |   |   | 1,169 |   |
| Federal      National Mortgage Association    |   |                              | 32     |   |                    |   | 4,928 |   |   |   | - |   |   |   | - |   |
| Government      National Mortgage Association |   |                              | 78     |   |                    |   | 10,791 |   |   |   | - |   |   |   | - |   |
|                                          |   | $                                 | 1,221  |   |                    | $      | 105,264 |   |   | $ | 8 |   |   | $ | 1,169 |   |
|                                          |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2008:                       |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Debt      securities:                         |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Securities Available for    Sale              |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Other      government-sponsored enterprises:  |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Federal      Home Loan Bank                   |   | $                                 | 1      |   |                    | $      | 20,372 |   |   | $ | - |   |   | $ | - |   |
| Federal      Farm Credit Bank                 |   |                              | 128    |   |                    |   | 999 |   |   |   | - |   |   |   | - |   |
| Mortgage-backed:                              |   |                              |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Federal      Home Loan Mortgage Corporation   |   |                              | 365    |   |                    |   | 26,879 |   |   |   | 1 |   |   |   | 484 |   |
| Federal      National Mortgage Association    |   |                              | 261    |   |                    |   | 26,056 |   |   |   | 5 |   |   |   | 458 |   |
| Government      National Mortgage Association |   |                              | 16     |   |                    |   | 4,179 |   |   |   | - |   |   |   | - |   |
| Municipal      bonds                          |   |                              | 25     |   |                    |   | 1,135 |   |   |   | 445 |   |   |   | 11,349 |   |
|                                          |   | $                                 | 796    |   |                    | $      | 79,620 |   |   | $ | 451 |   |   | $ | 12,291 |   |

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| 4. | Fair      Value of Assets and Liabilities |
|----|-------------------------------------------|

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|                        |   |                |   |   |         |   |    |         |   |   | Total           |   |
|-----------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|-----------------|--------|
|                        |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Fair      Value |   |
|                        |   | (In      thousands) |   |
| September      30, 2009:    |   |                |   |   |         |   |    |         |   |   |            |   |
| Assets                      |   |                |   |   |         |   |    |         |   |   |            |   |
| Securities                  |   | $                   | -      |   |         | $      | 509,091 |         |   | $      | -               |   |   | $ | 509,091 |   |
| Interest      rate products |   |                | -      |   |         |   | 1,494   |         |   |   | -               |   |   |   | 1,494 |   |
|                        |   | $                   | -      |   |         | $      | 510,585 |         |   | $      | -               |   |   | $ | 510,585 |   |
|                        |   |                |   |   |         |   |    |         |   |   |            |   |   |   |   |   |
|                        |   |                |   |   |         |   |    |         |   |   |            |   |   |   |   |   |
| Liabilities                 |   |                |   |   |         |   |    |         |   |   |            |   |   |   |   |   |
| Interest      rate products |   | $                   | -      |   |         | $      | 1,507   |         |   | $      | -               |   |   | $ | 1,507 |   |

|                        |   |                |   |   |         |   |    |         |   |   | Total           |   |
|-----------------------------|--------|---------------------|--------|--------|--------------|--------|---------|--------------|--------|--------|-----------------|--------|
|                        |   | Level      1        |   |   | Level      2 |   |    | Level      3 |   |   | Fair      Value |   |
|                        |   | (In      thousands) |   |
| December      31, 2008:     |   |                |   |   |         |   |    |         |   |   |            |   |
| Assets                      |   |                |   |   |         |   |    |         |   |   |            |   |
| Securities                  |   | $                   | -      |   |         | $      | 490,845 |         |   | $      | -               |   |   | $ | 490,845 |   |
| Interest      rate products |   |                | -      |   |         |   | 1,761   |         |   |   | -               |   |   |   | 1,761 |   |
|                        |   | $                   | -      |   |         | $      | 492,606 |         |   | $      | -               |   |   | $ | 492,606 |   |
|                        |   |                |   |   |         |   |    |         |   |   |            |   |   |   |   |   |
|                        |   |                |   |   |         |   |    |         |   |   |            |   |   |   |   |   |
| Liabilities                 |   |                |   |   |         |   |    |         |   |   |            |   |   |   |   |   |
| Interest      rate products |   | $                   | -      |   |         | $      | 1,796   |         |   | $      | -               |   |   | $ | 1,796 |   |

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|                         |   |                    |   |   |         |   |   |         |   |   | Quarter            |   |   | Nine      Months   |   |
|------------------------------|--------|-------------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|                         |   |                    |   |   |         |   |   |         |   |   | Ended              |   |   | Ended              |   |
|                         |   |                    |   |   |         |   |   |         |   |   | September      30, |   |   | September      30, |   |
|                         |   | September      30, 2009 |   |   | 2009         |   |   | 2009         |   |
|                         |   |                    |   |   |         |   |   |         |   |   | Total              |   |   | Total              |   |
|                         |   | Level      1            |   |   | Level      2 |   |   | Level      3 |   |   | Losses             |   |   | Losses             |   |
|                         |   | (In      thousands)     |   |   |         |   |
| Assets                       |   |                    |   |   |         |   |   |         |   |   |               |   |   |               |   |
| Other      real estate owned |   | $                       | -      |   |         | $      | -      |         |   | $      | 1,867              |   |   | $                  | -      |   |   | $ | 82 |   |
| Impaired      loans          |   |                    | -      |   |         |   | -      |         |   |   | 1,260              |   |   |               | 327    |   |   |   | 1,188 |   |
|                         |   | $                       | -      |   |         | $      | -      |         |   | $      | 3,127              |   |   | $                  | 327    |   |   | $ | 1,270 |   |

|                         |   |                   |   |   |         |   |   |         |   |   | Quarter            |   |   | Nine      Months   |   |
|------------------------------|--------|------------------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|                         |   |                   |   |   |         |   |   |         |   |   | Ended              |   |   | Ended              |   |
|                         |   |                   |   |   |         |   |   |         |   |   | September      30, |   |   | September      30, |   |
|                         |   | December      31, 2008 |   |   | 2008         |   |   | 2008         |   |
|                         |   |                   |   |   |         |   |   |         |   |   | Total              |   |   | Total              |   |
|                         |   | Level      1           |   |   | Level      2 |   |   | Level      3 |   |   | Losses             |   |   | Losses             |   |
|                         |   | (In      thousands)    |   |   |         |   |
| Assets                       |   |                   |   |   |         |   |   |         |   |   |               |   |   |               |   |
| Other      real estate owned |   | $                      | -      |   |         | $      | 1,158  |         |   | $      | -                  |   |   | $                  | -      |   |   | $ | 1,387 |   |
| Impaired      loans          |   |                   | -      |   |         |   | 1,481  |         |   |   | -                  |   |   |               | 280    |   |   |   | 541 |   |
|                         |   | $                      | -      |   |         | $      | 2,639  |         |   | $      | -                  |   |   | $                  | 280    |   |   | $ | 1,928 |   |

