Danvers Bancorp, Inc. - FORM 8-K - EX-99.1

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8-K - DANVERS BANCORP INC - FORM 8K - Danvers Bancorp, Inc.	form8k.htm

DANVERS BANCORP, INC.

FOR IMMEDIATE RELEASE

Date:	January 27, 2011

Contacts:	Kevin T. Bottomley	L. Mark Panella
	President and CEO	Executive Vice President and CFO

Phone:	(978) 739-0263	(978) 739-0217
Email:	kevin.bottomley@danversbank.com	mark.panella@danversbank.com

Danvers Bancorp, Inc. Reports Results for the Three Months and Year Ended December 31, 2010

DANVERS, MASSACHUSETTS (January 27, 2011): Danvers Bancorp, Inc. (the “Company”) (NASDAQ: DNBK), the holding company for Danversbank, today reported net income of $4.9 million for the quarter ended December 31, 2010 compared to $2.6 million for the same quarter in 2009. For the year ended December 31, 2010, net income was $18.2 million compared to $5.3 million for the same period in 2009. The combination of the acquisition of Beverly National Corporation (“Beverly”), organic growth, particularly within the loan portfolio, and the overall improvement of the Company’s net interest margin resulted in a significant increase in net interest income and, to a lesser extent, an increase in non-interest income. These increases were partially offset by increased salaries and benefits expense, occupancy, other operating expenses and provision for income taxes. Most notably, net interest income for the quarter and year ended December 31, 2010 improved by $3.4 million, or 17.9%, and $26.5 million, or 44.9%, respectively, when compared to the same periods in 2009.

Compared to the quarter ended September 30, 2010, net income increased by $703,000, or 16.9%. An increase in net interest income and non-interest income were somewhat offset by increases in the provision for loan losses, non-interest expense and income taxes between the comparable periods.

Proposed Merger

On January 20, 2011, the Company announced that it had entered into an Agreement and Plan of Merger (the “Merger Agreement”) with People’s United Financial, Inc. (“People’s United”), a Delaware corporation. Pursuant to the Merger Agreement, People’s United will acquire the Company in a 55% stock and 45% cash merger transaction valued at approximately $493 million, based on the 10-day average closing price of People’s United’s common stock for the period ended January 19, 2011.

The Merger Agreement provides that the Company will be merged with and into People’s United (the “Merger”), with People’s United continuing as the surviving corporation. Simultaneously with the effective time of the Merger, the Company’s subsidiary bank, Danversbank, will be merged with and into People’s United subsidiary bank, People’s United Bank, with People’s United Bank continuing as the surviving entity. The Company anticipates that the Merger will close in the second quarter of 2011, subject to customary closing conditions and receipt of regulatory approvals.

Under the terms and conditions of the Merger Agreement, the Company’s stockholders have the right to elect to receive (i) $23.00 in cash or (ii) 1.624 shares of People’s United common stock for each share of Company common stock, subject to customary pro ration provisions, whereby 55% of Company shares are exchanged for stock and 45% for cash.

“I’m confident that this transaction will benefit Danvers Bancorp shareholders, customers and employees,” said Kevin T. Bottomley, Chairman, President and Chief Executive Officer of Danvers Bancorp. “People’s United brings substantial resources for increased lending, additional products and services and opportunities for professional development for our employees. When coupled with our highly experienced lending staff and extensive eastern

DANVERS BANCORP, INC.

Massachusetts branch network, the combined organization will be well positioned to compete with the biggest players in the Greater Boston area.”

Selected 2010 fourth quarter and annual financial highlights include:

Non-performing assets to total assets of 0.52% compared to 0.77% for Q4 ‘09 and 0.73% for Q3 ‘10;

Net interest margin of 3.53% compared to 3.57% for Q4 ‘09 and 3.49% for Q3 ‘10;

Net interest income increased 17.9% compared to Q4 ‘09 and 9.1% compared to Q3 ‘10;

Non-interest income increased 59.2% compared to Q4 ‘09 and 37.2% compared to Q3 ‘10;

7% loan growth in 2010; and

19% deposit growth in 2010.

