MASB Massbank Corp Read Mass (MM)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K/A

Amendment No. 1

(Mark One)

þ		Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended DECEMBER 31, 2007

or

o		Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                      to                     

Commission file number: 0-15137

MASSBANK Corp.

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)		04-2930382 (I.R.S. Employer Identification No.)
123 Haven Street
Reading, Massachusetts		01867
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (781) 662-1000

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, par value $1.00 per share
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes þ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes þ No

The aggregate market value of the registrant’s voting and non-voting common stock held by nonaffiliates of the registrant, computed by reference to the closing price per share of common stock on June 29, 2007, the last business day of the registrant’s most recently completed second fiscal quarter, as reported on the NASDAQ Global Select Market, was $128,539,466. Although directors and executive officers of the registrant were assumed to be “affiliates” of the registrant for the purposes of this calculation, this classification is not to be interpreted as an admission of such status.

As of February 29, 2008, there were 4,233,079 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of MASSBANK Corp.’s (the “Corporation”) 2007 Annual Report to Stockholders are incorporated by reference in Parts I, II, III and IV of its Annual Report on Form 10-K for the period ended December 31, 2007.

 

 

EXPLANATORY NOTE

     This Form 10-K/A constitutes Amendment No. 1 to the Corporation’s Annual Report on Form 10-K for the period ended December 31, 2007, originally filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2008 (the “Original Filing”). We are filing this Amendment No. 1 to our Annual Report on Form 10-K/A to include information required by Items 10, 11, 12, 13, and 14 of Part III within the period required by General Instruction G(3) to Form 10-K. In addition, we are filing this Amendment No. 1 to our Annual Report on Form 10-K/A to include as an exhibit a copy of MASSBANK’S (the “Bank”) Officer Incentive Compensation Bonus Plan, as required by Item 15 in Part IV. Furthermore, Item 15 of Part IV has been amended to incorporate by reference the exhibits filed with the Original Filing and to contain currently dated certifications from the Corporation’s Chief Executive Officer and Chief Financial Officer, as required by section 302 of the Sarbanes-Oxley Act of 2002. These updated certifications are attached to this Form 10-K/A as exhibits 31.1 and 31.2. Except as described above, no other changes have been made to the Original Filing and no attempt has been made in this Amendment No. 1 to modify or update disclosures for events that occurred subsequent to the Original Filing.

TABLE OF CONTENTS

Item				Page
PART III
Item 10.		Directors, Executive Officers and Corporate Governance.				1
Item 11.		Executive Compensation.				4
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.				21
Item 13.		Certain Relationships and Related Transactions, and Director Independence.				25
Item 14.		Principal Accountant Fees and Services.				25
PART IV
Item 15.		Exhibits and Financial Statement Schedules.				26
Signatures						30
EX-10.7 Officer Incentive Compensation Bonus Plan
EX-31.1 Section 302 Certification of CEO
EX-31.2 Section 302 Certification of CFO

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

DIRECTORS

In accordance with the Corporation’s Restated Certificate of Incorporation and By-Laws, the Board of Directors is divided into three approximately equal classes, with each Director serving for a term of three years and until their successors are duly elected and qualified. As a consequence, the term of only one class of Directors expires each year, and their successors are elected for terms of three years. The Board of Directors is presently comprised as follows:

		Class I:		Messrs. Brandi, Latham, and Rucci, who were elected to serve until the 2008 Annual Meeting of Stockholders and until their successors are duly elected and qualified.
		Class II:		Mr. Bufferd, Ms. Camilli, Mr. Carr, and Ms. Pettinelli, who were elected to serve until the 2009 Annual Meeting of Stockholders and until their successors are duly elected and qualified.
		Class III:		Messrs. Costello, Marshall, McCarthy, and Mistry, who were elected to serve until the 2010 Annual Meeting of Stockholders and until their successors are duly elected and qualified.

Set forth below is information regarding all the Directors of the Corporation.

Gerard H. Brandi		Chairman of the Board, President, and Chief Executive Officer, MASSBANK Corp. and MASSBANK

Mr. Brandi, 59, has served as a Director since 1986. He first joined a predecessor bank in 1975 and became a Trustee in 1978. He has served MASSBANK (the “Bank”) and the Corporation in various capacities over the past 32 years. Mr. Brandi was named President of the Corporation and the Bank in 1986, Chief Executive Officer in 1992 and Chairman in 1993. Mr. Brandi is also Chairman of the Executive Committees of the Corporation and the Bank, a member of the Risk Management and Asset/Liability Committee of the Corporation, and a member of the Trust Committee of the Bank. He is a Director of the Depositors Insurance Fund and a member of its Executive Committee, Watch Bank Committee and Compensation Committee. He is a Director and member of the Audit Committee of the New England Automated Clearing House, and Director and member of the Audit Committee and Chairman of the Risk Management Committee of the Connecticut On Line Computer Center. He also serves as a Director of the Lowell Development and Financial Corp., Director of the Lowell Plan, Treasurer and Director of the Massachusetts Society for the Prevention of Cruelty to Animals and Chairman of its Audit and Investment Committees. He is also a Director and member of the Executive Committee of the Savings Banks Employees Retirement Association and Chairman of its Investment Committee.

