----

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

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

| Connecticut                                                    | 06-1514263                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 5 Bissell Street, Lakeville, CT                                | 06039                                |
| (Address of principal executive offices)                       | (Zip code)                           |
| (860) 435-9801                                                 |
| (Registrant's telephone number, including area code)           |

| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company ý |
|--------------------------------|---------------------|------------------------------|---------------------------------------|

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TAB

|                                    |                                                                               | Page   |
|-----------------------------------------|------------------------------------------------------------------------------------|--------|
|                                    |                                                                               |   |
| PART I  FINANCIAL INFORMATION |
|                                    |                                                                               |   |
| Item 1.                                 | Financial Statements:                                                              |   |
|                                    |                                                                               |   |
|                                    | Consolidated Balance Sheets as of March 31, 2011 (unaudited) and December 31, 2010 | 3      |
|                                    |                                                                               |   |
|                                    | Consolidated Statements of Income for the three month periods                      |   |
|                                    | ended March 31, 2011 and March 31, 2010 (unaudited)                                | 4      |
|                                    |                                                                               |   |
|                                    | Consolidated Statements of Changes in Shareholders' Equity for the three month     |   |
|                                    | periods ended March 31, 2011 and March 31, 2010 (unaudited)                        | 5      |
|                                    |                                                                               |   |
|                                    | Consolidated Statements of Cash Flows for the three month periods ended            |   |
|                                    | March 31, 2011 and March 31, 2010 (unaudited)                                      | 6      |
|                                    |                                                                               |   |
|                                    | Notes to Consolidated Financial Statements                                         | 7      |
|                                    |                                                                               |   |
| Item 2.                                 | Management's Discussion and Analysis of Financial Condition                        |   |
|                                    | and Results of Operations                                                          | 20     |
|                                    |                                                                               |   |
| Item 3.                                 | Quantitative and Qualitative Disclosure of Market Risk                             | 32     |
|                                    |                                                                               |   |
| Item 4.                                 | Controls and Procedures                                                            | 33     |
|                                    |                                                                               |   |
| PART II Other Information               |
|                                    |                                                                               |   |
| Item 1.                                 | Legal Proceedings                                                                  | 33     |
| Item 1A.                                | Risk Factors                                                                       | 34     |
| Item 2.                                 | Unregistered Sales of Equity Securities and Use of Proceeds                        | 34     |
| Item 3.                                 | Defaults upon Senior Securities                                                    | 34     |
| Item 4.                                 | Removed and Reserved                                                               | 34     |
| Item 5.                                 | Other information                                                                  | 34     |
| Item 6.                                 | Exhibits                                                                           | 34     |

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Table of Contents

CONSOLIDATED BALANCE SHEETS

|  in thousands (except share data) unaudited                       |   | March 31, 2011 |    |   | December 31, 2010 |   |
|------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
| ASSETS                                                                 |   |           |    |   |              |   |
| Cash and due from banks                                                |   | $              | 5,349   |   |              | $      | 6,694 |   |
| Interest bearing demand deposits with other banks                      |   |           | 37,742  |   |              |   | 20,214 |   |
| Total cash and cash equivalents                                        |   |           | 43,091  |   |              |   | 26,908 |   |
| Interest bearing time deposits with other banks                        |   |           | 5,000   |   |              |   | 5,000 |   |
| Securities                                                             |   |           |    |   |              |   |   |   |
| Available-for-sale at fair value                                       |   |           | 125,223 |   |              |   | 147,422 |   |
| Held-to-maturity at amortized cost (fair value: $56 and $58)           |   |           | 55      |   |              |   | 56 |   |
| Federal Home Loan Bank of Boston stock at cost                         |   |           | 6,032   |   |              |   | 6,032 |   |
| Loans held-for-sale                                                    |   |           | 187     |   |              |   | 1,184 |   |
| Loans receivable, net (allowance for loan losses: $3,978 and $3,920)   |   |           | 361,238 |   |              |   | 352,449 |   |
| Investment in real estate                                              |   |           | 75      |   |              |   | 75 |   |
| Other real estate owned                                                |   |           | 866     |   |              |   | 610 |   |
| Bank premises and equipment, net                                       |   |           | 12,303  |   |              |   | 12,190 |   |
| Goodwill                                                               |   |           | 9,829   |   |              |   | 9,829 |   |
| Intangible assets (net of accumulated amortization: $1,357 and $1,301) |   |           | 1,186   |   |              |   | 1,242 |   |
| Accrued interest receivable                                            |   |           | 2,002   |   |              |   | 2,132 |   |
| Cash surrender value of life insurance policies                        |   |           | 3,893   |   |              |   | 3,854 |   |
| Deferred taxes                                                         |   |           | 2,260   |   |              |   | 2,540 |   |
| Other assets                                                           |   |           | 3,654   |   |              |   | 3,947 |   |
| Total Assets                                                           |   | $              | 576,894 |   |              | $      | 575,470 |   |
| LIABILITIES and SHAREHOLDERS' EQUITY                                   |   |           |    |   |              |   |   |   |
| Deposits                                                               |   |           |    |   |              |   |   |   |
| Demand (non-interest bearing)                                          |   | $              | 74,690  |   |              | $      | 71,565 |   |
| Demand (interest bearing)                                              |   |           | 59,311  |   |              |   | 63,258 |   |
| Money market                                                           |   |           | 106,468 |   |              |   | 77,089 |   |
| Savings and other                                                      |   |           | 97,407  |   |              |   | 93,324 |   |
| Certificates of deposit                                                |   |           | 114,503 |   |              |   | 125,053 |   |
| Total deposits                                                         |   |           | 452,379 |   |              |   | 430,289 |   |
| Repurchase agreements                                                  |   |           | 8,241   |   |              |   | 13,190 |   |
| Federal Home Loan Bank of Boston advances                              |   |           | 55,888  |   |              |   | 72,812 |   |
| Accrued interest and other liabilities                                 |   |           | 4,438   |   |              |   | 4,163 |   |
| Total Liabilities                                                      |   |           | 520,946 |   |              |   | 520,454 |   |
| Commitments and contingencies                                          |   |           | -       |   |              |   | - |   |
| Shareholders' Equity                                                   |   |           |    |   |              |   |   |   |
| Preferred stock - $.01 per share par value                             |   |           |    |   |              |   |   |   |
| Authorized: 25,000; Shares issued: 8,816;                              |   |           |    |   |              |   |   |   |
| Liquidation preference: $1,000 per share                               |   |           | 8,743   |   |              |   | 8,738 |   |
| Common stock - $.10 per share par value                                |   |           |    |   |              |   |   |   |
| Authorized: 3,000,000;                                                 |   |           |    |   |              |   |   |   |
| Issued: 1,686,701 and 1,685,861                                        |   |           | 168     |   |              |   | 168 |   |
| Common stock warrants outstanding                                      |   |           | 112     |   |              |   | 112 |   |
| Paid-in capital                                                        |   |           | 13,200  |   |              |   | 13,200 |   |
| Retained earnings                                                      |   |           | 36,923  |   |              |   | 36,567 |   |
| Accumulated other comprehensive loss, net                              |   |           | (3,198  | )      |              |   | (3,769 | ) |
| Total Shareholders' Equity                                             |   |           | 55,948  |   |              |   | 55,016 |   |
| Total Liabilities and Shareholders' Equity                             |   | $              | 576,894 |   |              | $      | 575,470 |   |

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Table of Contents

CONSOLIDATED STATEMENTS OF INCOME

| Three months ended March 31, (in thousands except per share amounts) unaudited |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Interest and dividend income                                                   |   |   |   |   |   |   |
| Interest and fees on loans                                                     |   | $      | 4,664  |   |   | $      | 4,487 |   |
| Interest on debt securities                                                    |   |   |   |   |   |   |   |   |
| Taxable                                                                        |   |   | 783    |   |   |   | 926 |   |
| Tax exempt                                                                     |   |   | 554    |   |   |   | 560 |   |
| Other interest and dividends                                                   |   |   | 38     |   |   |   | 46 |   |
| Total interest and dividend income                                             |   |   | 6,039  |   |   |   | 6,019 |   |
| Interest expense                                                               |   |   |   |   |   |   |   |   |
| Deposits                                                                       |   |   | 871    |   |   |   | 1,198 |   |
| Repurchase agreements                                                          |   |   | 15     |   |   |   | 27 |   |
| Federal Home Loan Bank of Boston advances                                      |   |   | 646    |   |   |   | 758 |   |
| Total interest expense                                                         |   |   | 1,532  |   |   |   | 1,983 |   |
| Net interest income                                                            |   |   | 4,507  |   |   |   | 4,036 |   |
| Provision for loan losses                                                      |   |   | 330    |   |   |   | 180 |   |
| Net interest and dividend income after provision for loan losses               |   |   | 4,177  |   |   |   | 3,856 |   |
| Non-interest income                                                            |   |   |   |   |   |   |   |   |
| Trust and wealth advisory                                                      |   |   | 667    |   |   |   | 545 |   |
| Service charges and fees                                                       |   |   | 499    |   |   |   | 453 |   |
| Gains on securities                                                            |   |   | 11     |   |   |   | - |   |
| Gains on sales of mortgage loans, net                                          |   |   | 133    |   |   |   | 42 |   |
| Mortgage servicing, net                                                        |   |   | 32     |   |   |   | 33 |   |
| Other                                                                          |   |   | 59     |   |   |   | 56 |   |
| Total non-interest income                                                      |   |   | 1,401  |   |   |   | 1,129 |   |
| Non-interest expense                                                           |   |   |   |   |   |   |   |   |
| Salaries                                                                       |   |   | 1,729  |   |   |   | 1,571 |   |
| Employee benefits                                                              |   |   | 634    |   |   |   | 630 |   |
| Premises and equipment                                                         |   |   | 583    |   |   |   | 515 |   |
| Data processing                                                                |   |   | 377    |   |   |   | 408 |   |
| Professional fees                                                              |   |   | 280    |   |   |   | 402 |   |
| FDIC insurance                                                                 |   |   | 223    |   |   |   | 171 |   |
| Marketing and community support                                                |   |   | 68     |   |   |   | 62 |   |
| Amortization of intangibles                                                    |   |   | 56     |   |   |   | 56 |   |
| Other                                                                          |   |   | 474    |   |   |   | 497 |   |
| Total non-interest expense                                                     |   |   | 4,424  |   |   |   | 4,312 |   |
| Income before income taxes                                                     |   |   | 1,154  |   |   |   | 673 |   |
| Income tax provision                                                           |   |   | 211    |   |   |   | 79 |   |
| Net income                                                                     |   | $      | 943    |   |   | $      | 594 |   |
| Net income available to common shareholders                                    |   | $      | 828    |   |   | $      | 479 |   |
|                                                                           |   |   |   |   |   |   |   |   |
| Basic and diluted earnings per share                                           |   | $      | 0.49   |   |   | $      | 0.28 |   |
| Common dividends per share                                                     |   |   | 0.28   |   |   |   | 0.28 |   |