“Deposit growth was strong throughout 2010. Loan growth clearly picked up over the last six months of the year. In combination with our net interest margin, the Company’s results for the full year were extremely encouraging,” noted Mr. Bottomley.

Earnings per share basic and diluted for the fourth quarter of 2010 and 2009 were $0.25 and $0.14, respectively. Earnings per share basic and diluted for the quarter ended September 30, 2010 was $0.21. Earnings per share basic and diluted for the years ended December 31, 2010 and 2009 were $0.91 and $0.31, respectively.

Dividend Declared

The Board of Directors of the Company has declared a cash dividend on its common stock of $0.04 per share. The dividend will be paid on or after February 25, 2011 to shareholders of record as of February 11, 2011.

2010 Earnings Summary

The Company’s net interest income increased $3.4 million, or 17.9%, during the fourth quarter of 2010 compared to the same period in 2009. For the years ended December 31, 2010 and 2009, net interest income increased $26.5 million, or 44.9%. These increases are attributable to the overall growth of the Company and, in particular, the growth of the loan portfolio and the improvement in the Company’s net interest margin (“NIM”). The Company’s NIM improved by 29 basis points from 3.27% for the year ended December 31, 2009 to 3.56% for the year ended December 31, 2010 mainly due to a 69 basis point decline in overall funding costs.

The Company’s fourth quarter net interest income increased $1.9 million, or 9.1%, compared to the third quarter of 2010 mainly due to the decrease in the cost of interest-bearing liabilities. We experienced an 8 basis point decrease in the yield on earning assets, while the cost of interest-bearing liabilities decreased by 12 basis points. As a result, the Company’s NIM increased from 3.49% to 3.53% between the third and fourth quarters of 2010.

“Deposit funding is abundant at the moment and these balances can be acquired at a reasonable cost. The competition for new loan originations however, especially from some of the larger institutions, remains extremely challenging. We expect that the pressure on loan pricing could impact our net interest margin as we transition into 2011,” mentioned Mr. Bottomley.

Non-interest income for the fourth quarter of 2010 totaled $3.8 million, an increase of $1.4 million, or 59.2%, compared to the fourth quarter of 2009. The improvement was primarily due to an increase of $166,000 in net gain on sales of loans, $110,000 in trust services fees, $82,000 in additional deposit account service fees and a $1.1 million increase in the other operating income that was primarily related to a gain in one of the Company’s limited partnership investments. For the year ended December 31, 2010, non-interest income increased $5.8 million, or 76.2%, compared to the same period in 2009. Net gain on sales of securities, trust services fees and service charges on deposits were the largest contributors to the increase.

DANVERS BANCORP, INC.

Non-interest income for the fourth quarter of 2010 increased $1.0 million, or 37.2%, compared to the third quarter of 2010. This increase was primarily due to a $910,000 gain on one limited partnership investment. While the Company’s general levels of non-interest revenues have shown incremental improvement, developing additional and meaningful sources of non-interest income remains a significant challenge.

Non-interest expense increased $740,000, or 4.2%, between the quarters ended December 31, 2010 and 2009, respectively, due primarily to increases in salaries and employee benefits and occupancy expense as a result of the additional personnel and branches related to the Beverly acquisition and the overall expansion of the Company’s branch network. For the year ended December 31, 2010, non-interest expense increased $14.6 million, or 26.2%, from the comparable period in 2009. Salaries and benefits, occupancy and general other operating expense, related to operating the larger combined franchise, were the primary reasons for the increase in non-interest expense.

Non-interest expense increased by $677,000, or 3.9%, for the fourth quarter of 2010 compared to the third quarter of 2010. Increases in salaries and benefits and advertising expense were the primary reasons for the increase.

Since the fully taxable components of the Company’s revenues have increased as a result of the Beverly acquisition and organic growth of the franchise, the Company’s 2010 effective tax rate has increased when compared to the comparable three and twelve month periods in 2009. As of December 31, 2010, the Company’s effective tax rate was 20.9%.

