Net interest income increased $3.0 million, or 23%, to $16.2 million for the fourth quarter of 2012 mainly as a result of an increase in average interest-earning assets, partially offset by a contraction in the net interest margin. Total average interest-earning assets increased $384.4 million, or 25%, to $1.89 billion for the fourth quarter of 2012 driven by the acquisition of New England Bank (“NEB”) and strong organic loan growth, offset in part by a decrease in interest-earning cash balances. The net interest margin decreased by 8 basis points to 3.43% for the three months ended December 31, 2012 reflecting lower yields on loans and investments as a result of the lower interest rate environment, partially offset by reduced funding costs.

Provision for loan losses decreased $322,000, or 32%, to $689,000 for the three months ended December 31, 2012 primarily reflecting a decrease in required reserves for performing and impaired loans, partially reduced by increased net charge-offs.

Non-interest income increased $399,000, or 16%, to $3.0 million for the three months ended December 31, 2012. Fee income on deposit accounts grew $64,000, or 4%, driven by growth in core accounts. BOLI income increased $51,000, or 11%, due to the addition of the $10 million NEB portfolio. Net gains from sales of loans increased $37,000, or 25%, due to improved pricing on sales of 30-year fixed rate loans, and to a lesser extent, increased sales volume. The results also included $227,000 in gains from sales of $4.6 million in municipal securities.

Non-interest expense increased $11.6 million, or 108%, to $22.3 million in the fourth quarter of 2012. Excluding the ESOP plan termination expense of $4.5 million, acquisition-related costs totaling $4.0 million and FHLBB prepayment penalties of $207,000, non-interest expense would have increased $2.9 million, or 27%, to $13.6 million mainly due to additional costs incurred to operate our new Connecticut franchise.

Income tax expense was $942,000 for the fourth quarter of 2012 compared to $1.1 million in 2011. The 2012 total does not include a tax benefit for the $4.5 million ESOP termination expense and $2.1 million of acquisition-related costs because both items are not tax deductible. In addition, the 2012 amount was impacted by the reversal of an ESOP temporary difference ($532,000 expense) and a one-time adjustment to the tax basis of an investment in a low income housing tax credit fund ($350,000 expense).

Total assets increased $778.9 million, or 48%, to $2.40 billion at December 31, 2012 from $1.62 billion at December 31, 2011 reflecting the acquisition of NEB ($745 million) and strong organic loan growth, offset in part by a $30.8 million decrease in cash and cash equivalents.

Total loans increased $694.2 million, or 62%, to $1.82 billion at December 31, 2012 due in large part to the NEB acquisition ($553 million) and strong growth in the commercial loan portfolio.

Investment securities increased $39.6 million, or 12%, to $377.3 million at December 31, 2012 as a result of the addition of NEB’s $53.4 million portfolio partially offset by the sale of $13.8 million of securities.

Cash and cash equivalents decreased $30.8 million, or 50%, to $30.7 million at December 31, 2012 mainly driven by the use of excess cash to fund new loans and to pay-off longer-term FHLB advances.

Total deposits increased $618.2 million, or 50%, to $1.85 billion at December 31, 2012 reflecting growth of $332.5 million, or 41%, in core account balances and an increase of $285.7 million, or 68%, in certificates of deposit. These increases were in large part due to the acquisition of NEB’s $597 million deposit base and organic growth. Core deposit balances were $1.14 billion, or 62% of total deposits at December 31, 2012 compared to $808 million, or 66% at December 31, 2011.

Non-performing assets totaled $17.3 million, or 0.72% of total assets, at December 31, 2012 compared to $10.6 million, or 0.65% of total assets, at December 31, 2011. The $6.7 million increase was attributable to the addition of $7.1 million in NEB non-performing loans.

The ratio of the allowance for loan losses to total loans was 0.67% at December 31, 2012. Excluding the impact of loans acquired from Commonwealth National Bank in 2009 and NEB totaling $664.6 million at December 31, 2012 and $165.1 million at December 31, 2011, the ratio of the allowance for loan losses to total loans would have been 1.05% at December 31, 2012 and 1.16% at December 31, 2011. Net charge-offs totaled $2.2 million, or 0.18% of average loans outstanding for the year ended December 31, 2012 as compared to net charge-offs of $ 2.1 million, or 0.19% of average loans outstanding for 2011.