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Table of Contents

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

|                                        |   | Common Stock |      |   |  Preferred |    |   |        |   |    | Paid-in  |   |   |  Retained |   |   | Accumulatedother comp- |    |   | Total share-holders' |   |
|---------------------------------------------|--------|--------------|-----------|--------|-----------------|---------|--------|-------------|--------|---------|----------|--------|--------|----------------|--------|--------|------------------------|---------|--------|----------------------|--------|
| (dollars in thousands) unaudited            |   | Shares       |      |   | Amount          |    |   |  Stock |   |    | Warrants |   |   | capital        |   |   | earnings               |    |   | rehensive loss       |   |   | equity |   |
| Balances at December 31, 2009               |   |         | 1,686,701 |   |            | $       | 168    |        |   | $       | 8,717    |   |   | $              | 112    |   |                   | $       | 13,177 |                 |   | $ | 35,259 |   |   | $ | (5,078 | ) |   | $ | 52,355 |   |
| Net income for period                       |   |         | -         |   |            |    | -      |        |   |    | -        |   |   |           | -      |   |                   |    | -      |                 |   |   | 594 |   |   |   | - |   |   |   | 594 |   |
| Other comprehensive income, net of tax      |   |         | -         |   |            |    | -      |        |   |    | -        |   |   |           | -      |   |                   |    | -      |                 |   |   | - |   |   |   | 656 |   |   |   | 656 |   |
| Total comprehensive income                  |   |         |      |   |            |    |   |        |   |    |     |   |   |           |   |   |                   |    |   |                 |   |   |   |   |   |   |   |   |   |   | 1,250 |   |
| Amortization (accretion) of preferred stock |   |         | -         |   |            |    | -      |        |   |    | 5        |   |   |           | -      |   |                   |    | -      |                 |   |   | (5 | ) |   |   | - |   |   |   | - |   |
| Common stock dividends paid                 |   |         | -         |   |            |    | -      |        |   |    | -        |   |   |           | -      |   |                   |    | -      |                 |   |   | (472 | ) |   |   | - |   |   |   | (472 | ) |
| Preferred stock dividends paid              |   |         | -         |   |            | $  | -      |        |   | $  | -        |   |   | $         | -      |   |                   | $  | -      |                 |   | $  | (110 | ) |   | $  | - |   |   | $  | (110 | ) |
| Balances at March 31, 2010                  |   |         | 1,686,701 |   |            |    | 168    |        |   |    | 8,722    |   |   |           | 112    |   |                   |    | 13,177 |                 |   |   | 35,266 |   |   |   | (4,422 | ) |   |   | 53,023 |   |
| Balances at December 31, 2010               |   |         | 1,687,661 |   |            | $  | 168    |        |   | $  | 8,738    |   |   | $         | 112    |   |                   | $  | 13,200 |                 |   | $  | 36,567 |   |   | $  | (3,769 | ) |   | $  | 55,016 |   |
| Net income for period                       |   |         | -         |   |            |    | -      |        |   |    | -        |   |   |           | -      |   |                   |    | -      |                 |   |   | 943 |   |   |   | - |   |   |   | 943 |   |
| Other comprehensive income, net of tax      |   |         | -         |   |            |    | -      |        |   |    | -        |   |   |           | -      |   |                   |    | -      |                 |   |   | - |   |   |   | 571 |   |   |   | 571 |   |
| Total comprehensive income                  |   |         |      |   |            |    |   |        |   |    |     |   |   |           |   |   |                   |    |   |                 |   |   |   |   |   |   |   |   |   |   | 1,514 |   |
| Amortization (accretion) of preferred stock |   |         | -         |   |            |    | -      |        |   |    | 5        |   |   |           | -      |   |                   |    | -      |                 |   |   | (5 | ) |   |   | - |   |   |   | - |   |
| Common stock dividends paid                 |   |         | -         |   |            |    | -      |        |   |    | -        |   |   |           | -      |   |                   |    | -      |                 |   |   | (472 | ) |   |   | - |   |   |   | (472 | ) |
| Preferred stock dividends paid              |   |         | -         |   |            |    | -      |        |   |    | -        |   |   |           | -      |   |                   |    | -      |                 |   |   | (110 | ) |   |   | - |   |   |   | (110 | ) |
| Balances March 31, 2011                     |   |         | 1,687,661 |   |            | $       | 168    |        |   | $       | 8,743    |   |   | $              | 112    |   |                   | $       | 13,200 |                 |   | $ | 36,923 |   |   | $ | (3,198 | ) |   | $ | 55,948 |   |

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Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

| Three months ended March 31, (in thousands) unaudited                             |   | 2011   |   |   | 2010   |   |
|-----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Operating Activities                                                              |   |   |   |   |   |   |
| Net income                                                                        |   | $      | 943    |   |   | $      | 594 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |   |   |   |   |   |   |
| (Accretion), amortization and depreciation                                        |   |   |   |   |   |   |   |   |
| Securities                                                                        |   |   | 62     |   |   |   | 174 |   |
| Bank premises and equipment                                                       |   |   | 206    |   |   |   | 193 |   |
| Core deposit intangible                                                           |   |   | 56     |   |   |   | 56 |   |
| Mortgage servicing rights                                                         |   |   | 58     |   |   |   | 31 |   |
| Fair value adjustment on loans                                                    |   |   | 11     |   |   |   | 11 |   |
| Sales and calls of securities available-for-sale                                  |   |   | (11    | )      |   |   | - |   |
| Write down of other real estate owned                                             |   |   | 57     |   |   |   | - |   |
| Provision for loan losses                                                         |   |   | 330    |   |   |   | 180 |   |
| Decrease (increase) in loans held-for-sale                                        |   |   | 998    |   |   |   | (513 | ) |
| Increase in deferred loan origination fees and costs, net                         |   |   | (57    | )      |   |   | (41 | ) |
| Mortgage servicing rights originated                                              |   |   | (77    | )      |   |   | (28 | ) |
| Decrease in mortgage servicing rights impairment reserve                          |   |   | (2     | )      |   |   | (2 | ) |
| Decrease in interest receivable                                                   |   |   | 130    |   |   |   | 85 |   |
| Deferred tax benefit                                                              |   |   | (14    | )      |   |   | (8 | ) |
| Decrease in prepaid expenses                                                      |   |   | 73     |   |   |   | 68 |   |
| Increase in cash surrender value of life insurance policies                       |   |   | (39    | )      |   |   | (42 | ) |
| Decrease in income tax receivable                                                 |   |   | 224    |   |   |   | 69 |   |
| Decrease (increase) in other assets                                               |   |   | 25     |   |   |   | (25 | ) |
| Increase in accrued expenses                                                      |   |   | 537    |   |   |   | 431 |   |
| Decrease in interest payable                                                      |   |   | (101   | )      |   |   | (40 | ) |
| Decrease in other liabilities                                                     |   |   | (143   | )      |   |   | (111 | ) |
| Net cash provided by operating activities                                         |   |   | 3,266  |   |   |   | 1,082 |   |
| Investing Activities                                                              |   |   |   |   |   |   |   |   |
| Purchases of securities available-for-sale                                        |   |   | -      |   |   |   | (33,985 | ) |
| Proceeds from calls of securities available-for-sale                              |   |   | 22,997 |   |   |   | 1,550 |   |
| Proceeds from maturities of securities available-for-sale                         |   |   | -      |   |   |   | 12,089 |   |
| Proceeds from maturities of securities held-to-maturity                           |   |   | 1      |   |   |   | 1 |   |
| Loan originations and principle collections, net                                  |   |   | (9,394 | )      |   |   | (2,499 | ) |
| Recoveries of loans previously charged-off                                        |   |   | 7      |   |   |   | 6 |   |
| Capital expenditures                                                              |   |   | (327   | )      |   |   | (1,068 | ) |
| Net cash provided (utilized) by investing activities                              |   |   | 13,284 |   |   |   | (23,906 | ) |

| Three months ended March 31, (in thousands) unaudited           |   | 2011   |    |   | 2010   |   |
|-----------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Financing Activities                                            |   |   |    |   |   |   |
| Increase in deposit transaction accounts, net                   |   |   | 32,640  |   |   |   | 11,352 |   |
| Decrease in time deposits, net                                  |   |   | (10,550 | )      |   |   | (7,065 | ) |
| Decrease in securities sold under agreements to repurchase, net |   |   | (4,949  | )      |   |   | (3,442 | ) |
| Principal payments on Federal Home Loan Bank of Boston advances |   |   | (16,925 | )      |   |   | (1,008 | ) |
| Common stock dividends paid                                     |   |   | (473    | )      |   |   | (472 | ) |
| Preferred stock dividends paid                                  |   |   | (110    | )      |   |   | (110 | ) |
| Net cash utilized by financing activities                       |   |   | (367    | )      |   |   | (745 | ) |
| Net increase (decrease) in cash and cash equivalents            |   |   | 16,183  |   |   |   | (23,569 | ) |
| Cash and cash equivalents, beginning of period                  |   |   | 26,908  |   |   |   | 43,298 |   |
| Cash and cash equivalents, end of period                        |   | $      | 43,091  |   |   | $      | 19,729 |   |
| Cash paid during period                                         |   |   |    |   |   |   |   |   |
| Interest                                                        |   | $      | 633     |   |   | $      | 2,023 |   |
| Income taxes                                                    |   |   | 449     |   |   |   | 139 |   |
| Non-cash transfers                                              |   |   |    |   |   |   |   |   |
| Transfer from loans to other real estate owned                  |   |   | 314     |   |   |   | - |   |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Table of Contents