Allan S. Bufferd		Treasurer Emeritus, Massachusetts Institute of Technology

Mr. Bufferd, 70, has served as a Director since 1995. He is a member of the Executive Committee of the Corporation and a Director and a member of the Executive Committee of the Bank. He is also the Chairman of the Risk Management and Asset/Liability Committee of the Corporation. Mr. Bufferd has been Treasurer Emeritus of the Massachusetts Institute of Technology since his retirement in May 2006 as Founding President of the MIT Investment Management Company, a position he held since 2004. Prior to that, from 1999 until his retirement, Mr. Bufferd served as Treasurer of the Massachusetts Institute of Technology. Mr. Bufferd serves as a Trustee of the Robert Wood Johnson Foundation and as a Trustee of the Whiting Foundation. He is also a member of numerous investment advisory boards including those of the Grayce B. Kerr Fund and the National University of Singapore. In addition, he is the Chairman and a Director of the Harvard Cooperative Society, the Chairman and a Director of the Controlled Risk Insurance Company (“CRICO”), and a Director of each of Adveq, Beth Israel Deaconess Medical Center, M Fund, Inc., Makena LLC, Morgan Stanley Prime Property Fund, Och-Ziff Capital Management, and Ram Holdings Ltd. Mr. Bufferd serves on the Compensation Committee of each of Beth Israel Deaconess Medical Center, CRICO, and the Harvard Cooperative Society.

Kathleen M. Camilli		President, Camilli Economics, LLC

Ms. Camilli, 49, has served as a Director since 2003. Ms. Camilli is a member of the Risk Management and Asset/Liability Committee of the Corporation and the Insurance Committee of the Corporation. Ms. Camilli is one of the nation’s top economic forecasters and independent economists. Since 2005, her firm, Camilli Economics, has provided clients with “real world” economic guidance for smart business and financial decisions. From 2003 through 2004, Ms. Camilli served as U.S. Economist for Credit Suisse Asset Management. A frequent commentator, author and speaker, Ms. Camilli appears regularly on CNN, CNBC, The NewsHour with Jim Lehrer, Nightly Business Report, and Bloomberg Business News. Ms. Camilli is on the Board of Directors of the Money Marketers of New York University, the National

Association of Business Economists (NABE), and The National Council on Economic Education. She is a contributor to Blue Chip Financial Forecasts. Ms. Camilli is a member of the Financial Women’s Association, the New York Women’s Bond Club, the Forecasters Club, and the New York Association of Business Economists. Her civic activities include serving on the Board of the Epiphany School Foundation.

Stephen W. Carr		Retired Partner, Attorney, Goodwin Procter LLP

Mr. Carr, 65, has served as a Director since 2006. Mr. Carr is a member of the Executive Committee of the Corporation and the Compensation and Option Committee of the Corporation. Mr. Carr retired as partner of Goodwin Procter llp in 2004. He is a Director of Management Sciences for Health, the Concord Museum, and CC Pools, Inc.

Alexander S. Costello		Teacher, Brooks School

Mr. Costello, 54, has served as a Director since 1993. He is a member of the Audit Committee of the Corporation and the Chairman of the Nominating Committee of the Corporation. Mr. Costello is a teacher at the Brooks School. Mr. Costello was the Chairman of the Board of Directors of The Lowell Plan, a non-profit organization dedicated to the revitalization of the City of Lowell, and is a member of the Board of Governors of Saints Memorial Medical Center in Lowell. Mr. Costello is also the former Editorial Page Editor of the Lowell Sun.

O. Bradley Latham		Attorney, Principal, Latham, Latham & Lamond, P.C.

Mr. Latham, 67, has served as a Director since 2005. He is a member of the Compensation and Option Committee of the Corporation, the Insurance Committee of the Corporation and the Risk Management and Asset/Liability Committee of the Corporation. Mr. Latham is a principal in the law firm of Latham, Latham & Lamond, PC in Reading, Massachusetts. Mr. Latham is also a Trustee of Stoneham Theater and Director of the Reading Scholarship Foundation. He has served as an arbitrator for the American Arbitration Association, Chairman of the Regional Board of the American Red Cross, Chairman of the Regional Board of the American Cancer Society, and a Delegate for the Easter Seal Society. He serves as a pro bono counsel for the Reading Ice Arena Authority.