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|                                    |   | September      30, 2009 |      |   | December      31, 2008 |   |
|-----------------------------------------|--------|-------------------------|-----------|--------|------------------------|--------|
|                                    |   | Carrying                |      |   | Fair                   |   |   | Carrying |   |   | Fair |   |
|                                    |   | Amount                  |      |   | Value                  |   |   | Amount |   |   | Value |   |
|                                    |   | (In      thousands)     |      |
| Financial      assets:                  |   |                    |      |   |                   |   |   |   |   |   |   |   |
| Cash      and cash equivalents          |   | $                       | 37,603    |   |                   | $      | 37,603 |   |   | $ | 33,129 |   |   | $ | 33,129 |   |
| Certificates      of deposit            |   |                    | 10,588    |   |                   |   | 10,588 |   |   |   | 10,291 |   |   |   | 10,291 |   |
| Securities      available for sale      |   |                    | 509,091   |   |                   |   | 509,091 |   |   |   | 490,845 |   |   |   | 490,845 |   |
| Securities      held to maturity        |   |                    | 10,000    |   |                   |   | 10,000 |   |   |   | - |   |   |   | - |   |
| Federal      Home Loan Bank stock       |   |                    | 14,001    |   |                   |   | 14,001 |   |   |   | 14,001 |   |   |   | 14,001 |   |
| Loans      and loans held for sale, net |   |                    | 1,231,156 |   |                   |   | 1,237,727 |   |   |   | 1,106,815 |   |   |   | 1,118,521 |   |
| Accrued      interest receivable        |   |                    | 8,250     |   |                   |   | 8,250 |   |   |   | 7,457 |   |   |   | 7,457 |   |
| Servicing      rights                   |   |                    | 441       |   |                   |   | 793 |   |   |   | 473 |   |   |   | 473 |   |
|                                    |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      liabilities:             |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                               |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Demand      deposits                    |   |                    | 132,910   |   |                   |   | 132,910 |   |   |   | 123,414 |   |   |   | 123,414 |   |
| Savings      and NOW accounts           |   |                    | 207,198   |   |                   |   | 207,198 |   |   |   | 176,365 |   |   |   | 176,365 |   |
| Money      market accounts              |   |                    | 568,177   |   |                   |   | 568,177 |   |   |   | 440,931 |   |   |   | 440,931 |   |
| Term      certificates                  |   |                    | 465,764   |   |                   |   | 468,391 |   |   |   | 377,573 |   |   |   | 379,840 |   |
| Short-term      borrowings              |   |                    | 87,104    |   |                   |   | 87,104 |   |   |   | 168,276 |   |   |   | 168,276 |   |
| Long-term      debt                     |   |                    | 161,867   |   |                   |   | 162,679 |   |   |   | 163,022 |   |   |   | 165,822 |   |
| Subordinated      debt                  |   |                    | 29,965    |   |                   |   | 12,201 |   |   |   | 29,965 |   |   |   | 9,608 |   |
| Accrued      interest payable           |   |                    | 1,379     |   |                   |   | 1,379 |   |   |   | 1,309 |   |   |   | 1,309 |   |
|                                    |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| On-balance      sheet derivative        |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| financial      instruments:             |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate products:            |   |                    |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                  |   |                    | 1,494     |   |                   |   | 1,494 |   |   |   | 1,761 |   |   |   | 1,761 |   |
| Liabilities                             |   |                    | 1,507     |   |                   |   | 1,507 |   |   |   | 1,796 |   |   |   | 1,796 |   |

| 5. | Earnings      Per Share |
|----|-------------------------|

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|                                                    |   | Three      Months Ended September 30, |       |   | Nine      Months Ended September 30, |   |
|---------------------------------------------------------|--------|---------------------------------------|------------|--------|--------------------------------------|--------|
|                                                    |   | 2009                                  |       |   | 2008                                 |   |   | 2009 |   |   | 2008 |   |
|                                                    |   |                                  |       |   |                                 |   |   |   |   |   |   |   |
| Basic      weighted average common shares outstanding   |   |                                  | 15,662,796 |   |                                 |   | 16,450,979 |   |   |   | 15,993,596 |   |   |   | N/A |   |
| Dilutive      shares                                    |   |                                  | 71,747     |   |                                 |   | - |   |   |   | 44,988 |   |   |   | N/A |   |
| Diluted      weighted average common shares outstanding |   |                                  | 15,734,543 |   |                                 |   | 16,450,979 |   |   |   | 16,038,584 |   |   |   | N/A |   |
|                                                    |   |                                  |       |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings per share                           |   | $                                     | 0.074      |   |                                 | $      | 0.003 |   |   | $ | 0.168 |   |   |   | N/A |   |
| Effect      of dilutive shares                          |   |                                  | -          |   |                                 |   | - |   |   |   | (0.001 | ) |   |   | N/A |   |
| Diluted      earnings per share                         |   | $                                     | 0.074      |   |                                 | $      | 0.003 |   |   | $ | 0.167 |   |   |   | N/A |   |

| 6. | Dividend      Declared |
|----|------------------------|

| 7. | Recent      Accounting Pronouncements |
|----|---------------------------------------|

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| 8. | Subsequent      Events |
|----|------------------------|

Item 2

|   | · | statements      of our goals, intentions andexpectations; |
|--------|--------|-----------------------------------------------------------|

|   | · | statements      regarding our business plans and prospects and growth and operating      strategies; |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | statements      regarding the asset quality of our loan and investment portfolios;      and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | estimates      of our risks and future costs andbenefits. |
|--------|--------|-----------------------------------------------------------|

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|   | · | significantly      increased competition among depository and other financial      institutions; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | inflation      and changes in the interest rate environment that reduce our margins or      reduce the fair value of financialinstruments; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | general      economic conditions, whether national or regional, and conditions in the      real estate markets that could affect the demand for our loans and other      products and ability of borrowers to repay loans, lead to further declines      in credit quality and increased loan losses, and continue to negatively      affect the value and salability of the real estate that is the collateral      for many of our loans or that we owndirectly; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changing      business, banking, or regulatory conditions or policies, or new      legislation affecting the financial services industry that could lead to      changes in the competitive balance among financial institutions,      restrictions on bank activities, changes in costs (including deposit      insurance premiums), increased regulatory scrutiny, declines in consumer      confidence in depository institutions, or changes in the secondary market      for bank loan and other products; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      ability to enter new markets successfully and take advantage of growth      opportunities; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | changes      in consumer spending, borrowing and savings  habits; |
|--------|--------|-------------------------------------------------------------------|

|   | · | changes      in accounting policies and practices, as may be adopted by the bank      regulatory agencies and the Financial Accounting Standards Board;      and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes      in our organization, compensation and benefit  plans. |
|--------|--------|--------------------------------------------------------------------|

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|                           |   | September      30, 2009     |      |   | December      31, 2008 |   |
|--------------------------------|--------|-----------------------------|-----------|--------|------------------------|--------|
|                           |   | Amount                      |      |   | Percent                |   |   | Amount |   |   | Percent |   |
|                           |   | (Dollars      in thousands) |      |
| Real      estate mortgages:    |   |                        |      |   |                   |   |   |   |   |   |   |   |
| Construction                   |   | $                           | 116,663   |   |                   |   | 9.4 | % |   | $ | 122,974 |   |   |   | 11.0 | % |
| Residential                    |   |                        | 204,605   |   |                   |   | 16.4 |   |   |   | 189,242 |   |   |   | 16.9 |   |
| Commercial                     |   |                        | 294,648   |   |                   |   | 23.7 |   |   |   | 247,483 |   |   |   | 22.1 |   |
| Home      equity               |   |                        | 50,133    |   |                   |   | 4.0 |   |   |   | 41,660 |   |   |   | 3.7 |   |
| C&I                        |   |                        | 570,223   |   |                   |   | 45.8 |   |   |   | 510,359 |   |   |   | 45.5 |   |
| Consumer                       |   |                        | 8,912     |   |                   |   | 0.7 |   |   |   | 8,725 |   |   |   | 0.8 |   |
| Total      loans               |   |                        | 1,245,184 |   |                   |   | 100.0 | % |   |   | 1,120,443 |   |   |   | 100.0 | % |
| Allowance      for loan losses |   |                        | (13,878   | )      |                   |   |   |   |   |   | (12,133 | ) |   |   |   |   |
| Net      deferred loan fees    |   |                        | (1,775    | )      |                   |   |   |   |   |   | (1,495 | ) |   |   |   |   |
| Loans,      net                |   | $                           | 1,229,531 |   |                   |   |   |   |   | $ | 1,106,815 |   |   |   |   |   |