| (in thousands)                         |   | Amortizedcost (1) |    |   | Gross un-realized gains |   |   | Gross un-realized losses |   |   | Fair value |   |
|----------------------------------------|--------|-------------------|---------|--------|-------------------------|--------|--------|--------------------------|--------|--------|------------|--------|
| March 31, 2011                         |   |              |    |   |                    |   |   |                     |   |   |       |   |
| Available-for-sale                     |   |              |    |   |                    |   |   |                     |   |   |       |   |
| U.S. Treasury notes                    |   | $                 | 5,000   |   |                    | $      | 186    |                     |   | $      | -          |   |   | $ | 5,186 |   |
| U.S. Government Agency notes           |   |              | 22,587  |   |                    |   | 306    |                     |   |   | (79        | )      |   |   | 22,814 |   |
| Municipal bonds                        |   |              | 51,359  |   |                    |   | 236    |                     |   |   | (4,903     | )      |   |   | 46,692 |   |
| Mortgage backed securities             |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| U.S. Government Agencies               |   |              | 17,665  |   |                    |   | 567    |                     |   |   | (26        | )      |   |   | 18,206 |   |
| Collateralized mortgage obligations    |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| U.S. Government Agencies               |   |              | 8,602   |   |                    |   | 9      |                     |   |   | (42        | )      |   |   | 8,569 |   |
| Non-agency                             |   |              | 17,609  |   |                    |   | 708    |                     |   |   | (293       | )      |   |   | 18,024 |   |
| SBA bonds                              |   |              | 4,353   |   |                    |   | 73     |                     |   |   | -          |   |   |   | 4,426 |   |
| Corporate bonds                        |   |              | 1,092   |   |                    |   | 38     |                     |   |   | -          |   |   |   | 1,130 |   |
| Preferred Stock                        |   |              | 20      |   |                    |   | 156    |                     |   |   | -          |   |   |   | 176 |   |
| Total securities available-for-sale    |   | $                 | 128,287 |   |                    | $      | 2,279  |                     |   | $      | (5,343     | )      |   | $ | 125,223 |   |
| Held-to-maturity                       |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| Mortgage backed security               |   | $                 | 55      |   |                    | $      | 1      |                     |   | $      | -          |   |   | $ | 56 |   |
| Non-marketable securities              |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| Federal Home Loan Bank of Boston stock |   | $                 | 6,032   |   |                    | $      | -      |                     |   | $      | -          |   |   | $ | 6,032 |   |

| (1)   | Net of other-than-temporary impairment write-down recognized in earnings. |
|-----------------|---------------------------------------------------------------------------|

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Table of Contents

| (in thousands)                         |   | Amortizedcost (1) |    |   | Gross un-realized gains |   |   | Gross un-realized losses |   |   | Fair value |   |
|----------------------------------------|--------|-------------------|---------|--------|-------------------------|--------|--------|--------------------------|--------|--------|------------|--------|
| December 31, 2010                      |   |              |    |   |                    |   |   |                     |   |   |       |   |
| Available-for-sale                     |   |              |    |   |                    |   |   |                     |   |   |       |   |
| U.S. Treasury notes                    |   | $                 | 4,999   |   |                    | $      | 197    |                     |   | $      | -          |   |   | $ | 5,196 |   |
| U.S. Government Agency notes           |   |              | 41,590  |   |                    |   | 380    |                     |   |   | (92        | )      |   |   | 41,878 |   |
| Municipal bonds                        |   |              | 51,330  |   |                    |   | 139    |                     |   |   | (5,371     | )      |   |   | 46,098 |   |
| Mortgage backed securities             |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| U.S. Government Agencies               |   |              | 19,190  |   |                    |   | 566    |                     |   |   | (20        | )      |   |   | 19,736 |   |
| Collateralized mortgage obligations    |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| U.S. Government Agencies               |   |              | 9,283   |   |                    |   | 29     |                     |   |   | (1         | )      |   |   | 9,311 |   |
| Non-agency                             |   |              | 19,002  |   |                    |   | 714    |                     |   |   | (599       | )      |   |   | 19,117 |   |
| SBA bonds                              |   |              | 4,831   |   |                    |   | 70     |                     |   |   | -          |   |   |   | 4,901 |   |
| Corporate bonds                        |   |              | 1,089   |   |                    |   | 41     |                     |   |   | -          |   |   |   | 1,130 |   |
| Preferred Stock                        |   |              | 20      |   |                    |   | 35     |                     |   |   | -          |   |   |   | 55 |   |
| Total securities available-for-sale    |   | $                 | 151,334 |   |                    | $      | 2,171  |                     |   | $      | (6,083     | )      |   | $ | 147,422 |   |
| Held-to-maturity                       |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| Mortgage backed security               |   | $                 | 56      |   |                    | $      | 2      |                     |   | $      | -          |   |   | $ | 58 |   |
| Non-marketable securities              |   |              |    |   |                    |   |   |                     |   |   |       |   |   |   |   |   |
| Federal Home Loan Bank of Boston stock |   | $                 | 6,032   |   |                    | $      | -      |                     |   | $      | -          |   |   | $ | 6,032 |   |

| (1)   | Net of other-than-temporary impairment write-down recognized in earnings. |
|-----------------|---------------------------------------------------------------------------|

|                                       |   | Less than 12 Months |   |   | 12 Months or Longer    |   |   | Total     |   |
|--------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|-----------|--------|
| (in thousands)                             |   | Fairvalue           |   |   | Unrealized losses |   |   | Fairvalue |   |   | Unrealized losses |   |   | Fairvalue |   |   | Unrealized losses |   |
| March 31, 2011                             |   |                |   |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale                         |   |                |   |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |
| U.S. Government Agency notes               |   | $                   | 9,921  |   |                   | $      | 79     |      |   | $ | - |   |   | $ | - |   |   | $ | 9,921 |   |   | $ | 79 |   |
| Municipal Bonds                            |   |                | 26,099 |   |                   |   | 1,535  |      |   |   | 14,351 |   |   |   | 3,368 |   |   |   | 40,450 |   |   |   | 4,903 |   |
| Mortgage backed securities                 |   |                | 1,171  |   |                   |   | 26     |      |   |   | - |   |   |   | - |   |   |   | 1,171 |   |   |   | 26 |   |
| Collateralized mortgage obligations        |   |                |   |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government Agencies                   |   |                | 4,180  |   |                   |   | 42     |      |   |   | - |   |   |   | - |   |   |   | 4,180 |   |   |   | 42 |   |
| Non-agency                                 |   |                | -      |   |                   |   | -      |      |   |   | 2,171 |   |   |   | 185 |   |   |   | 2,171 |   |   |   | 185 |   |
| Total temporarily impaired securities      |   |                | 41,371 |   |                   |   | 1,682  |      |   |   | 16,522 |   |   |   | 3,553 |   |   |   | 57,893 |   |   |   | 5,235 |   |
| Other-than-temporarily impaired securities |   |                |   |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Collateralized mortgage obligations        |   |                |   |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-agency                                 |   |                | 1,030  |   |                   |   | 80     |      |   |   | 784 |   |   |   | 28 |   |   |   | 1,814 |   |   |   | 108 |   |
| Total temporarily impaired and other-than- |   |                |   |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| temporarily impaired securities            |   | $                   | 42,401 |   |                   | $      | 1,762  |      |   | $ | 17,306 |   |   | $ | 3,581 |   |   | $ | 59,707 |   |   | $ | 5,343 |   |

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Table of Contents

| Three months ended March 31 (in thousands)                                      |   | 2011   |   |   | 2010   |   |
|---------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Balance, beginning of period                                                    |   | $      | 1,128  |   |   | $      | 1,128 |   |
| Credit component on debt securities in which OTTI was not previously recognized |   |   | -      |   |   |   | - |   |
| Balance, end of period                                                          |   | $      | 1,128  |   |   | $      | 1,128 |   |

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Table of Contents

| (in thousands)                                |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
| Residential 1-4 family                        |   | $              | 183,194 |   |              | $      | 176,892 |   |
| Residential 5+ multifamily                    |   |           | 3,271   |   |              |   | 2,889 |   |
| Construction of residential 1-4 family        |   |           | 4,564   |   |              |   | 5,988 |   |
| Home equity credit                            |   |           | 34,608  |   |              |   | 34,164 |   |
| Residential real estate                       |   |           | 225,637 |   |              |   | 219,933 |   |
| Commercial                                    |   |           | 74,519  |   |              |   | 75,495 |   |
| Construction of commercial                    |   |           | 7,777   |   |              |   | 7,312 |   |
| Commercial real estate                        |   |           | 82,296  |   |              |   | 82,807 |   |
| Farm land                                     |   |           | 5,221   |   |              |   | 5,690 |   |
| Vacant land                                   |   |           | 12,757  |   |              |   | 12,979 |   |
| Real estate secured                           |   |           | 325,911 |   |              |   | 321,409 |   |
| Commercial and industrial                     |   |           | 29,289  |   |              |   | 25,123 |   |
| Municipal                                     |   |           | 4,563   |   |              |   | 4,338 |   |
| Consumer                                      |   |           | 4,574   |   |              |   | 4,677 |   |
| Loans receivable, gross                       |   |           | 364,337 |   |              |   | 355,547 |   |
| Deferred loan origination fees and costs, net |   |           | 879     |   |              |   | 822 |   |
| Allowance for loan losses                     |   |           | (3,978  | )      |              |   | (3,920 | ) |
| Loans receivable, net                         |   | $              | 361,238 |   |              | $      | 352,449 |   |
| Loans held-for-sale                           |   |           |    |   |              |   |   |   |
| Residential 1-4 family                        |   | $              | 187     |   |              | $      | 1,184 |   |