Stephen E. Marshall		Retired as President and Treasurer, C. H. Cleaves Insurance Agency, Inc.

Mr. Marshall, 69, has served as a Director since 1986 and as a Trustee of a predecessor bank since 1972. He is a member of the Executive Committee of the Corporation and a Director and a member of the Executive Committee of the Bank. Mr. Marshall is also Chairman of the Insurance Committee of the Corporation and a member of the Nominating Committee of the Corporation. Mr. Marshall’s affiliations include the Professional Insurance Agents of Massachusetts. Mr. Marshall is associated with various local charitable, civic, and church organizations.

Paul J. McCarthy		Executive Vice President, Jobs for Massachusetts, Inc.

Mr. McCarthy, 59, has served as a Director since 2007. Mr. McCarthy is a member of the Executive Committee of the Corporation, the Audit Committee of the Corporation, and the Nominating Committee of the Corporation. Mr. McCarthy is the Executive Vice President of Jobs for Massachusetts, Inc., a position he has held since 1982.

Nalin M. Mistry		Consulting Engineer and General Contractor, Mistry Associates, Inc., N M Construction Corporation and MAI Associates, Inc.

Mr. Mistry, 65, has served as a Director since 2007. Mr. Mistry is a member of the Audit Committee of the Corporation, the Compensation and Option Committee of the Corporation, and the Nominating Committee of the Corporation. Mr. Mistry is the President of Mistry Associates, Inc., a consulting engineering firm, a position he has held since 1979. Mr. Mistry is also currently the President of N M Construction Corporation, a general contracting firm, a position he has held since 1986, and the President of MAI Associates, Inc., a subcontracting firm, a position he has held since 1992.

Nancy L. Pettinelli		Executive Director, Visiting Nurse Association of Greater Lowell, Inc.

Ms. Pettinelli, 61, has served as a Director since 1998. She is a member of the Executive Committee of the Corporation and the Insurance Committee of the Corporation. Ms. Pettinelli is also the Chairperson of the Compensation and Option Committee. Ms. Pettinelli was the Director of Clinical Services for the Visiting Nurse Association of Greater Lowell, Inc. from 1986 through April 1995 and has served as its Executive Director thereafter. Ms. Pettinelli serves on the Board of Directors of the New England Quilt Museum. Ms. Pettinelli also serves on the Compensation Committee of the New England Quilt Museum.

William F. Rucci, Jr.		Certified Public Accountant, Partner, Rucci, Bardaro & Barrett, PC

Mr. Rucci, 48, has served as a Director since 2005. He is Chairman of the Audit Committee of the Corporation and a Director of the Bank. Mr. Rucci is the President of the Accounting/Consulting firm of Rucci, Bardaro & Barrett, PC and is Co-Director of the Russell Bedford International Corporate Tax Group. He is a Trustee and Chairman of the Audit and Compliance Committee of Hallmark Health Systems, Inc., and a Director and past President of the Malden Industrial Aid Society. Mr. Rucci is a member of the American Institute of Certified Public Accountants and Massachusetts Society of Certified Public Accountants, where he is a member of the Board of Directors and M.A.P. (Management of an Accounting Practice) Committee.

EXECUTIVE OFFICERS

Information required by this item concerning the Executive Officers of the Corporation is contained in part under the caption “Executive Officers of the Registrant” in Part I of the Original Filing.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Corporation’s Directors, executive officers, and beneficial owners of more than 10% of its common stock, par value $1.00 per share (the “Common Stock”), are required under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to file reports of ownership and changes in ownership with the SEC. Copies of those reports must also be furnished to the Corporation. Based solely on a review of reports furnished to the Corporation and written representations that no other reports were required from certain reporting persons, the Corporation believes that during 2007 each Director, executive officer, and 10% stockholder of the Corporation’s securities made timely filings of all reports required by Section 16 of the Exchange Act, with the following exceptions: Mr. Bufferd and Mr. Cormier each did not timely file one Form 4 reporting the exercise of a stock option.

CODE OF ETHICS

The Corporation adopted a code of ethics that applies to all of the Corporation’s and the Bank’s directors, officers and employees. This code of ethics is available on the Corporation’s website at www.massbank.com. The Corporation intends to disclose any amendments to, or waivers from, its code of ethics that are required to be publicly disclosed pursuant to the rules of the SEC and the NASDAQ Global Select Market by filing such amendment or waiver with the SEC and by posting it on our website.