|                                                                                                     |   |   | September      30,          |   |   | December      31, |   |
|----------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------|--------|--------|-------------------|--------|
|                                                                                                     |   |   | 2009                        |   |   | 2008              |   |
|                                                                                                     |   |   | (Dollars      in thousands) |   |
| Non-accrual      loans:                                                                                  |   |   |                        |   |   |              |   |
| Real      estate mortgages:                                                                              |   |   |                        |   |   |              |   |
| Construction                                                                                             |   |   | $                           | 400    |   |              | $      | 1,925 |   |
| Residential                                                                                              |   |   |                        | 3,947  |   |              |   | 2,184 |   |
| Commercial                                                                                               |   |   |                        | 1,155  |   |              |   | 263 |   |
| Home      equity                                                                                         |   |   |                        | 1,146  |   |              |   | 227 |   |
| Total      real estate mortgages                                                                         |   |   |                        | 6,648  |   |              |   | 4,599 |   |
| C&I                                                                                                  |   |   |                        | 1,550  |   |              |   | 1,295 |   |
| Consumer                                                                                                 |   |   |                        | 8      |   |              |   | 38 |   |
|             Total      non-accrual loans (1) |   |   | $                           | 8,206  |   |              | $      | 5,932 |   |
| Restructured      loans (2)                                                                              |   |   | $                           | 3,787  |   |              | $      | - |   |
| Total      non-performing loans                                                                          |   |   | $                           | 11,993 |   |              | $      | 5,932 |   |
| Other      real estate owned                                                                             |   |   |                        | 1,867  |   |              |   | 1,158 |   |
| Total      non-performing assets                                                                         |   |   | $                           | 13,860 |   |              | $      | 7,090 |   |
| Total      non-performing loans to total loans                                                           |   |   |                        | 0.96   | %      |              |   | 0.53 | % |
| Total      non-performing loans to total assets                                                          |   |   |                        | 0.63   | %      |              |   | 0.34 | % |
| Total      non-performing assets to total assets                                                         |   |   |                        | 0.73   | %      |              |   | 0.41 | % |

|   | (1) | All      loans on non-accrual status are considered  non-performing. |
|--------|-----|----------------------------------------------------------------------|

|   | (2) | Restructured      loans that have been performing in accordance with their modified terms      for a period of less than 12 months are considered      non-performing. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                           |   | At      or For the Three        |      |   | At      or For the Nine         |   |
|------------------------------------------------|--------|---------------------------------|-----------|--------|---------------------------------|--------|
|                                           |   | Months      Ended September 30, |      |   | Months      Ended September 30, |   |
|                                           |   | 2009                            |      |   | 2008                            |   |   | 2009 |   |   | 2008 |   |
|                                           |   | (Dollars      in thousands)     |      |
|                                           |   |                            |      |   |                            |   |   |   |   |   |   |   |
| Allowance      balance at beginning of period  |   | $                               | 12,719    |   |                            | $      | 10,320 |   |   | $ | 12,133 |   |   | $ | 9,096 |   |
| Provision      for loan losses                 |   |                            | 1,400     |   |                            |   | 1,050 |   |   |   | 3,360 |   |   |   | 2,725 |   |
| Charge-offs:                                   |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Real      estate mortgages:                    |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                   |   |                            | 110       |   |                            |   | - |   |   |   | 585 |   |   |   | - |   |
| Residential                                    |   |                            | 1         |   |                            |   | 20 |   |   |   | 50 |   |   |   | 105 |   |
| Commercial                                     |   |                            | -         |   |                            |   | 210 |   |   |   | - |   |   |   | 210 |   |
| Home      equity                               |   |                            | -         |   |                            |   | - |   |   |   | - |   |   |   | 14 |   |
| Total      real estate mortgages               |   |                            | 111       |   |                            |   | 230 |   |   |   | 635 |   |   |   | 329 |   |
| C&I                                        |   |                            | 135       |   |                            |   | 78 |   |   |   | 966 |   |   |   | 349 |   |
| Consumer                                       |   |                            | 5         |   |                            |   | 27 |   |   |   | 73 |   |   |   | 125 |   |
| Total      charge-offs                         |   |                            | 251       |   |                            |   | 335 |   |   |   | 1,674 |   |   |   | 803 |   |
| Recoveries:                                    |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Real      estate mortgages:                    |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                   |   |                            | 5         |   |                            |   | - |   |   |   | 5 |   |   |   | - |   |
| Residential                                    |   |                            | -         |   |                            |   | - |   |   |   | - |   |   |   | 8 |   |
| Commercial                                     |   |                            | -         |   |                            |   | - |   |   |   | - |   |   |   | - |   |
| Home      equity                               |   |                            | -         |   |                            |   | - |   |   |   | - |   |   |   | - |   |
| Total      real estate mortgages               |   |                            | 5         |   |                            |   | - |   |   |   | 5 |   |   |   | 8 |   |
| C&I                                        |   |                            | -         |   |                            |   | 10 |   |   |   | 25 |   |   |   | 10 |   |
| Consumer                                       |   |                            | 5         |   |                            |   | 1 |   |   |   | 29 |   |   |   | 10 |   |
| Total      recoveries                          |   |                            | 10        |   |                            |   | 11 |   |   |   | 59 |   |   |   | 28 |   |
| Net      charge-offs                           |   |                            | 241       |   |                            |   | 324 |   |   |   | 1,615 |   |   |   | 775 |   |
| Allowance      balance at end of period        |   | $                               | 13,878    |   |                            | $      | 11,046 |   |   | $ | 13,878 |   |   | $ | 11,046 |   |
|                                           |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans outstanding (1)               |   | $                               | 1,246,809 |   |                            | $      | 1,075,575 |   |   | $ | 1,246,809 |   |   | $ | 1,075,575 |   |
| Average      loans outstanding                 |   | $                               | 1,213,788 |   |                            | $      | 1,035,109 |   |   | $ | 1,168,888 |   |   | $ | 982,235 |   |
|                                           |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for loan losses as a percent of |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| total      loans outstanding                   |   |                            | 1.11      | %      |                            |   | 1.03 | % |   |   | 1.11 | % |   |   | 1.03 | % |
| Net      loans charged off as a percent of     |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| average      loans outstanding (annualized)    |   |                            | 0.08      | %      |                            |   | 0.13 | % |   |   | 0.18 | % |   |   | 0.11 | % |
| Allowance      for loan losses to non-         |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| performing      loans                          |   |                            | 115.72    | %      |                            |   | 152.51 | % |   |   | 115.72 | % |   |   | 152.51 | % |

|   | (1) | Includes      loans held for sale. |
|--------|-----|------------------------------------|

----

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|                                 |   | September      30, 2009     |      |   | December      31, 2008 |   |
|--------------------------------------|--------|-----------------------------|-----------|--------|------------------------|--------|
|                                 |   | Amount                      |      |   | Percent                |   |   | Amount |   |   | Percent |   |
|                                 |   | (Dollars      in thousands) |      |
|                                 |   |                        |      |   |                   |   |   |   |   |   |   |   |
| Demand      deposits                 |   | $                           | 132,910   |   |                   |   | 9.7 | % |   | $ | 123,414 |   |   |   | 11.0 | % |
| Savings      and NOW accounts        |   |                        | 207,198   |   |                   |   | 15.1 |   |   |   | 176,365 |   |   |   | 15.8 |   |
| Money      market accounts           |   |                        | 568,177   |   |                   |   | 41.3 |   |   |   | 440,931 |   |   |   | 39.4 |   |
| Total      non-certificate accounts  |   |                        | 908,285   |   |                   |   | 66.1 |   |   |   | 740,710 |   |   |   | 66.2 |   |
| Term      certificates over $100,000 |   |                        | 284,410   |   |                   |   | 20.7 |   |   |   | 242,846 |   |   |   | 21.7 |   |
| Other      term certificates         |   |                        | 181,354   |   |                   |   | 13.2 |   |   |   | 134,727 |   |   |   | 12.1 |   |
| Total      certificate accounts      |   |                        | 465,764   |   |                   |   | 33.9 |   |   |   | 377,573 |   |   |   | 33.8 |   |
| Total      deposits                  |   | $                           | 1,374,049 |   |                   |   | 100.0 | % |   | $ | 1,118,283 |   |   |   | 100.0 | % |