|                                |   |    |    |   | Past due   |   |   |       |   |
|-------------------------------------|--------|---------|---------|--------|------------|--------|--------|------------|--------|
|                                |   | Current |    |   | 1-29       |   |   | 30-59      |   |   | 60-89  |   |   | 90-179 |   |   | 180 days |   |   | 30 days |   |   | Accruing 90 |   |   | Non-accural |   |
|                                |   |    |    |   |  days |   |   |  days |   |   | days |   |   |  days |   |   |  and over |   |   | and over |   |   |  days and over |   |   |   |   |
| Residential 1-4 family              |   | $       | 175,498 |   |       | $      | 3,018  |       |   | $ | 1,663 |   |   | $ | 822 |   |   | $ | 1,152 |   |   | $ | 1,041 |   |   | $ | 4,678 |   |   | $ | 100 |   |   | $ | 2,524 |   |
| Residential 5+ multifamily          |   |    | 3,111   |   |       |   | -      |       |   |   | 160 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 160 |   |   |   | - |   |   |   | - |   |
| Residential 1-4 family construction |   |    | 4,564   |   |       |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Home equity credit                  |   |    | 33,582  |   |       |   | 199    |       |   |   | 788 |   |   |   | 14 |   |   |   | - |   |   |   | 25 |   |   |   | 827 |   |   |   | - |   |   |   | 359 |   |
| Residential real estate             |   |    | 216,755 |   |       |   | 3,217  |       |   |   | 2,611 |   |   |   | 836 |   |   |   | 1,152 |   |   |   | 1,066 |   |   |   | 5,665 |   |   |   | 100 |   |   |   | 2,883 |   |
| Commercial                          |   |    | 71,057  |   |       |   | 1,737  |       |   |   | 834 |   |   |   | 541 |   |   |   | 351 |   |   |   | - |   |   |   | 1,726 |   |   |   | - |   |   |   | 3,061 |   |
| Construction of commercial          |   |    | 7,756   |   |       |   | -      |       |   |   | 21 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 21 |   |   |   | - |   |   |   | - |   |
| Commercial real estate              |   |    | 78,813  |   |       |   | 1,737  |       |   |   | 855 |   |   |   | 541 |   |   |   | 351 |   |   |   | - |   |   |   | 1,747 |   |   |   | - |   |   |   | 3,061 |   |
| Farm land                           |   |    | 4,523   |   |       |   | 383    |       |   |   | - |   |   |   | 315 |   |   |   | - |   |   |   | - |   |   |   | 315 |   |   |   | - |   |   |   | - |   |
| Vacant land                         |   |    | 8,637   |   |       |   | 564    |       |   |   | 159 |   |   |   | - |   |   |   | - |   |   |   | 3,397 |   |   |   | 3,556 |   |   |   | - |   |   |   | 3,933 |   |
| Real estate secured                 |   |    | 308,728 |   |       |   | 5,901  |       |   |   | 3,625 |   |   |   | 1,692 |   |   |   | 1,503 |   |   |   | 4,463 |   |   |   | 11,283 |   |   |   | 100 |   |   |   | 9,877 |   |
| Commercial and industrial           |   |    | 28,441  |   |       |   | 140    |       |   |   | 45 |   |   |   | 492 |   |   |   | 171 |   |   |   | - |   |   |   | 708 |   |   |   | 50 |   |   |   | 848 |   |
| Municipal                           |   |    | 4,563   |   |       |   | -      |       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Consumer                            |   |    | 4,383   |   |       |   | 132    |       |   |   | 50 |   |   |   | 9 |   |   |   | - |   |   |   | - |   |   |   | 59 |   |   |   | - |   |   |   | - |   |
| Loans receivable, gross             |   | $       | 346,115 |   |       | $      | 6,173  |       |   | $ | 3,720 |   |   | $ | 2,193 |   |   | $ | 1,674 |   |   | $ | 4,463 |   |   | $ | 12,050 |   |   | $ | 150 |   |   | $ | 10,725 |   |

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Table of Contents

|                              |   | March 31, 2011    |   |
|-----------------------------------|--------|-------------------|--------|
| Three months ended (in thousands) |   | Beginning balance |   |   | Provision |   |   | Charge-offs |   |   | Reco-veries |   |   | Ending balance |   |
| Residential                       |   | $                 | 1,504  |   |   | $ | 60 |   |   | $ | (101 | ) |   | $ | - |   |   | $ | 1,463 |   |
| Commercial                        |   |              | 1,132  |   |   |   | 291 |   |   |   | (80 | ) |   |   | - |   |   |   | 1,343 |   |
| Land                              |   |              | 392    |   |   |   | (18 | ) |   |   | (79 | ) |   |   | - |   |   |   | 295 |   |
| Real estate                       |   |              | 3,028  |   |   |   | 333 |   |   |   | (260 | ) |   |   | - |   |   |   | 3,101 |   |
| Commercial & industrial       |   |              | 541    |   |   |   | (9 | ) |   |   | - |   |   |   | - |   |   |   | 532 |   |
| Municipal                         |   |              | 51     |   |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | 55 |   |
| Consumer                          |   |              | 164    |   |   |   | 16 |   |   |   | (19 | ) |   |   | 7 |   |   |   | 168 |   |
| Unallocated                       |   |              | 136    |   |   |   | (14 | ) |   |   | - |   |   |   | - |   |   |   | 122 |   |
| Total                             |   | $                 | 3,920  |   |   | $ | 330 |   |   | $ | (279 | ) |   | $ | 7 |   |   | $ | 3,978 |   |

|                                   |   | Collectively evaluated |    |   | Individually evaluated |   |   | Total portfolio |   |
|----------------------------------------|--------|------------------------|---------|--------|------------------------|--------|--------|-----------------|--------|
| March 31, 2011(in thousands)           |   | Loanbalance            |    |   | Allowance              |   |   | Loanbalance     |   |   | Allowance |   |   | LoanBalance |   |   | Allowance |   |
| Residential 1-4 family                 |   | $                      | 176,460 |   |                   | $      | 768    |            |   | $ | 6,734 |   |   | $ | 283 |   |   | $ | 183,194 |   |   | $ | 1,051 |   |
| Residential 5+ multifamily             |   |                   | 3,271   |   |                   |   | 27     |            |   |   | - |   |   |   | - |   |   |   | 3,271 |   |   |   | 27 |   |
| Construction of residential 1-4 family |   |                   | 4,564   |   |                   |   | 18     |            |   |   | - |   |   |   | - |   |   |   | 4,564 |   |   |   | 18 |   |
| Home equity credit                     |   |                   | 34,249  |   |                   |   | 367    |            |   |   | 359 |   |   |   | - |   |   |   | 34,608 |   |   |   | 367 |   |
| Residential real estate                |   |                   | 218,544 |   |                   |   | 1,180  |            |   |   | 7,093 |   |   |   | 283 |   |   |   | 225,637 |   |   |   | 1,463 |   |
| Commercial                             |   |                   | 66,873  |   |                   |   | 865    |            |   |   | 7,646 |   |   |   | 425 |   |   |   | 74,519 |   |   |   | 1,290 |   |
| Construction of commercial             |   |                   | 7,777   |   |                   |   | 53     |            |   |   | - |   |   |   | - |   |   |   | 7,777 |   |   |   | 53 |   |
| Commercial real estate                 |   |                   | 74,650  |   |                   |   | 918    |            |   |   | 7,646 |   |   |   | 425 |   |   |   | 82,296 |   |   |   | 1,343 |   |
| Farm land                              |   |                   | 5,221   |   |                   |   | 54     |            |   |   | - |   |   |   | - |   |   |   | 5,221 |   |   |   | 54 |   |
| Vacant land                            |   |                   | 8,665   |   |                   |   | 97     |            |   |   | 4,092 |   |   |   | 144 |   |   |   | 12,757 |   |   |   | 241 |   |
| Real estate secured                    |   |                   | 307,080 |   |                   |   | 2,249  |            |   |   | 18,831 |   |   |   | 852 |   |   |   | 325,911 |   |   |   | 3,101 |   |
| Commercial and industrial              |   |                   | 28,167  |   |                   |   | 395    |            |   |   | 1,122 |   |   |   | 137 |   |   |   | 29,289 |   |   |   | 532 |   |
| Municipal                              |   |                   | 4,563   |   |                   |   | 55     |            |   |   | - |   |   |   | - |   |   |   | 4,563 |   |   |   | 55 |   |
| Consumer                               |   |                   | 4,574   |   |                   |   | 168    |            |   |   | - |   |   |   | - |   |   |   | 4,574 |   |   |   | 165 |   |
| Unallocated allowance                  |   |                   | -       |   |                   |   | 122    |            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 122 |   |
| Totals                                 |   | $                      | 344,384 |   |                   | $      | 2,989  |            |   | $ | 19,953 |   |   | $ | 989 |   |   | $ | 364,337 |   |   | $ | 3,978 |   |

| March 31, 2011 (in thousands)          |   | Pass   |    |   | Special mention |   |   | Substandard |   |   | Doubtful |   |   | Loss   |   |   | Total  |   |
|----------------------------------------|--------|--------|---------|--------|-----------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Residential 1-4 family                 |   | $      | 161,295 |   |            | $      | 13,306 |        |   | $      | 8,593    |   |   | $      | -      |   |   | $      | - |   |   | $ | 183,194 |   |
| Residential 5+ multifamily             |   |   | 2,189   |   |            |   | 994    |        |   |   | 88       |   |   |   | -      |   |   |   | - |   |   |   | 3,271 |   |
| Construction of residential 1-4 family |   |   | 3,450   |   |            |   | 1,114  |        |   |   | -        |   |   |   | -      |   |   |   | - |   |   |   | 4,564 |   |
| Home equity credit                     |   |   | 31,723  |   |            |   | 1,696  |        |   |   | 1,189    |   |   |   | -      |   |   |   | - |   |   |   | 34,608 |   |
| Residential real estate                |   |   | 198,657 |   |            |   | 17,110 |        |   |   | 9,870    |   |   |   | -      |   |   |   | - |   |   |   | 225,637 |   |
| Commercial                             |   |   | 52,414  |   |            |   | 9,926  |        |   |   | 12,179   |   |   |   | -      |   |   |   | - |   |   |   | 74,519 |   |
| Construction of commercial             |   |   | 6,814   |   |            |   | 492    |        |   |   | 471      |   |   |   | -      |   |   |   | - |   |   |   | 7,777 |   |
| Commercial real estate                 |   |   | 59,228  |   |            |   | 10,418 |        |   |   | 12,650   |   |   |   | -      |   |   |   | - |   |   |   | 82,296 |   |
| Farm land                              |   |   | 3,164   |   |            |   | 884    |        |   |   | 1,173    |   |   |   | -      |   |   |   | - |   |   |   | 5,221 |   |
| Vacant land                            |   |   | 8,315   |   |            |   | 262    |        |   |   | 4,180    |   |   |   | -      |   |   |   | - |   |   |   | 12,757 |   |
| Real estate secured                    |   |   | 269,364 |   |            |   | 28,674 |        |   |   | 27,873   |   |   |   | -      |   |   |   | - |   |   |   | 325,911 |   |
| Commercial and industrial              |   |   | 19,129  |   |            |   | 8,430  |        |   |   | 1,730    |   |   |   | -      |   |   |   | - |   |   |   | 29,289 |   |
| Municipal                              |   |   | 4,563   |   |            |   | -      |        |   |   | -        |   |   |   | -      |   |   |   | - |   |   |   | 4,563 |   |
| Consumer                               |   |   | 4,342   |   |            |   | 159    |        |   |   | 65       |   |   |   | 8      |   |   |   | - |   |   |   | 4,574 |   |
| Loans receivable, gross                |   | $      | 297,398 |   |            | $      | 37,263 |        |   | $      | 29,668   |   |   | $      | 8      |   |   | $      | - |   |   | $ | 364,337 |   |