AUDIT COMMITTEE

The Corporation has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee are William F. Rucci, Jr. (Chairman), Alexander S. Costello, Paul J. McCarthy and Nalin M. Mistry, each of whom is independent as independence for audit committee members is defined under NASDAQ listing standards applicable to the Corporation as well as the SEC.

AUDIT COMMITTEE FINANCIAL EXPERT

The Corporation’s Board of Directors has determined that Audit Committee member William F. Rucci, Jr. is an audit committee financial expert as defined in Item 407(d)(5) of Regulation S-K of the Exchange Act.

DIRECTOR CANDIDATES

On February 11, 2008, the Corporation’s Board of Directors amended its By-Laws by adding:

	•		a new provision to Article I, Section 1 and Article II, Section 2 that addresses the timing for stockholders to make director nominations or stockholder proposals when the annual meeting of stockholders is held more than seven days after the anniversary of the immediately preceding annual meeting of stockholders;
	•		a new Section 2A to Article II, entitled “Limitations on Eligibility to Serve as a Director;” and
	•		a new Section 9 to Article V regarding the severability of the By-Laws.

Pursuant to the new provision included in Article I, Section 1 and in Article II, Section 2, in the event that a stockholder wishes to have any director nominations or a stockholder proposal considered at an annual meeting of stockholders and such annual meeting is scheduled to be held on a date more than seven days after the anniversary of the immediately preceding

annual meeting of stockholders, the stockholder will be allowed to provide written notice of such nominations or stockholder proposal and certain other information as set forth in the By-Laws to the Secretary of the Corporation at its principal offices not later than the close of business on (a) the 20 ^th day (or if that day is not a business day for the Corporation, on the next succeeding business day) following the first date on which the date of such annual meeting was publicly disclosed, or (b) if the first date of such public disclosure occurs more than 75 days prior to such scheduled date of such annual meeting, then the later of (1) the 20 ^th day (or if that day is not a business day for the Corporation, on the next succeeding business day) following the first date of such public disclosure or (2) the 75 ^th day prior to such scheduled date of such meeting (or if that day is not a business day for the Corporation, on the next succeeding business day).

Pursuant to Article II, Section 2A, no person will be qualified to be nominated or elected as a Director, or serve as a Director, and no person will be qualified to nominate a person to serve as a Director, if the Board of Directors determines that such person has, either alone or acting in concert with any other person or persons, group, associate or company, individually or together: (1) failed to make any necessary filings relating to control or ownership of shares of a banking institution or bank holding company with any state or federal banking or securities regulatory agency, including but not limited to the SEC, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, or the Massachusetts Division of Banks (“Federal or State Regulatory Agencies”); (2) failed to make any required material disclosure relating to the control or ownership of shares of a banking institution or bank holding company to any Federal or State Regulatory Agency; or (3) acquired control, or is attempting or is in the process of attempting to acquire control, of the Corporation or any subsidiary or affiliate of the Corporation without first having obtained the required approval or notice of non-objection from the appropriate Federal or State Regulatory Agency in accordance with applicable law. Furthermore, a person shall not be qualified to be nominated or elected, or serve as a Director, if the Board of Directors has determined that such person: (a) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty, breach of trust or money laundering; (b) is a person against whom a Federal or State Regulatory Agency has issued a cease and desist order for conduct involving dishonesty, breach of trust, or money laundering, which order is final; (c) has been found, in a final and unappealable decision by any Federal or State Regulatory Agency or by any court, to have (i) breached a fiduciary duty involving personal profit or (ii) committed a reckless or willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency; or (d) has been nominated by a person who would be disqualified from serving as a Director under clauses (a), (b) or (c).

Pursuant to Article V, Section 9, if any term or provision of any of the By-Laws is ruled illegal or invalid, it will not affect or invalidate any other term or provision of the By-Laws.

A copy of the Certificate of Amendment to the By-Laws of the Corporation was filed with the SEC on February 13, 2008 as an exhibit to the Corporation’s Current Report on Form 8-K.

Item 11. Executive Compensation.

COMPENSATION COMMITTEE

For 2007, the Compensation and Option Committee of the Corporation (the “Compensation Committee”) consisted of Ms. Pettinelli (Chairperson), and Messrs. Carr, Latham, and Mistry. For 2007, the Board of Directors has determined that each member of the Compensation Committee was “independent” under the rules of the SEC and the National Association of Securities Dealers. The Compensation and Option Committee is responsible for making recommendations to the Boards of Directors of the Bank and the Corporation with respect to the policies that govern both annual compensation and incentive stock ownership programs for the employees of the Bank. The Board of Directors has not adopted a charter for the Compensation Committee.

The Compensation Committee’s report concerning executive compensation matters appears elsewhere in this Amendment No. 1 to our Annual Report on Form 10-K/A.