Balance Sheet Summary

Total assets increased by $353.6 million, or 14.1%, during the year ended December 31, 2010. Net loans (including loans held for sale) increased $114.3 million, or 6.9%, securities, in aggregate, increased by $273.6 million, or 45.4%, and cash and cash equivalents decreased $41.5 million, or 57.8%, during the year. On the liability side, deposit balances increased by $334.2 million, or 18.9%, for the year ended December 31, 2010. After experiencing very strong loan, deposit and overall balance sheet growth in 2008 and 2009, the Company’s growth pattern for the year ended December 31, 2010 has been more modest. While the Company has experienced a constant inflow of deposits during the year, it was only during the third and fourth quarters that the Company’s loan balances and origination activities have demonstrated a meaningful increase. The Company continues to focus much of its lending resources on commercial and industrial (“C&I”) and selected permanent commercial real estate opportunities.

The Company experienced some improvement in its asset quality metrics for the quarter ended December 31, 2010. Non-performing assets (“NPAs”) totaled $14.8 million at December 31, 2010 compared to $19.2 million at September 30, 2010 and December 31, 2009. NPAs as a percentage of total assets decreased to 52 basis points at the end of the current quarter. This compares to NPA metrics of 73 basis points and 77 basis points for the quarters ended September 30, 2010 and December 31, 2009, respectively. At December 31, 2010, total NPAs consisted of $13.0 million in loans considered impaired and on non-accrual, $927,000 in performing troubled debt restructures and $832,000 in other real estate owned (“OREO”). Despite the improvement during the fourth quarter of 2010, the number of problem credits being resolved has been offset by an equal number of new problem credits from quarter to quarter. At December 31, 2010, the OREO balance consists of two properties.

Notwithstanding the current economic and employment conditions, the Company’s asset quality metrics and delinquency trends continue to be stable and favorable when compared to many industry peers. The fourth quarter provision for loan losses for both 2010 and 2009 was $1.8 million and $900,000 for the third quarter of 2010, as management continued to augment the allowance during the quarter in response to some relatively strong loan growth. The allowance for loan losses increased $3.2 million, or 21.8%, for the year and represents 1.00% of total loans at December 31, 2010. Net charge-offs for the quarter and year ended December 31, 2010 were $360,000 and $1.9 million, respectively. By comparison, net charge-offs were $929,000 and $2.5 million for the comparable periods in 2009. The allowance represents 128.5% of non-performing loans at December 31, 2010 compared to 82.5% at December 31, 2009.

DANVERS BANCORP, INC.

Deposits increased by $334.2 million, or 18.9%, to $2.1 billion at December 31, 2010 compared to $1.8 billion at December 31, 2009. During the year, the Company experienced increases in all but one deposit category. This growth is attributable to the Company’s expanded retail branch presence and online banking initiatives. The Company opened its Cambridge and Waltham locations in 2009, its first Boston retail location in the first quarter of 2010 and its Needham location in the third quarter of 2010. These branches have already attracted $128.1 million in new deposit balances. The previously announced Lexington branch is slated to open during the first quarter of 2011. Despite the low levels of short-term interest rates, the Company has experienced success in raising core deposit balances.

Short-term Federal Home Loan Bank (“FHLB”) advances, repurchase agreements and Federal Reserve Board (“FRB”) short-term advances increased by $48.0 million, or 40.0%, decreased by $7.5 million, or 14.2% and increased $1.0 million, or 100%, respectively, at December 31, 2010 compared to December 31, 2009. Management has selectively replaced some short and long-term borrowing with the aforementioned deposit inflows and in the process has lessened the Company’s reliance on any single funding source. The Company had approximately $196.8 million in various FHLB term advances outstanding and an additional $214.3 million in short-term borrowings at December 31, 2010. The Company’s short-term borrowings consist of short-term FHLB advances, overnight customer repurchase agreements and FRB short-term advances. From a funding and liquidity perspective, the Company has ready access to a number of large, stable and well-diversified short-term funding sources and these alternatives are available at competitive rates given the current rate environment.