At December 31, 2012, the Company was well capitalized with a tangible equity-to-tangible assets ratio of 11.11% and an equity-to-assets ratio of 12.79%.

Tangible book value per share was $12.99 at December 31, 2012.

In 2012, the Company repurchased 357,415 shares at an average price of $15.26 under publicly announced plans. During the fourth quarter of 2012, the Company completed its October 2010 repurchase program of 807,803 shares and commenced a new program to repurchase 769,000 shares. As of December 31, 2012, the Company has repurchased 27,312 shares under this new repurchase plan.

At December 31, 2012, the Company continued to have considerable liquidity consisting of significant balances at the Federal Reserve Bank of Boston, a large amount of marketable loans and investment securities, substantial unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston and access to funding through the repurchase agreement and brokered deposit markets.

Assets

Cash and cash equivalents

Investment securities

Loans held for sale

Loans:

Residential mortgages

Commercial mortgages

Construction loans

Commercial loans

Home equity loans

Consumer loans

Total loans

Net deferred loan costs and fees

Allowance for loan losses

Loans, net

Federal Home Loan Bank of Boston stock, at cost

Other real estate owned

Deferred tax asset, net

Premises and equipment, net

Bank-owned life insurance

Goodwill

Other intangible assets

Other assets

Total assets

Liabilities and Stockholders’ Equity

Deposits:

Demand

NOW

Savings

Money market

Certificates of deposit

Total deposits

Short-term borrowings

Long-term debt

Subordinated debentures

Escrow funds held for borrowers

Capitalized lease obligations

Accrued expenses and other liabilities

Total liabilities

Stockholders’ Equity:

Preferred stock, par value $0.01 per share, authorized 50,000,000 shares; none issued

Common stock, par value $0.01 per share; authorized 100,000,000 shares; shares issued: 24,266,428 at December 31, 2012 and 18,706,933 at December 31, 2011

Additional paid-in capital

Retained earnings

Unearned compensation

Accumulated other comprehensive income, net of taxes

Treasury stock, at cost (4,114,310 shares at December 31, 2012 and 2,994,036 shares at December 31, 2011)

Total stockholders’ equity

Total liabilities and stockholders’ equity

Interest and dividend income:

Loans

Investments

Other interest-earning assets

Total interest and dividend income

Interest expense:

Deposits

Borrowings

Total interest expense

Net interest income before provision for loan losses

Provision for loan losses

Net interest income after provision for loan losses

Non-interest income:

Fee income on depositors’ accounts

Wealth management income

Income from bank-owned life insurance

Net gain on sales of loans

Net gain on sales of securities

Impairment charges on securities

Other income

Total non-interest income

Non-interest expense:

Salaries and benefits

Occupancy expenses

Marketing expenses

Data processing expenses

Professional fees

ESOP plan termination expense

Acquisition related expenses

FDIC insurance assessments

Low income housing tax credit fund

Other expenses

Total non-interest expense

Income before income taxes

Income tax expense

Net income

Earnings per share:

Basic

Diluted

Weighted average shares outstanding:

Basic

Diluted

Operating Results:

Net interest income

Loan loss provision

Non-interest income

Non-interest expense

Net (loss) income

Performance Ratios (annualized):

(Loss) return on average assets

(Loss) return on average equity

Net interest margin

Non-interest income to average total assets

Non-interest expense to average total assets

Efficiency ratio (6)

Per Share Data:

Diluted (loss) earnings per share

Book value per share

Tangible book value per share

Market price at period end

Risk Profile

Equity as a percentage of assets

Tangible equity as a percentage of tangible assets

Net charge-offs to average loans outstanding (annualized)

Non-performing assets as a percent of total assets

Non-performing loans as a percent of total loans

Allowance for loan losses as a percent of total loans

Allowance for loan losses as a percent of non-performing loans

Average Balances

Loans

Securities

Total interest-earning assets

Total assets

Deposits

FHLBB advances

Stockholders’ Equity

Average Yields/Rates (annualized)

Loans

Securities

Total interest-earning assets

Savings accounts

Money market/NOW accounts

Certificates of deposit

FHLBB advances

Total interest-bearing liabilities