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee is responsible for recommending to the Boards of Directors of the Bank and the Corporation the annual compensation of the executive officers, including all incentive programs (cash and stock option awards), and director compensation.

Our Compensation Committee: (1) establishes the Bank’s compensation philosophy, (2) establishes the structure of compensation, (3) reviews the Chief Executive Officer’s recommendations for benefits and compensation of all other officers, (4) evaluates the Chief Executive Officer’s performance, (5) recommends to the Bank’s Board of Directors benefits and compensation for the Chief Executive Officer and other officers, (6) recommends to the Corporation’s Board of Directors

stock option awards, and (7) makes recommendations to the Corporation’s Board of Directors regarding director compensation.

Compensation Philosophy

Our compensation philosophy is to design compensation programs to achieve the following objectives: (1) to attract, retain and motivate all officers with the ability to contribute to our long term success, (2) to pay incentive compensation awards based upon our strategic goals and financial performance, and (3) to align management and stockholder interests.

Structure of Compensation

Our total compensation consists primarily of: (1) base salary, (2) incentive cash bonuses, (3) incentive stock options, (4) a defined benefit retirement plan, and (5) an employee stock ownership plan. In addition, the Chief Executive Officer and the Chief Operating Officer receive contributions to a deferred compensation program and the Chief Executive Officer is party to an executive supplemental retirement agreement. We believe that this mix will drive individual performance, short-term profitability and long-term stock performance. Additionally, we provide retirement and other benefits to attract and retain our employees.

Compensation Process

Our Compensation Committee met three times during 2007. When necessary, the Compensation Committee retains outside compensation consultants for the purpose of obtaining advice on the design of compensation programs. All outside consultants are independent of the Corporation, the Bank, and our employees. Our Compensation Committee currently retains an outside compensation consultant, Olney Associates, Inc., for the purpose of providing position evaluations, a report of market economic trends and practices regarding salary structures, and competitive salary surveys for geographic areas including both Massachusetts and Connecticut. There were no material changes to the principal terms of any compensation programs during 2007. In determining compensation for the Chief Executive Officer to recommend to the Bank’s and the Corporation’s Boards, the Compensation Committee considers the report of the compensation consultant as well as its assessment of the performance of the Chief Executive Officer. For all other senior executives, the Compensation Committee considers the compensation consultant’s report as well as recommendations made by the Chief Executive Officer. Officer evaluations are considered in executive session with only the Chief Executive Officer present and the Chief Executive Officer’s evaluation is considered in executive session with no employees present.

Base Salary

Several factors determine base salary, including the Corporation’s performance, individual performance, compensation of officers employed by similar institutions that we compete with for talent, compensation paid in prior years, the number of years employed by us, and the number of years in the same job. The Compensation Committee reviews competitive salary information provided by the compensation consultant. All officer base salary increases become effective January 1 ^st of the following year. In 2007, the average officer salary increase (29 employees) was 4.4% and the Chief Executive Officer’s salary increase was 3.6%. For the year 2008, the average officer salary increase (37 employees) was 4.0% and the Chief Executive Officer’s salary increase was 3.5%.

Incentive Program

Our Compensation Committee believes that incentive programs should be closely tied to the attainment of our short-term and long-term strategic objectives. In addition, our Compensation Committee believes that stock option awards further align the Directors and officers ownership interests with those of other stockholders.

Unlike base salary, incentive programs put the executives at risk based upon overall performance. These forms of compensation are not paid when goals and objectives are not obtained.

Cash Incentive Bonus Plan . All officers are eligible to receive incentive bonuses under the Bank’s Officer Incentive Cash Bonus Plan (the “Bonus Plan”). The Bonus Plan is designed to motivate and reward eligible employees for their contributions by making a significant portion of their cash compensation dependent upon the Corporation’s performance. The Bonus Plan establishes the terms under which annual cash bonus compensation may be paid to our eligible employees, including the named executive officers.

Annually, the Board of Directors of the Bank establishes the corporate performance goals for the Bonus Plan. To be eligible for a bonus payment, the Corporation must increase its net income by a specified percentage over last year’s results. No bonus is payable if the net income performance goal is not attained. Once the net income performance goal is attained, actual payments will be based, in part, on the Corporation’s achievement of the following performance goals: earnings per share; book value per share; dividends paid to our stockholders; and the improvement of efficiency levels throughout the Corporation (collectively, the “Performance Goals”). For fiscal year 2007, there was no individual performance component for any of the participants under the Bonus Plan.