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|                                                                                                                                          |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|-----------------------------|-----------|---------|--------|----------|--------|--------|---------------|--------|--------|-------------|--------|--------|--------|-----------|---------|--------|---------------|--------|
|                                                                                                                                          | Three      Months Ended September 30, |                        |
|                                                                                                                                          |                                  | 2009                        |      |    | 2008   |     |
|                                                                                                                                          |                                  | Average                     |      |    |   | Interest |   |   | Average       |   |   | Average     |   |   |   | Interest  |    |   | Average       |   |
|                                                                                                                                          |                                  | Outstanding                 |      |    |   | Earned/  |   |   | Yield/        |   |   | Outstanding |   |   |   | Earned/   |    |   | Yield/        |   |
|                                                                                                                                          |                                  | Balance                     |      |    |   | Paid     |   |   | Rate      (1) |   |   | Balance     |   |   |   | Paid      |    |   | Rate      (1) |   |
|                                                                                                                                          |                                  | (Dollars      in thousands) |      |
| Interest-earning      assets:                                                                                                                 |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |
| Interest-earning      cash equivalents and                                                                                                    |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |
| certificates      of deposit                                                                                                                  |                                  | $                           | 60,633    |    |   |     | $      | 97     |          |   |   | 0.64        | %      |   | $      | 50,212    |    |   |          | $      | 276 |   |   |   | 2.20 | % |
| Debt      securities: (2)                                                                                                                     |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| U.S.      Government                                                                                                                          |                                  |                        | -         |    |   |     |   | -      |          |   |   | -           |   |   |   | 2,014     |    |   |          |   | 17 |   |   |   | 3.38 |   |
| Gov't-sponsored      enterprises and                                                                                                          |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| FHLMC                                                                                                                                         |                                  |                        | 187,896   |    |   |     |   | 2,241  |          |   |   | 4.77        |   |   |   | 153,981   |    |   |          |   | 1,876 |   |   |   | 4.87 |   |
| Mortgage-backed                                                                                                                               |                                  |                        | 246,167   |    |   |     |   | 2,823  |          |   |   | 4.59        |   |   |   | 188,771   |    |   |          |   | 2,288 |   |   |   | 4.85 |   |
| Municipal      bonds                                                                                                                          |                                  |                        | 23,071    |    |   |     |   | 235    |          |   |   | 4.07        |   |   |   | 19,186    |    |   |          |   | 195 |   |   |   | 4.07 |   |
| Other                                                                                                                                         |                                  |                        | 7,454     |    |   |     |   | 198    |          |   |   | 10.63       |   |   |   | 250       |    |   |          |   | 2 |   |   |   | 3.20 |   |
| Equity      securities                                                                                                                        |                                  |                        | 14,626    |    |   |     |   | -      |          |   |   | -           |   |   |   | 11,528    |    |   |          |   | 91 |   |   |   | 3.16 |   |
| Real      estate mortgages (3)                                                                                                                |                                  |                        | 660,559   |    |   |     |   | 9,483  |          |   |   | 5.74        |   |   |   | 589,204   |    |   |          |   | 9,134 |   |   |   | 6.20 |   |
| C&I      loans (3)                                                                                                                        |                                  |                        | 456,742   |    |   |     |   | 6,748  |          |   |   | 5.91        |   |   |   | 379,419   |    |   |          |   | 6,231 |   |   |   | 6.57 |   |
| IRBs      (3)                                                                                                                                 |                                  |                        | 89,087    |    |   |     |   | 1,073  |          |   |   | 4.82        |   |   |   | 57,123    |    |   |          |   | 694 |   |   |   | 4.86 |   |
| Consumer      loans  (3)                                                                                                            |                                  |                        | 7,400     |    |   |     |   | 144    |          |   |   | 7.78        |   |   |   | 9,363     |    |   |          |   | 188 |   |   |   | 8.03 |   |
| Total      interest-earning assets                                                                                                            |                                  |                        | 1,753,635 |    |   |     |   | 23,042 |          |   |   | 5.26        |   |   |   | 1,461,051 |    |   |          |   | 20,992 |   |   |   | 5.75 |   |
| Allowance      for loan losses                                                                                                                |                                  |                        | (12,939   | )       |   |     |   |   |          |   |   |        |   |   |   | (10,653   | )       |   |          |   |   |   |   |   |   |   |
| Total      earning assets less allowance                                                                                                      |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
|  for      loan losses                                                                                                                    |                                  |                        | 1,740,696 |    |   |     |   |   |          |   |   |        |   |   |   | 1,450,398 |    |   |          |   |   |   |   |   |   |   |
| Non-interest-earning      assets                                                                                                              |                                  |                        | 105,848   |    |   |     |   |   |          |   |   |        |   |   |   | 98,660    |    |   |          |   |   |   |   |   |   |   |
| Total      assets                                                                                                                             |                                  | $                           | 1,846,544 |    |   |     |   |   |          |   |   |        |   |   | $      | 1,549,058 |    |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                                                            |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                     |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Savings      and NOW accounts                                                                                                                 |                                  | $                           | 210,558   |    |   |     |   | 647    |          |   |   | 1.23        |   |   | $      | 180,041   |    |   |          |   | 551 |   |   |   | 1.22 |   |
| Money      market accounts                                                                                                                    |                                  |                        | 553,428   |    |   |     |   | 2,828  |          |   |   | 2.04        |   |   |   | 420,442   |    |   |          |   | 2,692 |   |   |   | 2.56 |   |
| Term      certificates                                                                                                                        |                                  |                        | 459,363   |    |   |     |   | 3,069  |          |   |   | 2.67        |   |   |   | 353,383   |    |   |          |   | 3,333 |   |   |   | 3.77 |   |
| Total      deposits                                                                                                                           |                                  |                        | 1,223,349 |    |   |     |   | 6,544  |          |   |   | 2.14        |   |   |   | 953,866   |    |   |          |   | 6,576 |   |   |   | 2.76 |   |
| Borrowed      funds:                                                                                                                          |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Short-term      borrowings                                                                                                                    |                                  |                        | 63,215    |    |   |     |   | 62     |          |   |   | 0.39        |   |   |   | 34,973    |    |   |          |   | 108 |   |   |   | 1.24 |   |
| Long-term      debt                                                                                                                           |                                  |                        | 162,006   |    |   |     |   | 1,823  |          |   |   | 4.50        |   |   |   | 164,000   |    |   |          |   | 1,865 |   |   |   | 4.55 |   |
| Subordinated      debt                                                                                                                        |                                  |                        | 29,965    |    |   |     |   | 468    |          |   |   | 6.25        |   |   |   | 29,965    |    |   |          |   | 558 |   |   |   | 7.45 |   |
| Total      interest-bearing liabilities                                                                                                       |                                  |                        | 1,478,535 |    |   |     |   | 8,897  |          |   |   | 2.41        |   |   |   | 1,182,804 |    |   |          |   | 9,107 |   |   |   | 3.08 |   |
| Non-interest-bearing      deposits                                                                                                            |                                  |                        | 131,408   |    |   |     |   |   |          |   |   |        |   |   |   | 132,442   |    |   |          |   |   |   |   |   |   |   |
| Other      non-interest-bearing liabilities                                                                                                   |                                  |                        | 14,677    |    |   |     |   |   |          |   |   |        |   |   |   | 6,055     |    |   |          |   |   |   |   |   |   |   |
| Total      non-interest-bearing liabilities                                                                                                   |                                  |                        | 146,085   |    |   |     |   |   |          |   |   |        |   |   |   | 138,497   |    |   |          |   |   |   |   |   |   |   |
| Total      liabilities                                                                                                                        |                                  |                        | 1,624,620 |    |   |     |   |   |          |   |   |        |   |   |   | 1,321,301 |    |   |          |   |   |   |   |   |   |   |
| Stockholders'      equity                                                                                                                     |                                  |                        | 221,924   |    |   |     |   |   |          |   |   |        |   |   |   | 227,757   |    |   |          |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity                                                                                               |                                  | $                           | 1,846,544 |    |   |     |   |   |          |   |   |        |   |   | $      | 1,549,058 |    |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Net      interest income                                                                                                                      |                                  |                        |      |    |   |     | $      | 14,145 |          |   |   |        |   |   |   |      |    |   |          | $      | 11,885 |   |   |   |   |   |
| Net      interest rate spread (4)                                                                                                             |                                  |                        |      |    |   |     |   |   |          |   |   | 2.85        | %      |   |   |      |    |   |          |   |   |   |   |   | 2.67 | % |
| Net      interest-earning assets (5)                                                                                                          |                                  | $                           | 275,100   |    |   |     |   |   |          |   |   |        |   |   | $      | 278,247   |    |   |          |   |   |   |   |   |   |   |
| Net      interest margin (6)                                                                                                                  |                                  |                        |      |    |   |     |   |   |          |   |   | 3.23        | %      |   |   |      |    |   |          |   |   |   |   |   | 3.25 | % |
| Ratio      of interest-earning assets                                                                                                         |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| to      total interest-bearing liabilities                                                                                                    |                                  |                        | 1.19      |  x |   |     |   |   |          |   |   |        |   |   |   | 1.24      |  x |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| (1)Yields      are annualized.                                                                                                                |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |
| (2)Average      balances are presented at average amortized cost.                                                                             |                                  |                        |      |    |   |     |   |   |          |   |   |        |   |   |
| (3)Average      loans include non-accrual loans and are net of average deferred loan      fees/costs.                                         |                                  |                        |      |    |   |     |   |   |          |   |
| (4)Net      interest rate spread represents the difference between the yield on      interest-earning assets and the cost of interest-bearing |                                  |
|            liabilities      at the period indicated.                                                                 |                                  |
| (5)Net      interest-earning assets represent total interest-earning assets less total      interest-bearing liabilities.                     |                                  |                        |      |    |   |     |   |   |          |   |
| (6)Net      interest margin represents net interest income divided by average total      interest-earning assets.                             |                                  |                        |      |    |   |     |   |   |          |   |