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Table of Contents

| (in thousands)                                                |   | March 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Non-accrual loans, excluding troubled debt restructured loans |   | $              | 7,080  |   |              | $      | 5,791 |   |
| Non-accrual troubled debt restructured loans                  |   |           | 3,645  |   |              |   | 4,254 |   |
| Accruing troubled debt restructured loans                     |   |           | 5,323  |   |              |   | 5,330 |   |
| Total impaired loans                                          |   | $              | 16,048 |   |              | $      | 15,375 |   |
| Commitments to lend additional amounts to impaired borrowers  |   | $              | -      |   |              | $      | - |   |

|                      |   | Impaired loans with specific allowance |   |   | Impaired loans with no specific allowance |   |
|---------------------------|--------|----------------------------------------|--------|--------|-------------------------------------------|--------|
|                      |   | Loan balance                           |   |   | Specificallowance                         |   |   | Incomerecognized |   |   | Loan balance |   |   | Incomerecognized |   |
|                      |   | Book                                   |   |   | Note                                      |   |   | Average |   |   | Book |   |   | Note |   |   | Average |   |
| Residential 1-4 family    |   | $                                      | 2,048  |   |                                      | $      | 2,217 |   |   | $ | 1,657 |   |   | $ | 150 |   |   | $ | 6 |   |   | $ | 3,853 |   |   | $ | 3,852 |   |   | $ | 4,278 |   |   | $ | 29 |   |
| Home equity credit        |   |                                   | -      |   |                                      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 359 |   |   |   | 361 |   |   |   | 361 |   |   |   | 3 |   |
| Residential real estate   |   |                                   | 2,048  |   |                                      |   | 2,217 |   |   |   | 1,657 |   |   |   | 150 |   |   |   | 6 |   |   |   | 4,212 |   |   |   | 4,213 |   |   |   | 4,639 |   |   |   | 32 |   |
| Commercial                |   |                                   | 2,701  |   |                                      |   | 2,803 |   |   |   | 2,395 |   |   |   | 179 |   |   |   | 41 |   |   |   | 2,032 |   |   |   | 2,380 |   |   |   | 2,429 |   |   |   | 11 |   |
| Vacant land               |   |                                   | 670    |   |                                      |   | 774 |   |   |   | 787 |   |   |   | 64 |   |   |   | - |   |   |   | 3,263 |   |   |   | 3,627 |   |   |   | 3,202 |   |   |   | - |   |
| Real estate secured       |   |                                   | 5,419  |   |                                      |   | 5,794 |   |   |   | 4,839 |   |   |   | 393 |   |   |   | 47 |   |   |   | 9,507 |   |   |   | 10,220 |   |   |   | 10,270 |   |   |   | 43 |   |
| Commercial and industrial |   |                                   | 396    |   |                                      |   | 403 |   |   |   | 229 |   |   |   | 137 |   |   |   | 1 |   |   |   | 726 |   |   |   | 1,252 |   |   |   | 673 |   |   |   | 3 |   |
| Totals                    |   | $                                      | 5,815  |   |                                      | $      | 6,197 |   |   | $ | 5,068 |   |   | $ | 530 |   |   | $ | 48 |   |   | $ | 10,233 |   |   | $ | 11,472 |   |   | $ | 10,943 |   |   | $ | 46 |   |

| March 31, (in thousands)                       |   | 2011   |    |   | 2010   |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Residential mortgage loans serviced for others |   | $      | 101,636 |   |   | $      | 75,414 |   |
| Fair value of mortgage servicing rights        |   |   | 948     |   |   |   | 493 |   |

| Three months ended March 31, (in thousands) |   | 2011   |   |   | 2010   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
| Loan Servicing Rights                       |   |   |   |   |   |   |
| Balance, beginning of period                |   | $      | 683    |   |   | $      | 427 |   |
| Originated                                  |   |   | 77     |   |   |   | 28 |   |
| Amortization (1)                            |   |   | (59    | )      |   |   | (31 | ) |
| Balance, end of period                      |   |   | 701    |   |   |   | 424 |   |
| Valuation Allowance                         |   |   |   |   |   |   |   |   |
| Balance, beginning of period                |   |   | (10    | )      |   |   | (30 | ) |
| Decrease in impairment reserve (1)          |   |   | 2      |   |   |   | 2 |   |
| Balance, end of period                      |   |   | (8     | )      |   |   | (28 | ) |
| Loan servicing rights, net                  |   | $      | 693    |   |   | $      | 396 |   |

| (1)   | Amortization expense and changes in the impairment reserve are recorded in loan servicing fee income. |
|-----------------|-------------------------------------------------------------------------------------------------------|

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|  in thousands)                           |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
| Securities available-for-sale (at fair value) |   | $              | 61,866  |   |              | $      | 62,764 |   |
| Loans receivable                              |   |           | 116,489 |   |              |   | 114,424 |   |
| Total pledged assets                          |   | $              | 178,355 |   |              | $      | 177,188 |   |

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| Three months ended March 31, (in thousands, except per share amounts)    |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Net income                                                               |   | $      | 943    |   |   | $      | 594 |   |
| Preferred stock net accretion                                            |   |   | 5      |   |   |   | 5 |   |
| Preferred stock dividends paid                                           |   |   | 110    |   |   |   | 110 |   |
| Net income available to common shareholders                              |   | $      | 828    |   |   | $      | 479 |   |
| Weighted average common stock outstanding - basic                        |   |   | 1,688  |   |   |   | 1,687 |   |
| Weighted average common and common equivalent stock outstanding- diluted |   |   | 1,688  |   |   |   | 1,687 |   |
| Earnings per common and common equivalent share                          |   |   |   |   |   |   |   |   |
| Basic                                                                    |   | $      | 0.49   |   |   | $      | 0.28 |   |
| Diluted                                                                  |   |   | 0.49   |   |   |   | 0.28 |   |

|                                     |   | Actual |   |   | For Capital Adequacy Purposes |   |   | To be Well Capitalized Under Prompt Corrective Action Provisions |   |
|------------------------------------------|--------|--------|--------|--------|-------------------------------|--------|--------|------------------------------------------------------------------|--------|
| (dollars in thousands)                   |   | Amount |   |   | Ratio                         |   |   | Amount                                                           |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| March  31, 2011                |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to risk-weighted assets)  |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |
| Salisbury                                |   | $      | 52,209 |   |                          |   | 14.01  | %                                                                |   | $ | 29,810 |   |   |   | 8.0 | % |   |   | n/a |   |   |   | - |   |
| Bank                                     |   |   | 42,628 |   |                          |   | 11.23  |                                                             |   |   | 30,366 |   |   |   | 8.0 |   |   | $ | 37,957 |   |   |   | 10.0 | % |
| Tier 1 Capital (to risk-weighted assets) |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salisbury                                |   |   | 48,131 |   |                          |   | 12.92  |                                                             |   |   | 14,905 |   |   |   | 4.0 |   |   |   | n/a |   |   |   | - |   |
| Bank                                     |   |   | 38,551 |   |                          |   | 10.16  |                                                             |   |   | 15,183 |   |   |   | 4.0 |   |   |   | 22,774 |   |   |   | 6.0 |   |
| Tier 1 Capital (to average assets)       |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salisbury                                |   |   | 48,131 |   |                          |   | 8.60   |                                                             |   |   | 22,394 |   |   |   | 4.0 |   |   |   | n/a |   |   |   | - |   |
| Bank                                     |   |   | 38,551 |   |                          |   | 6.90   |                                                             |   |   | 22,349 |   |   |   | 4.0 |   |   |   | 27,936 |   |   |   | 5.0 |   |
| March 31, 2010                           |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to risk-weighted assets)  |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salisbury                                |   |   | 49,916 |   |                          |   | 12.75  |                                                             |   |   | 31,311 |   |   |   | 8.0 |   |   |   | n/a |   |   |   | - |   |
| Bank                                     |   |   | 40,420 |   |                          |   | 10.36  |                                                             |   |   | 31,227 |   |   |   | 8.0 |   |   |   | 38,034 |   |   |   | 10.0 |   |
| Tier 1 Capital (to risk-weighted assets) |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salisbury                                |   |   | 46,207 |   |                          |   | 11.81  |                                                             |   |   | 15,656 |   |   |   | 4.0 |   |   |   | n/a |   |   |   | - |   |
| Bank                                     |   |   | 36,712 |   |                          |   | 9.41   |                                                             |   |   | 15,613 |   |   |   | 4.0 |   |   |   | 23,420 |   |   |   | 6.0 |   |
| Tier 1 Capital (to average assets)       |   |   |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salisbury                                |   |   | 46,207 |   |                          |   | 8.40   |                                                             |   |   | 22,387 |   |   |   | 4.0 |   |   |   | n/a |   |   |   | - |   |
| Bank                                     |   |   | 36,712 |   |                          |   | 6.68   |                                                             |   |   | 21,996 |   |   |   | 4.0 |   |   |   | 27,494 |   |   |   | 5.0 |   |

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| Three months ended March 31, (in thousands) |   | 2011   |   |   | 2010   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
| Service cost                                |   | $      | 95     |   |   | $      | 100 |   |
| Interest cost on benefit obligation         |   |   | 93     |   |   |   | 91 |   |
| Expected return on plan assets              |   |   | (106   | )      |   |   | (100 | ) |
| Amortization of prior service cost          |   |   | -      |   |   |   | - |   |
| Amortization of net loss                    |   |   | 17     |   |   |   | 18 |   |
| Net periodic benefit cost                   |   | $      | 99     |   |   | $      | 109 |   |

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| Three months ended March 31, (in thousands)                            |   | 2011   |   |   | 2010   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Net income                                                             |   | $      | 943    |   |   | $      | 594 |   |
| Other comprehensive income                                             |   |   |   |   |   |   |   |   |
| Net unrealized gains  on securities available-for-sale       |   |   | 848    |   |   |   | 975 |   |
| Reclassification of net realized gains in net income                   |   |   | -      |   |   |   | - |   |
| Unrealized gains on securities available-for-sale                      |   |   | 848    |   |   |   | 975 |   |
| Income tax (expense)                                                   |   |   | (288   | )      |   |   | (331 | ) |
| Unrealized gains (losses) on securities available-for-sale, net of tax |   |   | 560    |   |   |   | 644 |   |
| Pension plan income                                                    |   |   | 17     |   |   |   | 18 |   |
| Income tax expense                                                     |   |   | (6     | )      |   |   | (6 | ) |
| Pension plan income, net of tax                                        |   |   | 11     |   |   |   | 12 |   |
| Other comprehensive income,  net of tax                      |   |   | 571    |   |   |   | 656 |   |
| Comprehensive income                                                   |   | $      | 1,514  |   |   | $      | 1,250 |   |

| Three months ended March 31, (in thousands)                    |   | 2011   |   |   | 2010   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Unrealized losses on securities available-for-sale, net of tax |   | $      | (2,022 | )      |   | $      | (3,186 | ) |
| Unrecognized pension plan expense, net of tax                  |   |   | (1,176 | )      |   |   | (1,236 | ) |
| Accumulated other comprehensive loss, net                      |   | $      | (3,198 | )      |   | $      | (4,422 | ) |