If the minimum increase in net income is attained (i.e., the participants are eligible for a bonus), the Compensation Committee considers the actual increase in net income and may, in its discretion, increase or decrease the amount of the bonus award, within the parameters discussed below, depending on the actual amount of the increase in net income. Thus, performance greatly exceeding the minimum increase in net income may result in progressively accelerating payments within the parameters discussed below and performance at or near the minimum increase in net income may result in a smaller payment within the parameters discussed below.

The target amount of the bonus is a target percentage of the participant’s base salary. For 2007, the target bonus percentage for Mr. Brandi and Ms. West was 35% and the target bonus percentage for Mr. Cormier, Mr. Milinazzo, and Mr. Rivers was 25%. If the Corporation achieves the net income performance goal and all of the Performance Goals, the participants, including the named executive officers, are entitled to receive his or her full target bonus (subject to a reduction in such payment based on the individual’s number of absences over five during the plan year). If the Corporation achieves the net income performance goal (and the level at which it was achieved) and some, but not all, of the Performance Goals, the Compensation Committee has the discretion to award bonuses to the named executive officers within the parameters set forth below:

		Achieves Some of		Achieves Most of
		the Performance		the Performance		Achieves All of the
Name		Goals		Goals		Performance Goals
Gerard H. Brandi		Up to 21%		21% to 34%			35	%
Reginald E. Cormier		Up to 15%		15% to 24%			25	%
Donna H. West		Up to 21%		21% to 34%			35	%
James L. Milinazzo		Up to 15%		15% to 24%			25	%
William F. Rivers		Up to 15%		15% to 24%			25	%

Shortly after the end of each year, the Chief Executive Officer reviews the Corporation’s net income and performance against the Performance Goals and, based on the Corporation’s actual increase in net income and achievement of the Performance Goals, and within the parameters discussed above, recommends to the Compensation Committee the amount of the actual bonus awards for the executive officers and the senior officers, other than the Chief Executive Officer. The Compensation Committee reviews the Chief Executive Officer’s recommendations and determines the amount of the actual bonus awards for the executive officers and the senior officers. Similarly, the Compensation Committee reviews the Corporation’s net income and performance against the Performance Goals and, based on the Corporation’s actual increase in net income as well as the achievement of the Performance Goals, and within the parameters discussed above, determines the amount of the actual bonus award for the Chief Executive Officer.

For 2007, we needed an increase of 10% in net income over the prior year’s results, which would have required us to increase our net income by $703,000, for eligible employees, including the named executive officers, to be eligible for a bonus. Our actual net income results entitled participants, including the named executive officers, to be eligible for a bonus under the Bonus Plan. In addition, in 2007 we achieved the following Performance Goals: earnings per share; book value per share; and dividends paid to our stockholders. We are not disclosing our specific Performance Goals because we have determined that such disclosure could result in competitive harm to us. We cannot determine how likely it will be for us to achieve these Performance Goals in the future; however, we have set these Performance Goals (where applicable) above the average performance of companies within our peer group, which consists of Massachusetts savings banks with assets in excess of $800 million.

Based on the actual net income and the achievements of these Performance Goals, the Compensation Committee determined that the named executive officers achieved “some of the Performance Goals” and exercised its discretion to award the following bonus payments to the named executive officers:

		Maximum Bonus
		Percentage of		Actual Bonus
		Salary that could		Percentage of
Name		be Awarded		Salary Awarded				Actual Bonus Amount
Gerard H. Brandi		Up to 21%			7.7	%		$	40,000
Reginald E. Cormier		Up to 15%			11.2	%		$	17,500
Donna H. West		Up to 21%			19.0	%		$	32,000
James L. Milinazzo		Up to 15%			4.9	%		$	6,500
William F. Rivers		Up to 15%			4.3	%		$	5,000

The terms of the Bonus Plan, including the target bonus levels and relationship of payouts to achievement of corporate performance criteria, were established by the Compensation Committee and approved by the Bank’s Board of Directors. Annually, the Compensation Committee reviews the plan to ensure that it is designed in a manner that continues to motivate employees to achieve our profitability goals.

Directors held in January, which is usually the third Tuesday of the month. Options granted to newly elected Directors are generally granted at a Board of Directors meeting following their election to the Board of Directors. All stock option awards are made at the closing price of our Common Stock on the grant date. All grants are effective on the date of the applicable Board meeting.

Our long-term strategic objectives are set forth in a five-year strategic plan that is revised annually. The objectives are related to nine performance ratio goals and the performance of our stock in the prior five years as compared to the S&P 500 Index and the NASDAQ Bank Index. The nine performance goals are: asset growth, earnings per share, return on assets, return on equity, net interest margin, non-interest expense, non-interest income, efficiency ratio, and book value per share. We are not disclosing our specific goals for our stock option program because we have determined that such disclosure could result in competitive harm to us. We cannot determine how likely it will be for us to achieve our performance goals in the future; however, we have set these goals (where applicable) above the average performance of companies within our peer group, which consists of Massachusetts savings banks with assets in excess of $800 million. Because a majority of our strategic objectives were attained in 2007, stock options were awarded to our Chief Executive Officer, Directors, and Bank officers in January 2008.