Company Profile

Danvers Bancorp, Inc., the holding company for Danversbank, is headquartered in Danvers, Massachusetts. The Company has grown to $2.9 billion in assets through acquisitions and internal growth, including de novo branching. We conduct business from our main office located at One Conant Street, Danvers, Massachusetts, and our 27 other branch offices located in Andover, Beverly, Boston, Cambridge, Chelsea, Danvers, Hamilton, Malden, Manchester, Middleton, Needham, Peabody, Reading, Revere, Salem, Saugus, Topsfield, Waltham, Wilmington and Woburn, Massachusetts. Our business consists primarily of making loans to our customers, including C&I loans, commercial real estate loans, owner-occupied residential mortgages and consumer loans and investing in a variety of investment securities. We fund these lending and investment activities with deposits from our customers, funds generated from operations and selected borrowings. We also provide wealth management and trust services, treasury management, debit and credit card products and online banking services. Additional information about the Company and its subsidiaries is available at www.danversbank.com.

Forward Looking Statements

Certain statements herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on the beliefs and expectations of management, as well as the assumptions made using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” “project,” “seek,” “plan” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the risk factors described in the Company’s December 31, 2009 Annual Report on Form 10-K, filed March 16, 2010, as updated by our Quarterly Reports on Form 10-Q, that adversely affect the business in which Danvers Bancorp, Inc. is engaged and changes in the securities market. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release and the associated conference call. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise.

DANVERS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	December 31,
	2010			2009
	(In thousands)
ASSETS
Cash and cash equivalents	$	30,282		$	71,757
Certificates of deposit		-			10,679
Securities available for sale, at fair value		723,610			481,100
Securities held to maturity, at cost		152,731			110,932
Loans held for sale		2,881			1,948
Loans		1,782,741			1,666,164
Less allowance for loan losses		(17,900	)		(14,699	)
Loans, net		1,764,841			1,651,465

Restricted stock, at cost		18,172			18,726
Premises and equipment, net		39,793			36,764
Bank-owned life insurance		34,250			32,900
Other real estate owned		832			1,427
Accrued interest receivable		9,845			9,998
Deferred tax asset, net		15,675			9,619
Goodwill and intangible assets		33,119			35,094
Prepaid FDIC assessment		6,215			8,515
Prepaid taxes		393			6,348
Other assets		20,706			12,477
	$	2,853,345		$	2,499,749

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand deposits	$	246,973		$	224,776
Savings and NOW accounts		449,036			376,975
Money market accounts		837,647			621,683
Term certificates over $100,000		344,165			314,097
Other term certificates		222,205			228,272
Total deposits		2,100,026			1,765,803
Short-term borrowings		214,330			172,829
Long-term debt		196,778			218,475
Subordinated debt		29,965			29,965
Accrued expenses and other liabilities		26,972			27,011
Total liabilities		2,568,071			2,214,083

Commitments and contingencies

Stockholders' equity:
Preferred stock; $0.01 par value, 10,000,000 shares authorized;
none issued		-			-
Common stock; $0.01 par value, 60,000,000 shares authorized; 22,316,125 shares
issued		223			223
Additional paid-in capital		239,163			237,577
Retained earnings		88,067			71,864
Accumulated other comprehensive income (loss)		(2,102	)		3,650
Unearned restricted shares - 530,558 and 639,807 shares at December 31, 2010
and 2009, respectively		(5,331	)		(6,793	)
Unearned compensation - ESOP; 1,213,290 and 1,284,660 shares at
December 31, 2010 and 2009, respectively		(12,133	)		(12,846	)
Treasury stock, at cost; 1,592,382 and 610,593 shares at December 31, 2010
and 2009, respectively		(22,613	)		(8,009	)
Total stockholders' equity		285,274			285,666
	$	2,853,345		$	2,499,749

DANVERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended					Years Ended
	December 31,					December 31,
	2010		2009			2010			2009
	(Dollars in thousands, except per share amounts)
Interest and dividend income:
Interest and fees on loans	$	25,162	$	21,650		$	96,320		$	71,417
Interest on debt securities:
Taxable		5,500		5,842			21,297			21,622
Non-taxable		498		248			1,255			906
Dividends on equity securities		-		5			12			6
Interest on cash equivalents and certificates of deposit		20		114			125			406
Total interest and dividend income		31,180		27,859			119,009			94,357