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|                                                                                                                                          |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|---------|--------|----------|--------|--------|---------------|--------|--------|-------------|--------|--------|--------|-----------|---------|--------|---------------|--------|
|                                                                                                                                          |   | Nine      Months Ended September 30, |      |
|                                                                                                                                          |   | 2009                                 |      |    | 2008   |     |
|                                                                                                                                          |   | Average                              |      |    |   | Interest |   |   | Average       |   |   | Average     |   |   |   | Interest  |    |   | Average       |   |
|                                                                                                                                          |   | Outstanding                          |      |    |   | Earned/  |   |   | Yield/        |   |   | Outstanding |   |   |   | Earned/   |    |   | Yield/        |   |
|                                                                                                                                          |   | Balance                              |      |    |   | Paid     |   |   | Rate      (1) |   |   | Balance     |   |   |   | Paid      |    |   | Rate      (1) |   |
|                                                                                                                                          |   | (Dollars      in thousands)          |      |
| Interest-earning      assets:                                                                                                                 |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |
| Interest-earning      cash equivalents and                                                                                                    |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |
| certificates      of deposit                                                                                                                  |   | $                                    | 43,678    |    |   |     | $      | 292    |          |   |   | 0.89        | %      |   | $      | 46,166    |    |   |          | $      | 959 |   |   |   | 2.77 | % |
| Debt      securities: (2)                                                                                                                     |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| U.S.      Government                                                                                                                          |   |                                 | 681       |    |   |     |   | 13     |          |   |   | 2.55        |   |   |   | 2,032     |    |   |          |   | 62 |   |   |   | 4.07 |   |
| Gov't-sponsored      enterprises and                                                                                                          |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| FHLMC                                                                                                                                         |   |                                 | 191,469   |    |   |     |   | 6,991  |          |   |   | 4.87        |   |   |   | 170,022   |    |   |          |   | 6,183 |   |   |   | 4.85 |   |
| Mortgage-backed                                                                                                                               |   |                                 | 241,350   |    |   |     |   | 8,574  |          |   |   | 4.74        |   |   |   | 202,225   |    |   |          |   | 7,607 |   |   |   | 5.02 |   |
| Municipal      bonds                                                                                                                          |   |                                 | 21,583    |    |   |     |   | 658    |          |   |   | 4.06        |   |   |   | 18,950    |    |   |          |   | 578 |   |   |   | 4.07 |   |
| Other                                                                                                                                         |   |                                 | 2,668     |    |   |     |   | 202    |          |   |   | 10.09       |   |   |   | 295       |    |   |          |   | 11 |   |   |   | 4.97 |   |
| Equity      securities                                                                                                                        |   |                                 | 14,626    |    |   |     |   | 1      |          |   |   | 0.01        |   |   |   | 11,196    |    |   |          |   | 301 |   |   |   | 3.58 |   |
| Real      estate mortgages (3)                                                                                                                |   |                                 | 634,383   |    |   |     |   | 26,814 |          |   |   | 5.64        |   |   |   | 573,119   |    |   |          |   | 27,232 |   |   |   | 6.34 |   |
| C&I      loans (3)                                                                                                                        |   |                                 | 445,032   |    |   |     |   | 19,571 |          |   |   | 5.86        |   |   |   | 347,930   |    |   |          |   | 17,965 |   |   |   | 6.88 |   |
| IRBs      (3)                                                                                                                                 |   |                                 | 81,684    |    |   |     |   | 2,930  |          |   |   | 4.78        |   |   |   | 51,799    |    |   |          |   | 1,899 |   |   |   | 4.89 |   |
| Consumer      loans  (3)                                                                                                            |   |                                 | 7,789     |    |   |     |   | 452    |          |   |   | 7.74        |   |   |   | 9,387     |    |   |          |   | 569 |   |   |   | 8.08 |   |
| Total      interest-earning assets                                                                                                            |   |                                 | 1,684,943 |    |   |     |   | 66,498 |          |   |   | 5.26        |   |   |   | 1,433,121 |    |   |          |   | 63,366 |   |   |   | 5.90 |   |
| Allowance      for loan losses                                                                                                                |   |                                 | (12,623   | )       |   |     |   |   |          |   |   |        |   |   |   | (9,871    | )       |   |          |   |   |   |   |   |   |   |
| Total      earning assets less allowance                                                                                                      |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
|  for      loan losses                                                                                                                    |   |                                 | 1,672,320 |    |   |     |   |   |          |   |   |        |   |   |   | 1,423,250 |    |   |          |   |   |   |   |   |   |   |
| Non-interest-earning      assets                                                                                                              |   |                                 | 103,532   |    |   |     |   |   |          |   |   |        |   |   |   | 101,998   |    |   |          |   |   |   |   |   |   |   |
| Total      assets                                                                                                                             |   | $                                    | 1,775,852 |    |   |     |   |   |          |   |   |        |   |   | $      | 1,525,248 |    |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                                                            |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Deposits:                                                                                                                                     |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Savings      and NOW accounts                                                                                                                 |   | $                                    | 201,511   |    |   |     |   | 1,842  |          |   |   | 1.22        |   |   | $      | 179,717   |    |   |          |   | 1,762 |   |   |   | 1.31 |   |
| Money      market accounts                                                                                                                    |   |                                 | 504,418   |    |   |     |   | 8,711  |          |   |   | 2.30        |   |   |   | 408,529   |    |   |          |   | 8,716 |   |   |   | 2.84 |   |
| Term      certificates (4)                                                                                                                    |   |                                 | 419,597   |    |   |     |   | 9,100  |          |   |   | 2.89        |   |   |   | 351,537   |    |   |          |   | 10,927 |   |   |   | 4.14 |   |
| Total      deposits                                                                                                                           |   |                                 | 1,125,526 |    |   |     |   | 19,653 |          |   |   | 2.33        |   |   |   | 939,783   |    |   |          |   | 21,405 |   |   |   | 3.04 |   |
| Borrowed      funds:                                                                                                                          |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Short-term      borrowings                                                                                                                    |   |                                 | 90,414    |    |   |     |   | 269    |          |   |   | 0.40        |   |   |   | 35,767    |    |   |          |   | 427 |   |   |   | 1.59 |   |
| Long-term      debt                                                                                                                           |   |                                 | 162,391   |    |   |     |   | 5,417  |          |   |   | 4.45        |   |   |   | 156,385   |    |   |          |   | 5,299 |   |   |   | 4.52 |   |
| Subordinated      debt                                                                                                                        |   |                                 | 29,965    |    |   |     |   | 1,499  |          |   |   | 6.67        |   |   |   | 29,965    |    |   |          |   | 1,736 |   |   |   | 7.72 |   |
| Total      interest-bearing liabilities                                                                                                       |   |                                 | 1,408,296 |    |   |     |   | 26,838 |          |   |   | 2.54        |   |   |   | 1,161,900 |    |   |          |   | 28,867 |   |   |   | 3.31 |   |
| Non-interest-bearing      deposits                                                                                                            |   |                                 | 128,132   |    |   |     |   |   |          |   |   |        |   |   |   | 141,450   |    |   |          |   |   |   |   |   |   |   |
| Other      non-interest-bearing liabilities                                                                                                   |   |                                 | 13,923    |    |   |     |   |   |          |   |   |        |   |   |   | 8,303     |    |   |          |   |   |   |   |   |   |   |
| Total      non-interest-bearing liabilities                                                                                                   |   |                                 | 142,055   |    |   |     |   |   |          |   |   |        |   |   |   | 149,753   |    |   |          |   |   |   |   |   |   |   |
| Total      liabilities                                                                                                                        |   |                                 | 1,550,351 |    |   |     |   |   |          |   |   |        |   |   |   | 1,311,653 |    |   |          |   |   |   |   |   |   |   |
| Stockholders'      equity                                                                                                                     |   |                                 | 225,501   |    |   |     |   |   |          |   |   |        |   |   |   | 213,595   |    |   |          |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity                                                                                               |   | $                                    | 1,775,852 |    |   |     |   |   |          |   |   |        |   |   | $      | 1,525,248 |    |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| Net      interest income                                                                                                                      |   |                                 |      |    |   |     | $      | 39,660 |          |   |   |        |   |   |   |      |    |   |          | $      | 34,499 |   |   |   |   |   |
| Net      interest rate spread (5)                                                                                                             |   |                                 |      |    |   |     |   |   |          |   |   | 2.72        | %      |   |   |      |    |   |          |   |   |   |   |   | 2.59 | % |
| Net      interest-earning assets (6)                                                                                                          |   | $                                    | 276,647   |    |   |     |   |   |          |   |   |        |   |   | $      | 271,221   |    |   |          |   |   |   |   |   |   |   |
| Net      interest margin (7)                                                                                                                  |   |                                 |      |    |   |     |   |   |          |   |   | 3.14        | %      |   |   |      |    |   |          |   |   |   |   |   | 3.21 | % |
| Ratio      of interest-earning assets                                                                                                         |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| to      total interest-bearing liabilities                                                                                                    |   |                                 | 1.20      |  x |   |     |   |   |          |   |   |        |   |   |   | 1.23      |  x |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
|                                                                                                                                          |   |                                 |      |    |   |     |   |   |          |   |   |        |   |   |   |      |    |   |          |   |   |   |   |   |   |   |
| (1)Yields      are annualized.                                                                                                                |   |
| (2)Average      balances are presented at average amortized cost.                                                                             |   |
| (3)Average      loans include non-accrual loans and are net of average deferred loan      fees/costs.                                         |   |
| (4)In      2008, term certificates include brokered and non-brokered certificates of      deposit.                                            |   |
| (5)Net      interest rate spread represents the difference between the yield on      interest-earning assets and the cost of interest-bearing |   |
|            liabilities      at the period indicated.                                                                 |   |
| (6)Net      interest-earning assets represent total interest-earning assets less total      interest-bearing liabilities.                     |   |
| (7)Net      interest margin represents net interest income divided by average total      interest-earning assets.                             |   |