Retirement Plans

The Defined Benefit Plan. Under our Savings Banks Employees Retirement Association (“SBERA”) defined benefit pension plan, all full time employees and part time employees who work more than 1,000 hours within a year, who have attained the age of 21, and have achieved one year of eligibility service, earn the right to receive certain benefits upon retirement. Participants are vested in the plan over a period of seven years. Normal retirement benefits are payable at age 65 and are calculated as the product of 1.50% times years of service (up to a maximum of 25) multiplied by the participant’s final three year average eligible earnings up to the IRS permissible limit ($220,000 for plan years beginning in 2006) plus 0.60% of the participant’s final three year average earnings in excess of covered compensation. Covered compensation is the average of the Social Security taxable wage base for the 35-year period ending in the year the participant attains his or her normal retirement age for Social Security purposes.

Our Compensation Committee believes that retirement benefits are an essential part of attracting and retaining employees in our market. This type of retirement plan provides our employees a fixed retirement benefit while we remain at risk for any changes in the market value of the plan assets. Our Compensation Committee believes this gives us a competitive advantage over other employers in our market who do not have defined benefit plans.

Employee Stock Ownership Plan (“ESOP”). As a supplement to the SBERA pension plan, we have established an ESOP for the benefit of substantially all our employees. The ESOP has the same eligibility and vesting requirements as the defined benefit plan except that, as of October 1, 2007, participants in the ESOP are vested in the plan over a period of six years. Annually, we make a contribution to the trust that purchases shares either from former or retired employees or on the open market and distributes those shares on a pro rata basis based upon each employee’s salary up to the IRS permissible limit ($220,000 for plan years beginning in 2006). The benefit available to each employee will be equal to the number of shares held in trust at his or her retirement date (or termination date if fully vested) multiplied by the market price of the stock at that time. This retirement plan requires the employee to take all the risk of changes in market price. Our Compensation Committee believes that having this type of retirement plan gives every employee an interest in our financial success and will motivate the employee to act accordingly.

Deferred Compensation Program

We also maintain a nonqualified deferred compensation program for the benefit of our Chief Executive Officer and our Chief Operating Officer in recognition of their many years of service with us. Mr. Brandi, our Chief Executive Officer, has been with the Corporation since 1975, a period of 32 years. Due to the fact that his retirement benefits under both the SBERA pension plan and our ESOP are reduced by the IRS mandated ceiling ($220,000 for plan years beginning in 2006) and his years of service exceed the maximum of 25 years used in the calculation of retirement benefits under our SBERA pension plan, we set up a deferred compensation program for him in 1994. The program calls for a contribution of 20% of the difference between his earnings and the IRS ceiling to be paid into a trust and invested in mutual funds, other securities, and/or bank deposits. The investment earnings accrue to the benefit of Mr. Brandi. Upon retirement or termination of employment, the balance of the trust is to be paid to Mr. Brandi. The amount paid will be determined by the value of the trust upon his termination. Mr. Brandi takes the risk of any fluctuation in market value.

We also extended the deferred compensation program for the benefit of our Chief Operating Officer, Donna West, upon her attainment of 25 years of service with us. Her benefit is based upon annual contributions to be determined by the Compensation Committee at its discretion as her salary does not exceed the IRS mandated ceiling. As in the case of Mr. Brandi, the contribution is made to a trust and invested in mutual funds, other securities, and/or bank deposits. The investment earnings accrue to the benefit of Ms. West, who also bears the risk of any fluctuations in market value.

Our Compensation Committee believes that the deferred compensation program is necessary in order to retain the aforementioned individuals and these types of programs are customary in our market place for executives at this level.

Executive Supplemental Retirement Agreement

We entered into an Executive Supplemental Retirement Agreement with Mr. Brandi in 1980, which was amended and restated in 1986. This agreement provides for 180 monthly payments of $2,500 to Mr. Brandi upon his retirement or 120 monthly payments of $3,000 to his beneficiary in the case of his death prior to retirement. This type of supplemental retirement benefit is very common in our market place for senior executives and the level of benefits provided to Mr. Brandi is very modest when compared to similar arrangements at our peer banks.

