Total loans increased by $44.4 million, or 2%, to $1.86 billion at June 30, 2013 from $1.82 billion at December 31, 2012, primarily due to growth of $41.2 million or 4% in the commercial portfolios (commercial, commercial real estate and construction).

Credit quality remained solid, as demonstrated by the non-performing loans to total loans ratio of 75 basis points at June 30, 2013 and an annualized net charge-offs to average loans ratio of 9 basis points for the six months ended June 30, 2013.

Core deposits increased by $50.2 million, or 4%, to $1.19 billion at June 30, 2013 from $1.14 billion at December 31, 2012.

Tangible book value per share was $13.00 at June 30, 2013. During the first six months of 2013, the Company repurchased 533,064 shares at an average price of $14.86 per share. At June 30, 2013, the Company had approximately 253,000 shares remaining to be purchased under its current plan approved in October, 2012.

Net interest income increased $6.4 million, or 48%, to $19.7 million for the second quarter of 2013 as a result of an increase in average interest-earning assets and net interest margin expansion. Total average interest-earning assets increased $683.2 million, or 44%, to $2.23 billion for the second quarter of 2013 driven by the acquisition of New England Bank and organic loan growth. The net interest margin increased by 9 basis points to 3.53% for the three months ended June 30, 2013 reflecting an increase of $990,000 in the net accretion of acquisition accounting adjustments, offset in part by a decrease in spreads in response to the challenging interest rate environment.

Provision for loan losses increased by $142,000, or 19%, to $892,000 for the three months ended June 30, 2013 primarily attributable to an increase in general reserves associated with stronger commercial loan origination activity and an increase in impaired loan reserves.

Non-interest income increased by $445,000, or 17%, to $3.0 million for the three months ended June 30, 2013 due to growth in other income, bank-owned life insurance income and deposit services charges. Other income increased by $400,000 to $554,000 reflecting a $200,000 gain related to a cost basis investment, higher loan prepayment penalties and late charges and increased credit enhancement fees related to loans sold to the FHLBB. Fee income on depositors’ accounts increased $68,000, or 4%, driven by a larger deposit base related to the New England Bank’s acquisition, offset to a large extent by the negative impact of new regulations, including the Durbin Amendment, on debit card fee income.

Non-interest expense increased $4.8 million, or 42%, to $16.3 million in the second quarter of 2013. Excluding branch closing costs of $477,000 and acquisition related costs of $123,000, non-interest expense would have increased by $4.8 million, or 44% to $15.7 million primarily reflecting costs to operate, expand and promote our new Connecticut franchise, a new loan production office opened in Glastonbury, Connecticut during the second quarter of 2012, a new branch established in Northborough, Massachusetts during the fourth quarter of 2012, annual wage increases and increased expenses related to loan workout and collection activities.

Income taxes increased $440,000, or 41%, to $1.5 million for the three months ended June 30, 2013 primarily due to an increase in pre-tax income.

Total assets increased $46.0 million, or 2%, to $2.45 billion at June 30, 2013 from $2.40 billion at December 31, 2012 reflecting growth in loans and cash balances offset in part by a decrease in the investment securities portfolio.

Total loans increased $44.4 million, or 2%, to $1.86 billion at June 30, 2013 due to growth in commercial mortgages ($29.1 million), construction loans ($14.0 million), and residential mortgages ($6.5 million) as a result of successful business development efforts and competitive products and pricing. These items were partially reduced by modest runoff in the consumer and commercial segments.

Total investment securities decreased $17.8 million, or 5%, to $359.5 million at June 30, 2013 as cash flows from existing bonds were used to fund loan originations.

Total deposits increased $76.9 million, or 4%, to $1.93 billion at June 30, 2013 reflecting growth of $50.2 million, or 4%, in core account balances and an increase of $26.7 million, or 4%, in certificates of deposit. The growth in core deposit account balances was driven by sales and marketing initiatives, competitive products and pricing, attention to excellence in customer service and targeted promotional activities. Core deposit balances were $1.19 billion, or 62% of total deposits, at June 30, 2013 compared to $1.14 billion, or 62%, at December 31, 2012.

Non-performing assets totaled $15.8 million, or 0.65% of total assets, at June 30, 2013 compared to $17.3 million, or 0.72% of total assets, at December 31, 2012. The $1.5 million decrease in non-performing assets reflects sales of OREO properties and successful loan workout activities.

The ratio of the allowance for loan losses to total loans was 0.70% at June 30, 2013 as compared to 0.67% at December 31, 2012. Excluding the aggregate impact of acquired loans totaling $588.4 million at June 30, 2013 and $664.6 million at December 31, 2012, the ratio of the allowance for loan losses to total loans would have been 1.03% at June 30, 2013 and 1.05% at December 31, 2012. Net charge-offs totaled $861,000 or 0.09% of average loans outstanding for the six months ended June 30, 2013 as compared to net charge-offs of $781,000 or 0.14% of average loans outstanding for the same period in 2012.

At June 30, 2013, the Company remained well capitalized with a tangible equity-to-tangible assets ratio of 10.62% and an equity-to-assets ratio of 12.27%.

At June 30, 2013, 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 a 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 June 30, 2013 and December 31, 2012 and 18,706,933 at June 30, 2012

Additional paid-in capital

Retained earnings

Unearned compensation

Accumulated other comprehensive income, net of taxes

Treasury stock, at cost (4,618,496 shares at June 30, 2013, 4,114,310 shares at December 31, 2012 and 3,186,409 shares at June 30, 2012)

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 loss on sales of securities

Other income

Total non-interest income

Non-interest expense:

Salaries and benefits

Occupancy expenses

Marketing expenses

Data processing expenses

Professional fees

Acquisition related expenses

Branch closing 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 (1)

Loan loss provision

Non-interest income

Non-interest expense (3)

Net income (loss)

Performance Ratios (annualized):

Return (loss) on average assets

Return (loss) on average equity

Net interest margin (1)

Non-interest income to average total assets

Non-interest expense to average total assets (6)

Efficiency ratio (6, 7)

Per Share Data:

Diluted earnings (loss) per share

Book value per share

Tangible book value per share (8)

Market price at period end

Risk Profile

Equity as a percentage of assets

Tangible equity as a percentage of tangible assets (8)

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 (9)

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