Interest expense:
Interest on deposits:
Savings and NOW accounts		1,268		875			4,939			2,717
Money market accounts		2,433		2,479			9,628			11,190
Term certificates		2,510		2,822			9,761			11,922
Interest on short-term borrowings		64		103			244			372
Interest on long-term debt and subordinated debt		2,256		2,366			9,107			9,282
Total interest expense		8,531		8,645			33,679			35,483
Net interest income		22,649		19,214			85,330			58,874
Provision for loan losses		1,750		1,750			5,150			5,110
Net interest income, after provision for loan losses		20,899		17,464			80,180			53,764

Non-interest income:
Service charges on deposits		1,136		1,054			4,572			3,557
Loan servicing fees		35		60			195			123
Net gain on sales of loans		220		54			929			826
Net gain on sales of securities, net of impairment write-down		-		2			2,109			6
Loss on impairment of available for sale securities		-		-			(779	)		-
Gain (loss) on limited partnerships		717		(3	)		57			(99	)
Increase in cash surrender value of bank-owned life insurance		346		331			1,350			884
Trust services		373		263			1,571			263
Other operating income		1,010		649			3,365			2,029
Total non-interest income		3,837		2,410			13,369			7,589

Non-interest expenses:
Salaries and employee benefits		10,020		8,683			39,012			30,301
Occupancy		2,073		1,706			8,077			5,960
Equipment		1,071		1,195			4,180			3,659
Outside services		575		929			2,121			2,069
Other real estate owned expense		176		393			827			819
Deposit insurance expense		706		692			2,670			2,807
Advertising expense		416		491			1,272			1,088
Other operating expense		3,183		3,391			12,371			9,192
Total non-interest expenses		18,220		17,480			70,530			55,895
Income before income taxes		6,516		2,394			23,019			5,458
Provision (benefit) for income taxes		1,661		(234	)		4,818			149
Net income	$	4,855	$	2,628		$	18,201		$	5,309

Weighted-average shares outstanding:
Basic		19,612,520		18,488,838			20,048,042			16,980,117
Diluted		19,676,484		18,600,778			20,067,767			16,980,117

Earnings per share:
Basic	$	0.25	$	0.14		$	0.91		$	0.31
Diluted	$	0.25	$	0.14		$	0.91		$	0.31

DANVERS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended
	December 31,		September 30,
	2010		2010
	(Dollars in thousands,
	except per share amounts)
Interest and dividend income:
Interest and fees on loans	$	25,162	$	23,563
Interest on debt securities:
Taxable		5,500		5,441
Non-taxable		498		310
Dividends on equity securities		-		8
Interest on cash equivalents and certificates of deposit		20		30
Total interest and dividend income		31,180		29,352

Interest expense:
Interest on deposits:
Savings and NOW accounts		1,268		1,403
Money market accounts		2,433		2,563
Term certificates		2,510		2,206
Interest on short-term borrowings		64		41
Interest on long-term debt and subordinated debt		2,256		2,377
Total interest expense		8,531		8,590
Net interest income		22,649		20,762
Provision for loan losses		1,750		900
Net interest income, after provision for loan losses		20,899		19,862

Non-interest income:
Service charges on deposits		1,136		1,129
Loan servicing fees		35		34
Net gain on sales of loans		220		466
Net gain on sales of securities, net of impairment write-down		-		67
Gain (loss) on limited partnerships		717		(462	)
Increase in cash surrender value of bank-owned life insurance		346		346
Trust services		373		362
Other operating income		1,010		854
Total non-interest income		3,837		2,796

Non-interest expenses:
Salaries and employee benefits		10,020		9,787
Occupancy		2,073		1,936
Equipment		1,071		1,055
Outside services		575		474
Other real estate owned expense		176		276
Deposit insurance expense		706		683
Advertising expense		416		214
Other operating expense		3,183		3,118
Total non-interest expenses		18,220		17,543
Income before income taxes		6,516		5,115
Provision for income taxes		1,661		963
Net income	$	4,855	$	4,152

Weighted-average shares outstanding:
Basic		19,612,520		19,871,405
Diluted		19,676,484		19,902,305

Earnings per share:
Basic	$	0.25	$	0.21
Diluted	$	0.25	$	0.21

DANVERS BANCORP, INC.