|   | · | Level 1. Quoted prices in active markets for identical assets. Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange.  Level 1 also includes U.S. Treasury, other U.S. Government and agency mortgage-backed securities that are traded by dealers or brokers in active markets.  Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2. Significant other observable inputs. Valuations for assets and liabilities traded in less active dealer or broker markets.  Valuations are obtained from third party pricing services for identical or comparable assets or liabilities. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3. Significant unobservable inputs. Valuations for assets and liabilities that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions.  Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets and liabilities. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Securities available-for-sale. Securities available-for-sale are recorded at fair value on a recurring basis. Level 1 securities include exchange-traded equity securities. Level 2 securities include debt securities with quoted prices, which are traded less frequently than exchange-traded instruments, whose value is determined using matrix pricing with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes obligations of the U.S. Treasury and U.S. government-sponsored enterprises, mortgage-backed securities, collateralized mortgage obligations, municipal bonds, SBA bonds, corporate bonds and certain preferred equities. Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence.  In the absence of such evidence, management’s best estimate is used. Subsequent to inception, management only changes level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Collateral dependent loans that are deemed to be impaired are valued based upon the fair value of the underlying collateral less costs to sell. Such collateral primarily consists of real estate and, to a lesser extent, other business assets. Management may adjust appraised values to reflect estimated market value declines or apply other discounts to appraised values resulting from its knowledge of the property. Internal valuations are utilized to determine the fair value of other business assets. Collateral dependent impaired loans are categorized as Level 3. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other real estate owned acquired through foreclosure or repossession is adjusted to fair value less costs to sell upon transfer out of loans. Subsequently, it is carried at the lower of carrying value or fair value less costs to sell. Fair value is generally based upon independent market prices or appraised values of the collateral. Management adjusts appraised values to reflect estimated market value declines or apply other discounts to appraised values for unobservable factors resulting from its knowledge of the property, and such property is categorized as Level 3. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Fair value measurements using |   |   | Assets at |   |
|-----------------------------------------------|--------|-------------------------------|--------|--------|-----------|--------|
| (in thousands)                                |   | Level 1                       |   |   | Level 2   |   |   | Level 3 |   |   | fair value |   |
| March 31, 2011                                |   |                          |   |   |      |   |   |   |   |   |   |   |
| Assets at fair value on a recurring basis     |   |                          |   |   |      |   |   |   |   |   |   |   |
| Securities available-for-sale                 |   | $                             | 176    |   |      | $      | 125,047 |   |   | $ | - |   |   | $ | 125,223 |   |
| Assets at fair value on a non-recurring basis |   |                          |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Collateral dependent impaired loans           |   |                          | -      |   |      |   | - |   |   |   | 5,285 |   |   |   | 5,285 |   |
| Other real estate owned                       |   |                          | -      |   |      |   | - |   |   |   | 500 |   |   |   | 500 |   |

|  (in thousands)                                     |   | Securities available-for-sale |   |   | Collateral dependent impaired Loans |   |   | Other real estate owned |   |   | Level 3assets atfair value |   |
|----------------------------------------------------------|--------|-------------------------------|--------|--------|-------------------------------------|--------|--------|-------------------------|--------|--------|----------------------------|--------|
| Balance, December 31, 2010                               |   | $                             | -      |   |                                | $      | 4,768  |                    |   | $      | 557                        |   |   | $ | 5,325 |   |
| Gains and losses (realized/unrealized)                   |   |                          |   |   |                                |   |   |                    |   |   |                       |   |   |   |   |   |
| Included in earnings                                     |   |                          | -      |   |                                |   | -      |                    |   |   | -                          |   |   |   | - |   |
| Included in other comprehensive income                   |   |                          | -      |   |                                |   | -      |                    |   |   | -                          |   |   |   | - |   |
| Principal paydowns of securities, net of accretion       |   |                          | -      |   |                                |   | -      |                    |   |   | -                          |   |   |   | - |   |
| Write-down of other real estate owned                    |   |                          |   |   |                                |   |   |                    |   |   | (57                        | )      |   |   |   |   |
| Transfers in and/or out of Level 3                       |   |                          | -      |   |                                |   | 517    |                    |   |   | -                          |   |   |   | 460 |   |
| Balance, March 31, 2011                                  |   | $                             | -      |   |                                | $      | 5,285  |                    |   | $      | 500                        |   |   | $ | 5,785 |   |
| Amount of total gains or losses for the period           |   |                          |   |   |                                |   |   |                    |   |   |                       |   |   |   |   |   |
| attributable to the change in unrealized gains or losses |   |                          |   |   |                                |   |   |                    |   |   |                       |   |   |   |   |   |
| Relating to assets still held at the reporting date      |   | $                             | -      |   |                                | $      | -      |                    |   | $      | -                          |   |   | $ | - |   |

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|                                            |   | March 31, 2011 |    |   | December 31, 2010   |   |
|-------------------------------------------------|--------|----------------|---------|--------|---------------------|--------|
| (in thousands)                                  |   | Carryingvalue  |    |   | Estimatedfair value |   |   | Carryingvalue |   |   | Estimatedfair value |   |
| Financial Assets                                |   |           |    |   |                |   |   |   |   |   |   |   |
| Cash and due from banks                         |   | $              | 43,091  |   |                | $      | 43,091 |   |   | $ | 26,908 |   |   | $ | 26,908 |   |
| Interest bearing time deposits with other banks |   |           | 5,000   |   |                |   | 5,000 |   |   |   | 5,000 |   |   |   | 5,000 |   |
| Securities available-for-sale                   |   |           | 125,223 |   |                |   | 125,223 |   |   |   | 147,422 |   |   |   | 147,422 |   |
| Security held-to-maturity                       |   |           | 55      |   |                |   | 56 |   |   |   | 56 |   |   |   | 58 |   |
| Federal Home Loan Bank stock                    |   |           | 6,032   |   |                |   | 6,032 |   |   |   | 6,032 |   |   |   | 6,032 |   |
| Loans held-for-sale                             |   |           | 187     |   |                |   | 188 |   |   |   | 1,184 |   |   |   | 1,193 |   |
| Loans receivable net                            |   |           | 361,238 |   |                |   | 361,791 |   |   |   | 352,449 |   |   |   | 351,628 |   |
| Accrued interest receivable                     |   |           | 2,002   |   |                |   | 2,002 |   |   |   | 2,132 |   |   |   | 2,132 |   |
| Financial Liabilities                           |   |           |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Demand (non-interest-bearing)                   |   | $              | 74,690  |   |                | $      | 74,690 |   |   | $ | 71,565 |   |   | $ | 71,565 |   |
| Demand (interest-bearing)                       |   |           | 59,311  |   |                |   | 59,311 |   |   |   | 63,258 |   |   |   | 63,258 |   |
| Money market                                    |   |           | 106,468 |   |                |   | 106,471 |   |   |   | 77,089 |   |   |   | 77,089 |   |
| Savings and other                               |   |           | 97,407  |   |                |   | 97,407 |   |   |   | 93,324 |   |   |   | 93,324 |   |
| Certificates of deposit                         |   |           | 114,503 |   |                |   | 114,589 |   |   |   | 125,053 |   |   |   | 125,172 |   |
| Deposits                                        |   |           | 452,379 |   |                |   | 452,468 |   |   |   | 430,289 |   |   |   | 430,408 |   |
| FHLBB advances                                  |   |           | 55,888  |   |                |   | 61,065 |   |   |   | 72,812 |   |   |   | 78,317 |   |
| Repurchase agreements                           |   |           | 8,241   |   |                |   | 8,241 |   |   |   | 13,190 |   |   |   | 13,190 |   |
| Accrued interest payable                        |   |           | 334     |   |                |   | 334 |   |   |   | 435 |   |   |   | 435 |   |

----

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| Item 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------|

----

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----

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| Three months ended March 31,                       |   | Average Balance |    |   | Income / Expense |   |    | Average Yield / Rate |   |
|----------------------------------------------------|--------|-----------------|---------|--------|------------------|--------|---------|----------------------|--------|
| (dollars in thousands)                             |   | 2011            |    |   | 2010             |   |    | 2011                 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Loans (a)                                          |   | $               | 362,436 |   |             | $      | 333,347 |                 |   | $ | 4,664 |   |   | $ | 4,487 |   |   |   | 5.15 | % |   |   | 5.38 | % |
| Securities (c)(d)                                  |   |            | 145,216 |   |             |   | 150,385 |                 |   |   | 1,594 |   |   |   | 1,745 |   |   |   | 4.39 |   |   |   | 4.64 |   |
| FHLBB stock                                        |   |            | 6,032   |   |             |   | 6,032   |                 |   |   | 6 |   |   |   | - |   |   |   | 0.42 |   |   |   | - |   |
| Short term funds (b)                               |   |            | 23,753  |   |             |   | 40,747  |                 |   |   | 33 |   |   |   | 46 |   |   |   | 0.56 |   |   |   | 0.45 |   |
| Total earning assets                               |   |            | 537,437 |   |             |   | 530,511 |                 |   |   | 6,297 |   |   |   | 6,278 |   |   |   | 4.69 |   |   |   | 4.73 |   |
| Other assets                                       |   |            | 33,436  |   |             |   | 32,865  |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                       |   | $               | 570,873 |   |             | $      | 563,376 |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing demand deposits                   |   | $               | 63,094  |   |             | $      | 49,158  |                 |   |   | 116 |   |   |   | 147 |   |   |   | 0.74 |   |   |   | 1.20 |   |
| Money market accounts                              |   |            | 84,306  |   |             |   | 66,413  |                 |   |   | 110 |   |   |   | 95 |   |   |   | 0.52 |   |   |   | 0.57 |   |
| Savings and other                                  |   |            | 95,454  |   |             |   | 87,644  |                 |   |   | 97 |   |   |   | 143 |   |   |   | 0.41 |   |   |   | 0.65 |   |
| Certificates of deposit                            |   |            | 120,688 |   |             |   | 148,941 |                 |   |   | 548 |   |   |   | 813 |   |   |   | 1.82 |   |   |   | 2.18 |   |
| Total interest-bearing deposits                    |   |            | 363,542 |   |             |   | 352,156 |                 |   |   | 871 |   |   |   | 1,198 |   |   |   | 0.96 |   |   |   | 1.36 |   |
| Repurchase agreements                              |   |            | 12,077  |   |             |   | 12,601  |                 |   |   | 15 |   |   |   | 27 |   |   |   | 0.50 |   |   |   | 0.86 |   |
| FHLBB advances                                     |   |            | 63,080  |   |             |   | 75,752  |                 |   |   | 646 |   |   |   | 758 |   |   |   | 4.10 |   |   |   | 4.00 |   |
| Total interest-bearing liabilities                 |   |            | 438,699 |   |             |   | 440,509 |                 |   |   | 1,532 |   |   |   | 1,983 |   |   |   | 1.40 |   |   |   | 1.80 |   |
| Demand deposits                                    |   |            | 72,989  |   |             |   | 66,122  |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other liabilities                                  |   |            | 3,995   |   |             |   | 3,791   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                         |   |            | 55,190  |   |             |   | 52,954  |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities & shareholders’ equity |   | $               | 570,873 |   |             | $      | 563,376 |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                |   |            |    |   |             |   |    |                 |   | $ | 4,765 |   |   | $ | 4,295 |   |   |   |   |   |   |   |   |   |
| Spread on interest-bearing funds                   |   |            |    |   |             |   |    |                 |   |   |   |   |   |   |   |   |   |   | 3.29 |   |   |   | 2.93 |   |
| Net interest margin (e)                            |   |            |    |   |             |   |    |                 |   |   |   |   |   |   |   |   |   |   | 3.56 |   |   |   | 3.25 |   |