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|                                                                                                              |   |   | Three      Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------|--------|
|                                                                                                              |   |   | 2009      vs. 2008                    |   |
|                                                                                                              |   |   | Increase      (Decrease)              |   |   | Total |   |
|                                                                                                              |   |   | Due      to                           |   |   | Increase |   |
|                                                                                                              |   |   | Volume                                |   |   | Rate |   |   | (Decrease) |   |
|                                                                                                              |   |   | (In      thousands)                   |   |
| Interest-earning      assets:                                                                                     |   |   |                                  |   |   |   |   |   |   |   |
| Interest-earning      cash equivalents and certificates of deposit                                                |   |   | $                                     | 57     |   |   | $ | (236 | ) |   | $ | (179 | ) |
| Debt      securities (1):                                                                                         |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government                                                                                              |   |   |                                  | (17    | ) |   |   | - |   |   |   | (17 | ) |
| Gov't-sponsored      enterprises and FHLMC                                                                        |   |   |                                  | 413    |   |   |   | (48 | ) |   |   | 365 |   |
| Mortgage-backed                                                                                                   |   |   |                                  | 696    |   |   |   | (161 | ) |   |   | 535 |   |
| Municipal      bonds                                                                                              |   |   |                                  | 39     |   |   |   | 1 |   |   |   | 40 |   |
| Other                                                                                                             |   |   |                                  | 58     |   |   |   | 138 |   |   |   | 196 |   |
| Equity      securities                                                                                            |   |   |                                  | 24     |   |   |   | (115 | ) |   |   | (91 | ) |
| Real      estate mortgages (2)                                                                                    |   |   |                                  | 1,106  |   |   |   | (757 | ) |   |   | 349 |   |
| C&I      loans (2)                                                                                            |   |   |                                  | 1,270  |   |   |   | (753 | ) |   |   | 517 |   |
| IRBs      (2)                                                                                                     |   |   |                                  | 388    |   |   |   | (9 | ) |   |   | 379 |   |
| Consumer      loans (2)                                                                                           |   |   |                                  | (39    | ) |   |   | (5 | ) |   |   | (44 | ) |
| Total      interest-earning assets                                                                                |   |   |                                  | 3,995  |   |   |   | (1,945 | ) |   |   | 2,050 |   |
|                                                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                                |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                         |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Savings      and NOW accounts                                                                                     |   |   |                                  | 93     |   |   |   | 3 |   |   |   | 96 |   |
| Money      market accounts                                                                                        |   |   |                                  | 851    |   |   |   | (715 | ) |   |   | 136 |   |
| Term      certificates                                                                                            |   |   |                                  | 1,000  |   |   |   | (1,264 | ) |   |   | (264 | ) |
| Total      deposits                                                                                               |   |   |                                  | 1,944  |   |   |   | (1,976 | ) |   |   | (32 | ) |
| Borrowed      funds:                                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Short-term      borrowings                                                                                        |   |   |                                  | 87     |   |   |   | (133 | ) |   |   | (46 | ) |
| Long-term      debt                                                                                               |   |   |                                  | (23    | ) |   |   | (19 | ) |   |   | (42 | ) |
| Subordinated      debt                                                                                            |   |   |                                  | -      |   |   |   | (90 | ) |   |   | (90 | ) |
| Total      interest-bearing liabilities                                                                           |   |   |                                  | 2,008  |   |   |   | (2,218 | ) |   |   | (210 | ) |
|                                                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Increase      (decrease) in net interest income                                                                   |   |   | $                                     | 1,987  |   |   | $ | 273 |   |   | $ | 2,260 |   |
|                                                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                              |   |   |                                  |   |   |   |   |   |   |   |   |   |   |
|        (1)Average      balances are presented at average amortized cost.                                     |   |   |                                  |   |   |
|        (2)Average      loans include non-accrual loans and are net of average deferred loan      fees/costs. |   |   |                                  |   |   |