NET INTEREST INCOME ANALYSIS

(Unaudited)


	Three Months Ended December 31,
	2010								2009
	Average			Interest		Average			Average			Interest		Average
	Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/
	Balance			Paid		Rate (1)			Balance			Paid		Rate (1)
	(Dollars in thousands)
Interest-earning assets:
Interest-earning cash equivalents and
certificates of deposit	$	40,567		$	20		0.20	%	$	64,866		$	114		0.70	%
Debt securities: (2)
U.S. Government		-			-		-			10,326			5		0.19
Gov't-sponsored enterprises		375,638			2,869		3.06			235,645			2,421		4.11
Mortgage-backed		298,353			2,629		3.52			284,050			3,104		4.37
Municipal bonds		47,130			498		4.23			24,223			248		4.10
Other		1,062			2		0.75			10,774			312		11.58
Restricted stock		18,172			-		-			17,579			5		0.11
Real estate mortgages (3)		913,745			12,828		5.62			865,970			12,346		5.70
C&I loans (3)		696,436			10,426		5.99			510,371			7,760		6.08
IRBs (3)		169,379			1,867		4.41			121,196			1,453		4.80
Consumer loans (3)		3,305			41		4.96			5,316			91		6.85
Total interest-earning assets		2,563,787			31,180		4.86			2,150,316			27,859		5.18
Allowance for loan losses		(16,845	)							(14,003	)
Total earning assets less allowance
for loan losses		2,546,942								2,136,313
Non-interest-earning assets		193,772								132,633
Total assets	$	2,740,714							$	2,268,946

Interest-bearing liabilities:
Deposits:
Savings and NOW accounts	$	450,830			1,268		1.13		$	318,748			875		1.10
Money market accounts		850,142			2,433		1.14			623,484			2,479		1.59
Term certificates		557,471			2,510		1.80			510,741			2,822		2.21
Total deposits		1,858,443			6,211		1.34			1,452,973			6,176		1.70
Borrowed funds:
Short-term borrowings		74,564			64		0.34			121,451			103		0.34
Long-term debt		204,103			1,789		3.51			198,440			1,900		3.83
Subordinated debt		30,073			467		6.21			29,965			466		6.22
Total interest-bearing liabilities		2,167,183			8,531		1.57			1,802,829			8,645		1.92
Non-interest-bearing deposits		260,241								195,679
Other non-interest-bearing liabilities		22,781								22,986
Total non-interest-bearing liabilities		283,022								218,665
Total liabilities		2,450,205								2,021,494
Stockholders' equity		290,509								247,452
Total liabilities and stockholders' equity	$	2,740,714							$	2,268,946

Net interest income				$	22,649							$	19,214
Net interest rate spread (4)							3.29	%							3.26	%
Net interest-earning assets (5)	$	396,604							$	347,487
Net interest margin (6)							3.53	%							3.57	%
Ratio of interest-earning assets
to total interest-bearing liabilities		1.18	x							1.19	x


(1) Yields are annualized.
(2) Average balances are presented at average amortized cost.
(3) Average loans include non-accrual loans and are net of average deferred loan fees/costs.
(4) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing
liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.

DANVERS BANCORP, INC.

NET INTEREST INCOME ANALYSIS

(Unaudited)


	Years Ended December 31,
	2010								2009
	Average			Interest		Average			Average			Interest		Average
	Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/
	Balance			Paid		Rate			Balance			Paid		Rate
	(Dollars in thousands)
Interest-earning assets:
Interest-earning cash equivalents and
certificates of deposit	$	57,164		$	125		0.22	%	$	48,946		$	406		0.83	%
Debt securities: (1)
U.S. Government		4,712			8		0.17			3,091			18		0.58
Gov't-sponsored enterprises		293,546			9,759		3.32			202,486			9,412		4.65
Mortgage-backed		289,031			10,761		3.72			252,042			11,678		4.63
Municipal bonds		32,832			1,255		3.82			22,248			906		4.07
Other		7,743			769		9.93			4,710			514		10.91
Restricted stock		18,752			12		0.06			14,791			6		0.04
Real estate mortgages (2)		917,957			52,517		5.72			694,412			39,330		5.66
C&I loans (2)		629,905			37,087		5.89			461,910			27,331		5.92
IRBs (2)		140,646			6,527		4.64			91,618			4,383		4.78
Consumer loans (2)		3,434			189		5.50			4,685			373		7.96
Total interest-earning assets		2,395,722			119,009		4.97			1,800,939			94,357		5.24
Allowance for loan losses		(16,031	)							(12,972	)
Total earning assets less allowance
for loan losses		2,379,691								1,787,967
Non-interest-earning assets		193,141								109,488
Total assets	$	2,572,832							$	1,897,455