| (a) | Includes non-accrual loans. |
|-----|-----------------------------|

| (b) | Includes interest-bearing deposits in other banks and federal funds sold. |
|-----|---------------------------------------------------------------------------|

| (c) | Average balances of securities are based on historical cost. |
|-----|--------------------------------------------------------------|

| (d) | Includes tax exempt income of $258,000 and $259,000, respectively for 2011 and 2010 on tax-exempt securities whose income and yields are calculated on a tax-equivalent basis. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Net interest income divided by average interest-earning assets. |
|-----|-----------------------------------------------------------------|

| Three months ended March 31, (in thousands) |   | 2011 versus 2010 |   |
|---------------------------------------------|--------|------------------|--------|
| Change in interest due to                   |   | Volume           |   |   | Rate |   |   | Net |   |
| Interest-earning assets                     |   |             |   |   |   |   |   |   |   |
| Loans                                       |   | $                | 383    |   |   | $ | (206 | ) |   | $ | 177 |   |
| Securities                                  |   |             | (58    | ) |   |   | (93 | ) |   |   | (151 | ) |
| FHLBB stock                                 |   |             | -      |   |   |   | 6 |   |   |   | 6 |   |
| Short term funds                            |   |             | (21    | ) |   |   | 8 |   |   |   | (13 | ) |
| Total                                       |   |             | 304    |   |   |   | (285 | ) |   |   | 19 |   |
| Interest-bearing liabilities                |   |             |   |   |   |   |   |   |   |   |   |   |
| Deposits                                    |   |             | (73    | ) |   |   | (254 | ) |   |   | (327 | ) |
| Repurchase agreements                       |   |             | (1     | ) |   |   | (11 | ) |   |   | (12 | ) |
| FHLBB advances                              |   |             | (128   | ) |   |   | 16 |   |   |   | (112 | ) |
| Total                                       |   |             | (202   | ) |   |   | (249 | ) |   |   | (451 | ) |
| Net change in net interest income           |   | $                | 506    |   |   | $ | (36 | ) |   | $ | 470 |   |

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| As of or for the three months ended (dollars in thousands) |   | March 31, 2011 |    |   | December 31, 2010 |   |    | March 31, 2010 |   |
|------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|---------|----------------|--------|
| Balance, beginning of period                               |   | $              | 3,920   |   |              | $      | 3,847   |           |   | $ | 3,473 |   |
| Provision (benefit) or loan losses                         |   |           | 330     |   |              |   | 380     |           |   |   | 180 |   |
| Charge-offs                                                |   |           |    |   |              |   |    |           |   |   |   |   |
| Real estate mortgages                                      |   |           | (260    | )      |              |   | (202    | )              |   |   | - |   |
| Commercial & industrial                                |   |           | -       |   |              |   | (95     | )              |   |   | - |   |
| Consumer                                                   |   |           | (19     | )      |              |   | (18     | )              |   |   | (10 | ) |
| Total charge-offs                                          |   |           | (279    | )      |              |   | (315    | )              |   |   | (10 | ) |
| Recoveries                                                 |   |           |    |   |              |   |    |           |   |   |   |   |
| Real estate mortgages                                      |   |           | -       |   |              |   | -       |           |   |   | - |   |
| Commercial & industrial                                |   |           | -       |   |              |   | -       |           |   |   | - |   |
| Consumer                                                   |   |           | 7       |   |              |   | 8       |           |   |   | 6 |   |
| Total recoveries                                           |   |           | 7       |   |              |   | 8       |           |   |   | 6 |   |
| Net (charge-offs) recoveries                               |   |           | (272    | )      |              |   | (307    | )              |   |   | (4 | ) |
| Balance, end of period                                     |   | $              | 3,978   |   |              | $      | 3,920   |           |   | $ | 3,649 |   |
| Loans receivable, gross                                    |   | $              | 364,337 |   |              | $      | 355,547 |           |   | $ | 332,622 |   |
| Non-performing loans                                       |   |           | 10,875  |   |              |   | 10,141  |           |   |   | 12,064 |   |
| Accruing loans past due 30-89 days                         |   |           | 3,991   |   |              |   | 1,917   |           |   |   | 5,383 |   |
| Ratio of allowance for loan losses:                        |   |           |    |   |              |   |    |           |   |   |   |   |
| to loans receivable, gross                                 |   |           | 1.09    | %      |              |   | 1.10    | %              |   |   | 1.10 | % |
| to non-performing loans                                    |   |           | 36.58   |   |              |   | 38.65   |           |   |   | 30.25 |   |
| Ratio of non-performing loans                              |   |           |    |   |              |   |    |           |   |   |   |   |
| to loans receivable, gross                                 |   |           | 2.98    |   |              |   | 2.85    |           |   |   | 3.62 |   |
| Ratio of accruing loans past due 30-89 days                |   |           |    |   |              |   |    |           |   |   |   |   |
| to loans receivable, gross                                 |   |           | 1.10    |   |              |   | 0.54    |           |   |   | 1.62 |   |

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| Three months ended March 31, (dollars in thousands) |   | 2011   |   |   | 2010   |   |   | 2011 vs. 2010 |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------------|--------|
| Gains on securities, net                            |   | $      | 11     |   |   | $      | -      |          |   | $ | 11 |   |   |   | (100.00 | )% |
| Trust and wealth advisory fees                      |   |   | 667    |   |   |   | 545    |          |   |   | 122 |   |   |   | 22.38 |   |
| Service charges and fees                            |   |   | 499    |   |   |   | 453    |          |   |   | 46 |   |   |   | 10.15 |   |
| Gains on sales of mortgage loans, net               |   |   | 133    |   |   |   | 42     |          |   |   | 91 |   |   |   | 216.66 |   |
| Mortgage servicing, net                             |   |   | 32     |   |   |   | 33     |          |   |   | (1 | ) |   |   | (3.03 | ) |
| Other                                               |   |   | 59     |   |   |   | 56     |          |   |   | 3 |   |   |   | 5.36 |   |
| Total non-interest income                           |   | $      | 1,401  |   |   | $      | 1,129  |          |   | $ | 272 |   |   |   | 24.09 |   |

| Three months ended March 31, (dollars in thousands) |   | 2011   |   |   | 2010   |   |   | 2011 vs. 2010 |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------------|--------|
| Salaries                                            |   | $      | 1,729  |   |   | $      | 1,571  |          |   | $ | 158 |   |   |   | (10.06 | )% |
| Employee benefits                                   |   |   | 634    |   |   |   | 630    |          |   |   | 4 |   |   |   | 0.63 |   |
| Premises and equipment                              |   |   | 583    |   |   |   | 515    |          |   |   | 68 |   |   |   | 13.20 |   |
| Data processing                                     |   |   | 377    |   |   |   | 408    |          |   |   | (31 | ) |   |   | 7.60 |   |
| Professional fees                                   |   |   | 280    |   |   |   | 402    |          |   |   | (122 | ) |   |   | 30.35 |   |
| FDIC insurance                                      |   |   | 223    |   |   |   | 171    |          |   |   | 52 |   |   |   | 30.41 |   |
| Marketing and community contributions               |   |   | 68     |   |   |   | 62     |          |   |   | 6 |   |   |   | 9.68 |   |
| Amortization of intangible assets                   |   |   | 56     |   |   |   | 56     |          |   |   | - |   |   |   | - |   |
| Other                                               |   |   | 474    |   |   |   | 497    |          |   |   | (23 | ) |   |   | (4.63 | ) |
| Non-interest expense                                |   | $      | 4,424  |   |   | $      | 4,312  |          |   | $ | 112 |   |   |   | 2.60 |   |

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| (in thousands)                                |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
| Residential 1-4 family                        |   | $              | 183,194 |   |              | $      | 176,892 |   |
| Residential 5+ multifamily                    |   |           | 3,271   |   |              |   | 2,889 |   |
| Construction of residential 1-4 family        |   |           | 4,564   |   |              |   | 5,988 |   |
| Home equity credit                            |   |           | 34,608  |   |              |   | 34,164 |   |
| Residential real estate                       |   |           | 225,637 |   |              |   | 219,933 |   |
| Commercial                                    |   |           | 74,519  |   |              |   | 75,495 |   |
| Construction of commercial                    |   |           | 7,777   |   |              |   | 7,312 |   |
| Commercial real estate                        |   |           | 82,296  |   |              |   | 82,807 |   |
| Farm land                                     |   |           | 5,221   |   |              |   | 5,690 |   |
| Vacant land                                   |   |           | 12,757  |   |              |   | 12,979 |   |
| Real estate secured                           |   |           | 325,911 |   |              |   | 321,409 |   |
| Commercial and industrial                     |   |           | 29,289  |   |              |   | 25,123 |   |
| Municipal                                     |   |           | 4,563   |   |              |   | 4,338 |   |
| Consumer                                      |   |           | 4,574   |   |              |   | 4,677 |   |
| Loans receivable, gross                       |   |           | 364,337 |   |              |   | 355,547 |   |
| Deferred loan origination fees and costs, net |   |           | 879     |   |              |   | 822 |   |
| Allowance for loan losses                     |   |           | (3,978  | )      |              |   | (3,920 | ) |
| Loans receivable, net                         |   | $              | 361,238 |   |              | $      | 352,449 |   |
| Loans held-for-sale                           |   |           |    |   |              |   |   |   |
| Residential 1-4 family                        |   | $              | 187     |   |              | $      | 1,184 |   |