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|                                                                                                  |   | Nine      Months Ended September 30, |   |
|-------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                  |   | 2009      vs. 2008                   |   |
|                                                                                                  |   | Increase      (Decrease)             |   |   | Total |   |
|                                                                                                  |   | Due      to                          |   |   | Increase |   |
|                                                                                                  |   | Volume                               |   |   | Rate |   |   | (Decrease) |   |
|                                                                                                  |   | (In      thousands)                  |   |
| Interest-earning      assets:                                                                         |   |                                 |   |   |   |   |   |   |   |
| Interest-earning      cash equivalents and certificates of deposit                                    |   | $                                    | (52    | ) |   | $ | (615 | ) |   | $ | (667 | ) |
| Debt      securities (1):                                                                             |   |                                 |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government                                                                                  |   |                                 | (41    | ) |   |   | (8 | ) |   |   | (49 | ) |
| Gov't-sponsored      enterprises and FHLMC                                                            |   |                                 | 780    |   |   |   | 28 |   |   |   | 808 |   |
| Mortgage-backed                                                                                       |   |                                 | 1,472  |   |   |   | (505 | ) |   |   | 967 |   |
| Municipal      bonds                                                                                  |   |                                 | 80     |   |   |   | - |   |   |   | 80 |   |
| Other                                                                                                 |   |                                 | 88     |   |   |   | 103 |   |   |   | 191 |   |
| Equity      securities                                                                                |   |                                 | 92     |   |   |   | (392 | ) |   |   | (300 | ) |
| Real      estate mortgages (2)                                                                        |   |                                 | 2,911  |   |   |   | (3,329 | ) |   |   | (418 | ) |
| C&I      loans (2)                                                                                |   |                                 | 5,014  |   |   |   | (3,408 | ) |   |   | 1,606 |   |
| IRBs      (2)                                                                                         |   |                                 | 1,096  |   |   |   | (65 | ) |   |   | 1,031 |   |
| Consumer      loans (2)                                                                               |   |                                 | (97    | ) |   |   | (20 | ) |   |   | (117 | ) |
| Total      interest-earning assets                                                                    |   |                                 | 11,343 |   |   |   | (8,211 | ) |   |   | 3,132 |   |
|                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                    |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                             |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Savings      and NOW accounts                                                                         |   |                                 | 214    |   |   |   | (134 | ) |   |   | 80 |   |
| Money      market accounts                                                                            |   |                                 | 2,046  |   |   |   | (2,051 | ) |   |   | (5 | ) |
| Term      certificates (3)                                                                            |   |                                 | 2,116  |   |   |   | (3,943 | ) |   |   | (1,827 | ) |
| Total      deposits                                                                                   |   |                                 | 4,376  |   |   |   | (6,128 | ) |   |   | (1,752 | ) |
| Borrowed      funds:                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Short-term      borrowings                                                                            |   |                                 | 652    |   |   |   | (810 | ) |   |   | (158 | ) |
| Long-term      debt                                                                                   |   |                                 | 204    |   |   |   | (86 | ) |   |   | 118 |   |
| Subordinated      debt                                                                                |   |                                 | -      |   |   |   | (237 | ) |   |   | (237 | ) |
| Total      interest-bearing liabilities                                                               |   |                                 | 5,232  |   |   |   | (7,261 | ) |   |   | (2,029 | ) |
|                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Increase      (decrease) in net interest income                                                       |   | $                                    | 6,111  |   |   | $ | (950 | ) |   | $ | 5,161 |   |
|                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                                 |   |   |   |   |   |   |   |   |   |   |
| (1)Average      balances are presented at average amortized cost.                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |
| (2)Average      loans include non-accrual loans and are net of average deferred loan      fees/costs. |   |                                 |   |   |   |
| (3)In      2008, term certificates include brokered and non-brokered certificates of      deposit.    |   |                                 |   |   |   |   |   |   |   |

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|                                 |   | September      30, 2009 |   |
|--------------------------------------|--------|-------------------------|--------|
|                                 |   |                    |   |   | More      than |   |   | More      than |   |   |   |   |   |   |   |
|                                 |   |                    |   |   | One      Year |   |   | Three      Years |   |   |   |   |   |   |   |
|                                 |   | One      Year           |   |   | Through |   |   | Through |   |   | Over |   |   |   |   |
|                                 |   | or      Less            |   |   | Three      Years |   |   | Five      Years |   |   | Five      Years |   |   | Total |   |
|                                 |   | (In      thousands)     |   |
| Federal      Home Loan Bank advances |   | $                       | 43,588 |   |   | $ | 42,500 |   |   | $ | 10,000 |   |   | $ | 100,779 |   |   | $ | 196,867 |   |
| Federal      Reserve Bank borrowings |   |                    | 20,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 20,000 |   |
| Repurchase      agreements (1)       |   |                    | 32,104 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 32,104 |   |
| Subordinated      debt               |   |                    | -      |   |   |   | - |   |   |   | - |   |   |   | 29,965 |   |   |   | 29,965 |   |
| Operating      leases                |   |                    | 2,333  |   |   |   | 4,362 |   |   |   | 3,312 |   |   |   | 6,926 |   |   |   | 16,933 |   |
| Total      contractual obligations   |   | $                       | 98,025 |   |   | $ | 46,862 |   |   | $ | 13,312 |   |   | $ | 137,670 |   |   | $ | 295,869 |   |
|                                 |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | (1) | All      repurchase agreements mature on a daily basis and are secured by      obligations of government-sponsoredenterprises. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | September      30, 2009 |    |
|-------------------------------------------------|--------|-------------------------|---------|
|                                            |   |                    |    |   | More      than |   |   | More      than |   |   |   |   |   |   |   |
|                                            |   |                    |    |   | One      Year |   |   | Three      Years |   |   |   |   |   |   |   |
|                                            |   | One      Year           |    |   | Through |   |   | Through |   |   | Over |   |   |   |   |
|                                            |   | or      Less            |    |   | Three      Years |   |   | Five      Years |   |   | Five      Years |   |   | Total |   |
|                                            |   | (In      thousands)     |    |
| Commitments      to grant loans                 |   | $                       | 63,734  |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 63,734 |   |
| Unfunded      commitments under lines of credit |   |                    | 309,117 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 309,117 |   |
| Unadvanced      funds on construction loans     |   |                    | 11,463  |   |   |   | 4,708 |   |   |   | 810 |   |   |   | - |   |   |   | 16,981 |   |
| Commercial      and standby letters of credit   |   |                    | 5,382   |   |   |   | 37 |   |   |   | 39 |   |   |   | - |   |   |   | 5,458 |   |
| Total      contractual obligations              |   | $                       | 389,696 |   |   | $ | 4,745 |   |   | $ | 849 |   |   | $ | - |   |   | $ | 395,290 |   |