Interest-bearing liabilities:
Deposits:
Savings and NOW accounts	$	425,554			4,939		1.16		$	230,857			2,717		1.18
Money market accounts		741,898			9,628		1.30			534,321			11,190		2.09
Term certificates		558,238			9,761		1.75			442,476			11,922		2.69
Total deposits		1,725,690			24,328		1.41			1,207,654			25,829		2.14
Borrowed funds:
Short-term borrowings		60,621			244		0.40			98,152			372		0.38
Long-term debt		209,597			7,246		3.46			171,401			7,317		4.27
Subordinated debt		29,965			1,861		6.21			29,965			1,965		6.56
Total interest-bearing liabilities		2,025,873			33,679		1.66			1,507,172			35,483		2.35
Non-interest-bearing deposits		235,001								145,025
Other non-interest-bearing liabilities		21,509								14,359
Total non-interest-bearing liabilities		256,510								159,384
Total liabilities		2,282,383								1,666,556
Stockholders' equity		290,449								230,899
Total liabilities and stockholders' equity	$	2,572,832							$	1,897,455

Net interest income				$	85,330							$	58,874
Net interest rate spread (3)							3.31	%							2.89	%
Net interest-earning assets (4)	$	369,849							$	293,767
Net interest margin (5)							3.56	%							3.27	%
Ratio of interest-earning assets
to total interest-bearing liabilities		1.18	x							1.19	x


(1) Average balances are presented at average amortized cost.
(2) Average loans include non-accrual loans and are net of average deferred loan fees/costs.
(3) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing
liabilities.
(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

DANVERS BANCORP, INC.

NET INTEREST INCOME ANALYSIS

(Unaudited)


	Three Months Ended
	December 31, 2010								September 30, 2010
	Average			Interest		Average			Average			Interest		Average
	Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/
	Balance			Paid		Rate (1)			Balance			Paid		Rate (1)
	(Dollars in thousands)
Interest-earning assets:
Interest-earning cash equivalents and
certificates of deposit	$	40,567		$	20		0.20	%	$	45,395		$	30		0.26	%
Debt securities: (2)
U.S. Government		-			-		-			-			-		-
Gov't-sponsored enterprises		375,638			2,869		3.06			325,286			2,741		3.37
Mortgage-backed		298,353			2,629		3.52			276,293			2,540		3.68
Municipal bonds		47,130			498		4.23			32,050			310		3.87
Other		1,062			2		0.75			9,326			160		6.86
Restricted stock		18,172			-		-			23,067			8		0.14
Real estate mortgages (3)		913,745			12,828		5.62			880,169			12,353		5.61
C&I loans (3)		696,436			10,426		5.99			639,855			9,475		5.92
IRBs (3)		169,379			1,867		4.41			142,668			1,686		4.73
Consumer loans (3)		3,305			41		4.96			3,517			49		5.57
Total interest-earning assets		2,563,787			31,180		4.86			2,377,626			29,352		4.94
Allowance for loan losses		(16,845	)							(16,325	)
Total earning assets less allowance
for loan losses		2,546,942								2,361,301
Non-interest-earning assets		193,772								222,869
Total assets	$	2,740,714							$	2,584,170