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| (in thousands)                              |   | March 31, 2011 |   |   | December 31, 2010 |   |
|---------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Residential 1-4 family                      |   | $              | 2,524  |   |              | $      | 2,534 |   |
| Home equity credit                          |   |           | 359    |   |              |   | 362 |   |
| Commercial                                  |   |           | 3,061  |   |              |   | 2,923 |   |
| Vacant land                                 |   |           | 3,933  |   |              |   | 4,018 |   |
| Real estate secured                         |   |           | 9,877  |   |              |   | 9,837 |   |
| Commercial and industrial                   |   |           | 848    |   |              |   | 208 |   |
| Total non-accruing loans                    |   |           | 10,725 |   |              |   | 10,045 |   |
| Accruing loans past due 90 days and over    |   |           | 150    |   |              |   | 96 |   |
| Total non-performing loans                  |   |           | 10,875 |   |              |   | 10,141 |   |
| Real estate acquired in settlement of loans |   |           | 866    |   |              |   | 610 |   |
| Total non-performing assets                 |   | $              | 11,741 |   |              | $      | 10,751 |   |

| (in thousands)             |   | March 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------|--------|----------------|--------|--------|-------------------|--------|
| Current                    |   | $              | 2,188  |   |              | $      | 2,931 |   |
| Past due 001-029 days      |   |           | 829    |   |              |   | 219 |   |
| Past due 030-059 days      |   |           | 728    |   |              |   | 541 |   |
| Past due 060-089 days      |   |           | 993    |   |              |   | 1,050 |   |
| Past due 090-179 days      |   |           | 1,674  |   |              |   | 683 |   |
| Past due 180 days and over |   |           | 4,463  |   |              |   | 4,717 |   |
| Total non-performing loans |   | $              | 10,875 |   |              | $      | 10,141 |   |

| (in thousands)                               |   | March 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Residential 1-4 family                       |   | $              | 3,377  |   |              | $      | 3,377 |   |
| Commercial                                   |   |           | 1,672  |   |              |   | 1,677 |   |
| Real estate secured                          |   |           | 5,049  |   |              |   | 5,054 |   |
| Commercial and industrial                    |   |           | 274    |   |              |   | 276 |   |
| Accruing troubled debt restructured loans    |   |           | 5,323  |   |              |   | 5,330 |   |
| Residential 1-4 family                       |   |           | 450    |   |              |   | 552 |   |
| Commercial                                   |   |           | 2,520  |   |              |   | 2,923 |   |
| Vacant land                                  |   |           | 536    |   |              |   | 621 |   |
| Real estate secured                          |   |           | 3,506  |   |              |   | 4,096 |   |
| Commercial and Industrial                    |   |           | 140    |   |              |   | 158 |   |
| Non-accrual troubled debt restructured loans |   |           | 3,646  |   |              |   | 4,254 |   |
| Troubled debt restructured loans             |   | $              | 8,969  |   |              | $      | 9,584 |   |

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| (in thousands)                               |   | March 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Current                                      |   | $              | 4,478  |   |              | $      | 4,798 |   |
| Past due 001-029 days                        |   |           | 688    |   |              |   | 375 |   |
| Past due 030-059 days                        |   |           | 157    |   |              |   | 157 |   |
| Accruing troubled debt restructured loans    |   |           | 5,323  |   |              |   | 5,330 |   |
| Current                                      |   |           | 1,782  |   |              |   | 2,585 |   |
| Past due 001-029 days                        |   |           | 829    |   |              |   | 169 |   |
| Past due 030-059 days                        |   |           | 402    |   |              |   | 378 |   |
| Past due 090-179 days                        |   |           | 351    |   |              |   | 346 |   |
| Past due 180 days and over                   |   |           | 282    |   |              |   | 776 |   |
| Non-accrual troubled debt restructured loans |   |           | 3,646  |   |              |   | 4,254 |   |
| Total troubled debt restructured loans       |   | $              | 8,969  |   |              | $      | 9,584 |   |

| (in thousands)                          |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-----------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Past due 030-059 days                   |   | $              | 2,991  |   |              | $      | 1,188 |   |
| Past due 060-089 days                   |   |           | 1,200  |   |              |   | 730 |   |
| Past due 090-179 days                   |   |           | 150    |   |              |   | 96 |   |
| Accruing loans                          |   |           | 4,341  |   |              |   | 2,014 |   |
| Past due 030-059 days                   |   |           | 729    |   |              |   | 541 |   |
| Past due 060-089 days                   |   |           | 993    |   |              |   | 1,050 |   |
| Past due 090-179 days                   |   |           | 1,524  |   |              |   | 587 |   |
| Past due 180 days and over              |   |           | 4,463  |   |              |   | 4,716 |   |
| Non-accrual loans                       |   |           | 7,709  |   |              |   | 6,894 |   |
| Total loans past due 30 days or greater |   | $              | 12,050 |   |              | $      | 8,908 |   |

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| (in thousands)                         |   | March 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Residential 1-4 family                 |   | $              | 2,692  |   |              | $      | 2,483 |   |
| Residential 5+ multifamily             |   |           | 88     |   |              |   | 89 |   |
| Construction of residential 1-4 family |   |           | -      |   |              |   | 75 |   |
| Home equity credit                     |   |           | 829    |   |              |   | 817 |   |
| Residential real estate                |   |           | 3,609  |   |              |   | 3,464 |   |
| Commercial                             |   |           | 7,446  |   |              |   | 2,327 |   |
| Construction of commercial             |   |           | 471    |   |              |   | 47 |   |
| Commercial real estate                 |   |           | 7,917  |   |              |   | 2,374 |   |
| Farm land                              |   |           | 1,173  |   |              |   | 881 |   |
| Vacant land                            |   |           | 247    |   |              |   | 249 |   |
| Real estate secured                    |   |           | 12,946 |   |              |   | 6,968 |   |
| Commercial and Industrial              |   |           | 608    |   |              |   | 897 |   |
| Consumer                               |   |           | 65     |   |              |   | 67 |   |
| Potential problem loans                |   | $              | 13,619 |   |              | $      | 7,932 |   |

| (in thousands)                |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-------------------------------|--------|----------------|--------|--------|-------------------|--------|
| Current                       |   | $              | 11,502 |   |              | $      | 5,757 |   |
| Past due 001-029 days         |   |           | 511    |   |              |   | 1,233 |   |
| Past due 001-029 days         |   |           | 359    |   |              |   | 357 |   |
| Past due 030-059 days         |   |           | 1,097  |   |              |   | 534 |   |
| Past due 090-179 days         |   |           | 150    |   |              |   | 51 |   |
| Total potential problem loans |   | $              | 13,619 |   |              | $      | 7,932 |   |

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|                                     |   | Well        |   |   | March 31, 2011 |   |   | December 31, 2010 |   |
|------------------------------------------|--------|-------------|--------|--------|----------------|--------|--------|-------------------|--------|
|                                     |   | capitalized |   |   | Salisbury      |   |   | Bank              |   |   | Salisbury |   |   | Bank |   |
| Total Capital (to risk-weighted assets)  |   |        | 10.00  | %      |           |   | 14.01  | %                 |   |   | 11.23 | % |   |   | 13.91 | % |   |   | 11.11 | % |
| Tier 1 Capital (to risk-weighted assets) |   |        | 6.00   |   |           |   | 12.92  |              |   |   | 10.16 |   |   |   | 12.84 |   |   |   | 10.06 |   |
| Tier 1 Capital (to average assets)       |   |        | 5.00   |   |           |   | 8.60   |              |   |   | 6.90 |   |   |   | 8.39 |   |   |   | 6.72 |   |

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| (a) | assumptions concerning future economic and business conditions and their effect on the economy in general and on the markets in which Salisbury and the Bank do business; and |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | expectations for revenues and earnings for Salisbury and the Bank. |
|-----|--------------------------------------------------------------------|

| (a) | the risk of adverse changes in business conditions in the banking industry generally and in the specific markets in which the Bank operates; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | changes in the legislative and regulatory environment that negatively impacts Salisbury and Bank through increased operating expenses; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|

| (c) | increased competition from other financial and non-financial institutions; |
|-----|----------------------------------------------------------------------------|

| (d) | the impact of technological advances; and |
|-----|-------------------------------------------|

| (e) | other risks detailed from time to time in Salisbury’s filings with the Securities and Exchange Commission. |
|-----|------------------------------------------------------------------------------------------------------------------|

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| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK |
|---------|--------------------------------------------------------|

| As of March 31, 2011                                                       |   | Months 1-12 |   |   | Months 13-24 |   |
|----------------------------------------------------------------------------|--------|-------------|--------|--------|--------------|--------|
| Immediately rising interest rates (management’s growth assumptions)  |   |        | (13.91 | )%     |         |   | (13.53 | )% |
| Immediately falling interest rates (management’s growth assumptions) |   |        | 0.77   |   |         |   | (1.25 | ) |
| Gradually rising interest rates (static balance sheet)                     |   |        | (14.84 | )      |         |   | (18.18 | ) |

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| As of March 31, 2011 (in thousands)      |   | Rates up 100bp |   |   | Rates up 200bp |   |
|------------------------------------------|--------|----------------|--------|--------|----------------|--------|
| U.S. Treasury notes                      |   | $              | (257   | )      |           | $      | (500 | ) |
| U.S. Government agency notes             |   |           | (769   | )      |           |   | (1,613 | ) |
| Municipal bonds                          |   |           | (3,965 | )      |           |   | (7,522 | ) |
| Mortgage backed securities               |   |           | (408   | )      |           |   | (990 | ) |
| Collateralized mortgage obligations      |   |           | (749   | )      |           |   | (1,624 | ) |
| SBA pools                                |   |           | (17    | )      |           |   | (30 | ) |
| Total available-for-sale debt securities |   | $              | (6,165 | )      |           | $      | (12,279 | ) |

| Item 4. | CONTROLS AND PROCEDURES |
|---------|-------------------------|

| PART II. | OTHER INFORMATION |
|----------|-------------------|

| Item 1. | LEGAL PROCEEDINGS |
|---------|-------------------|

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| Item 1A. | RISK FACTORS |
|----------|--------------|

| Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
|---------|-------------------------------------------------------------|

| Item 3. | DEFAULTS UPON SENIOR SECURITIES |
|---------|---------------------------------|

| Item 4. | REMOVED AND RESERVED |
|---------|----------------------|

| Item 5. | OTHER INFORMATION |
|---------|-------------------|

| Item 6. | EXHIBITS |
|---------|----------|

| 31.1 | Rule 13a-14(a)/15d-14(a) Certification. |
|------|-----------------------------------------|

| 31.2 | Rule 13a-14(a)/15d-14(a) Certification. |
|------|-----------------------------------------|

| 32 | Section 1350 Certifications |
|----|-----------------------------|

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SIGNATURES

| May 16, 2011 | by    /s/ Richard J. Cantele, Jr. |
|--------------|-------------------------------------------------------|
|         | Richard J. Cantele, Jr.,                              |
|         | Chief Executive Officer                               |
|         |                                                  |
| May 16, 2011 | by    /s/ B. Ian McMahon          |
|         | B. Ian McMahon,                                       |
|         | Chief Financial Officer                               |

----