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|                   |   |   | Net      Portfolio Value(2) |   |    |                               | Net      Interest Income |   |    |
|------------------------|--------|--------|-----------------------------|--------|---------|------------------------------------|--------------------------|--------|---------|
|                   |   |   |                        |   |    |                               |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                   |   |   |                        |   |    |                               |                     |   |    |   |   |   |   |   |   | Increase      (Decrease) |   |   |
| Change      in         |   |   | Estimated                   |   |    |                               |                     |   |    |   |   |   | Estimated |   |   | in      Estimated |   |   |
| Interest      Rates    |   |   | Net      Portfolio          |   |    | Estimated      Increase (Decrease) |                     |   |    | Net      Interest |   |   | Net      Interest Income |   |   |
| (basis      points)(1) |   |   | Value                       |   |    | Amount                             |                     |   | Percent |   |   |   | Income |   |   | Amount |   |   | Percent |   |   |
|                   |   |   | (Dollars      in thousands) |   |    |
|                   |   |   |                        |   |    |                               |                     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                   | +300   | bp     |                        | $      | 166,543 |                               |                     | $      | (70,379 | ) |   |   | (29.7 | % | )  |   | $ | 54,038 |   |   | $ | (6,699 | ) |   |   | (11.0 | % | )  |
|                   | +200   | bp     |                        |   | 193,177 |                               |                     |   | (43,745 | ) |   |   | (18.5 | % | )  |   |   | 57,356 |   |   |   | (3,381 | ) |   |   | (5.6 | % | )  |
|                   | +100   | bp     |                        |   | 223,132 |                               |                     |   | (13,790 | ) |   |   | (5.8 | % | )  |   |   | 60,106 |   |   |   | (631 | ) |   |   | (1.0 | % | )  |
|                   | 0      | bp     |                        |   | 236,922 |                               |                     |   | -       |   |   |   | 0.0 | % |   |   |   | 60,737 |   |   |   | - |   |   |   | 0.0 | % |   |

|   | (1) | Assumes      an instantaneous uniform change in interest rates at all      maturities. |
|--------|-----|----------------------------------------------------------------------------------------|

|   | (2) | Net portfolio value is the      discounted present value of expected cash flows from interest-earning      assets, interest-bearing liabilities and off-balance sheet      contracts. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item

Item

|   | · | integrating      personnel with diverse businessbackgrounds; |
|--------|--------|--------------------------------------------------------------|

|   | · | integrating      departments, systems, operating procedures and information      technologies; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | combining      different corporate cultures; |
|--------|--------|----------------------------------------------|

|   | · | retaining      existing customers and attracting new customers;  and |
|--------|--------|----------------------------------------------------------------------|

|   | · | retaining      key employees. |
|--------|--------|-------------------------------|

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Item

|   |                                                                                                              |   |   |           |    |   |            |   |   | Total      Number of     |   |   | Maximum      Number of |   |
|--------|-------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|---------|--------|-----------------|--------|--------|--------------------------|--------|--------|------------------------|--------|
|   |                                                                                                              |   |   | Total          |    |   |            |   |   | Shares      Purchased    |   |   | Shares      That May   |   |
|   |                                                                                                              |   |   | Number         |    |   | Average         |   |   | as      Part of Publicly |   |   | Yet      be Purchased  |   |
|   |                                                                                                              |   |   | of      Shares |    |   | Price      Paid |   |   | Announced      Plans     |   |   | Under      the Plans   |   |
|   | Period                                                                                                            |   |   | Purchased      |    |   | per      Share  |   |   | or      Programs         |   |   | or      Programs (1)   |   |
|   |                                                                                                              |   |   |           |    |   |            |   |   |                     |   |   |                   |   |
|   | July      1-31                                                                                                    |   |   |           | 17,500  |   |            | $      | 12.95  |                     |   |   | 17,500                 |   |   |   | 856,485 |   |
|   |                                                                                                              |   |   |           |    |   |            |   |   |                     |   |   |                   |   |   |   |   |   |
|   | August      1-31                                                                                                  |   |   |           | 271,400 |   |            | $      | 12.71  |                     |   |   | 271,400                |   |   |   | 585,085 |   |
|   |                                                                                                              |   |   |           |    |   |            |   |   |                     |   |   |                   |   |   |   |   |   |
|   | September      1-30                                                                                               |   |   |           | -       |   |            | $      | -      |                     |   |   | -                      |   |   |   | 585,085 |   |
|   |                                                                                                                   | Total  |   |           | 288,900 |   |            | $      | 12.72  |                     |   |   | 288,900                |   |   |   |   |   |
|   |                                                                                                              |   |   |           |    |   |            |   |   |                     |   |   |                   |   |   |   |   |   |
|   |                                                                                                              |   |
|   | (1)Maximum      number of shares based upon the Company's common stock outstanding as of      September 30, 2009. |   |

Item

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Item

| FOR    |       |   | AGAINST |   |    | ABSTAIN |   |   | BROKER      NON-VOTE |   |
|--------|------------|--------|---------|--------|---------|---------|--------|--------|----------------------|--------|
|   |       |   |    |   |    |    |   |   |                 |   |
|   | 13,740,717 |   |    |   | 180,508 |    |   |   | 7,049                |   |   |   | - |   |

Item

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Item6

| Exhibit      No.                              |   | Description                                                                              |
|-----------------------------------------------|--------|------------------------------------------------------------------------------------------|
|                                          |   |                                                                                     |
| 31.1                                          |   | Section 302 Certification of President and Chief      Executive Officer*                 |
| 31.2                                          |   | Section 302 Certification of Executive Vice President      and Chief Operating Officer*  |
| 31.3                                          |   | Section 302 Certification of Executive Vice President      and Chief Financial Officer*  |
| 32.1                                          |   | Section 906 Certification of President and Chief      Executive Officer**                |
| 32.2                                          |   | Section 906 Certification of Executive Vice President      and Chief Operating Officer** |
| 32.3                                          |   | Section 906 Certification of Executive Vice President      and Chief Financial Officer** |
|                                          |   |                                                                                     |
|                                          |   |                                                                                     |
| *    Filed      herewith. |
| **      Furnished herewith.                   |

----

|   |                  |   |   |   |   |   |                                       |   |
|--------|-----------------------|--------|--------|--------|--------|--------|--------------------------------------------|--------|
| Date:  | November      9, 2009 |   |   |   | By:    | /s/    | Kevin      T. Bottomley                    |   |
|   |                  |   |   |   |   |   | Kevin      T. Bottomley                    |   |
|   |                  |   |   |   |   |   | President      and Chief Executive Officer |   |
|   |                  |   |   |   |   |   |                                       |   |
|   |                  |   |   |   |   |   |                                       |   |
| Date:  | November      9, 2009 |   |   |   | By:    | /s/    | James      J. McCarthy                     |   |
|   |                  |   |   |   |   |   | James      J. McCarthy                     |   |
|   |                  |   |   |   |   |   | Executive      Vice President and Chief    |   |
|   |                  |   |   |   |   |   | Operating      Officer                     |   |
|   |                  |   |   |   |   |   |                                       |   |
|   |                  |   |   |   |   |   |                                       |   |
| Date:  | November      9, 2009 |   |   |   | By:    | /s/    | L.      Mark Panella                       |   |
|   |                  |   |   |   |   |   | L.      Mark Panella                       |   |
|   |                  |   |   |   |   |   | Executive      Vice President and Chief    |   |
|   |                  |   |   |   |   |   | Financial      Officer                     |   |

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