Interest-bearing liabilities:
Deposits:
Savings and NOW accounts	$	450,830			1,268		1.13		$	435,559			1,403		1.29
Money market accounts		850,142			2,433		1.14			769,254			2,563		1.33
Term certificates		557,471			2,510		1.80			546,500			2,206		1.61
Total deposits		1,858,443			6,211		1.34			1,751,313			6,172		1.41
Borrowed funds:
Short-term borrowings		74,564			64		0.34			40,102			41		0.41
Long-term debt		204,103			1,789		3.51			207,606			1,809		3.49
Subordinated debt		30,073			467		6.21			30,481			568		7.45
Total interest-bearing liabilities		2,167,183			8,531		1.57			2,029,502			8,590		1.69
Non-interest-bearing deposits		260,241								242,240
Other non-interest-bearing liabilities		22,781								20,258
Total non-interest-bearing liabilities		283,022								262,498
Total liabilities		2,450,205								2,292,000
Stockholders' equity		290,509								292,170
Total liabilities and stockholders' equity	$	2,740,714							$	2,584,170

Net interest income				$	22,649							$	20,762
Net interest rate spread (4)							3.29	%							3.25	%
Net interest-earning assets (5)	$	396,604							$	348,124
Net interest margin (6)							3.53	%							3.49	%
Ratio of interest-earning assets
to total interest-bearing liabilities		1.18	x							1.17	x


(1) Yields are annualized.
(2) Average balances are presented at average amortized cost.
(3) Average loans include non-accrual loans and are net of average deferred loan fees/costs.
(4) Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing
liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.

DANVERS BANCORP, INC.

SELECTED FINANCIAL RATIOS AND OTHER DATA

(Unaudited)

													At or For
	At or For the						At or For the						the Three
	Three Months Ended						Years Ended						Months Ended
	December 31,						December 31,						September 30,
	2010			2009			2010			2009			2010

Performance Ratios:

Return on assets (ratio of income to average total assets) (1)		0.71	%		0.46	%		0.71	%		0.28	%		0.64	%
Return on equity (ratio of income to average equity) (1)		6.68	%		4.25	%		6.27	%		2.30	%		5.68	%
Net interest rate spread (1) (2)		3.29	%		3.26	%		3.31	%		2.89	%		3.25	%
Net interest margin (1) (3)		3.53	%		3.57	%		3.56	%		3.27	%		3.49	%
Efficiency ratio (4)		66.83	%		81.89	%		69.24	%		83.39	%		72.11	%
Non-interest expenses to average total assets (1)		2.66	%		3.08	%		2.74	%		2.95	%		2.72	%
Average interest-earning assets to interest-bearing liabilities		1.18	x		1.19	x		1.18	x		1.19	x		1.17	x

Asset Quality Ratios:

Non-performing assets to total assets		0.52	%		0.77	%		0.52	%		0.77	%		0.73	%
Non-performing loans to total loans		0.78	%		1.01	%		0.78	%		1.01	%		1.05	%
Allowance for loan losses to non-performing loans		128.51	%		82.49	%		128.51	%		82.49	%		89.87	%
Allowance for loan losses to total loans		1.00	%		0.88	%		1.00	%		0.88	%		0.94	%

Capital Ratios:

Risk-based capital (to risk-weighted assets)		15.40	%		15.86	%		15.40	%		15.86	%		15.83	%
Tier 1 risk-based capital (to risk-weighted assets)		14.48	%		15.05	%		14.48	%		15.05	%		14.95	%
Tier 1 leverage capital (to average assets)		10.44	%		12.25	%		10.44	%		12.25	%		11.03	%
Stockholders' equity to total assets		10.00	%		11.43	%		10.00	%		11.43	%		11.16	%
Average stockholders' equity to average assets		10.60	%		10.91	%		11.29	%		12.17	%		11.31	%

(1) Ratios for the three months ended December 31, 2010 and 2009 and September 30, 2010 are annualized.
(2) The net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) The net interest margin represents net interest income as a percent of average interest-earning assets.
(4) The efficiency ratio represents non-interest expense for the period minus expenses related to the amortization of intangible assets divided by the
sum of net interest income (before the loan loss provision) plus non-interest income.

Danvers Bancorp, Inc. - FORM 8-K - EX-99.1 - January 27, 2011

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Danvers Bancorp, Inc. Reports

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