Other Benefits

We provide all officers with other benefits, including health insurance, life insurance, payment for the use of personal vehicles on company business, or the reasonable use of company vehicles on personal matters. Our Compensation Committee believes that these types of benefits are reasonable and consistent with the overall compensation program and enable us to attract and retain superior employees for key positions. Our Board periodically reviews the levels of payments of these items during normal budgetary review.

COMPENSATION COMMITTEE REPORT

The Compensation and Option Committee administers the executive compensation program of the Bank and the Corporation under the supervision of the Board of Directors. The Compensation and Option Committee has reviewed and discussed the Compensation Discussion and Analysis report beginning on page 4 of this Amendment No. 1 to our Annual Report on Form 10-K/A with management. Based on that review and discussion, the Compensation and Option Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Amendment No. 1 to our Annual Report on Form 10-K/A.

This report has been furnished by Nancy L. Pettinelli (Chairperson), Stephen W. Carr, O. Bradley Latham, and Nalin M. Mistry, the members of the Compensation and Option Committee for 2007.

* * * *

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In 2007, the Compensation and Option Committee of the Board of Directors was comprised of Ms. Pettinelli (Chairperson), Mr. Carr, Mr. Latham, and Mr. Mistry, all of whom are non-employee Directors of the Corporation. The Corporation is not aware of any compensation committee interlocks or relationships involving members of the Board of Directors requiring disclosure in this Amendment No. 1 to our Annual Report on Form 10-K/A.

EXECUTIVE COMPENSATION

Until the Corporation becomes actively involved in other business, no separate compensation is being paid to the executive officers of the Corporation, all of whom are executive officers of the Bank and receive compensation as such.

Summary Compensation Table

The following table sets forth for the fiscal years ended December 31, 2007 and December 31, 2006, a summary of the compensation paid by the Bank to the Chief Executive Officer of the Corporation, the Chief Financial Officer of the Corporation and each of the three most highly compensated executive officers of the Corporation and/or the Bank, other than the Chief Executive Officer and Chief Financial Officer, whose total compensation exceeded $100,000 in each year.

SUMMARY COMPENSATION TABLE

																										Change in
																										Pension Value
																										and
																										Nonqualified
																						Non-Equity				Deferred
														Stock				Option				Incentive Plan				Compensation				All Other
Name and Principal						Salary				Bonus				Awards				Awards				Compensation				Earnings				Compensation				Total
Position		Year				($)				($)(1)				($)				($)(2)				($)				($)(3)(4)				($)(5)				($)
Gerard H. Brandi			2007			$	517,800			$	40,000			$	0			$	7,771			$	0			$	93,664			$	69,195	(6)		$	728,430
Chairman, President and Chief Executive Officer			2006			$	499,800			$	0			$	0			$	3,936			$	0			$	214,616			$	66,503	(7)		$	784,855
Reginald E. Cormier			2007			$	156,600			$	17,500			$	0			$	6,476			$	0			$	53,339			$	7,431	(6)		$	241,346
Senior Vice President,			2006			$	150,000			$	0			$	0			$	3,280			$	0			$	59,356			$	6,853	(7)		$	219,489
Treasurer and Chief Financial Officer
Donna H. West			2007			$	168,000			$	32,000			$	0			$	6,476			$	0			$	88,926			$	27,964	(6)		$	323,366
Senior Vice President,			2006			$	160,800			$	0			$	0			$	3,280			$	0			$	100,003			$	17,313	(7)		$	281,396
Community Banking and Chief Operating Officer
James L. Milinazzo			2007			$	133,200			$	6,500			$	0			$	6,476			$	0			$	12,495			$	6,380	(6)		$	165,051
Senior Vice President,			2006			$	127,920			$	0			$	0			$	3,280			$	0			$	21,760			$	3,286	(7)		$	156,246
Lending
William F. Rivers			2007			$	116,700			$	5,000			$	0			$	5,181			$	0			$	9,923			$	5,666	(6)		$	142,470
Vice President,			2006			$	112,800			$	0			$	0			$	2,624			$	0			$	10,315			$	5,305	(7)		$	131,044
Operations

Grants of Plan-Based Awards

The following table contains information concerning grants of plan based awards under the Corporation’s cash and equity incentive plans to the named executive officers during the year ended December 31, 2007.

GRANTS OF PLAN-BASED AWARDS

																														All
																														Other												Grant
																														Stock				All Other				Exercise				Date
																														Awards:				Option				or Base				Fair
																														Number				Awards:				Price of				Value
						Estimated Future Payouts												Estimated Future Payouts												of				Number of				Option				of Stock
						Under												Under												Shares of				Securities				Awards				and
		Grant				Non-Equity Incentive Plan												Equity Incentive Plan												Stock or				Underlying				($/Sh)				Option
Name		Date				Awards												Awards												Units (#)				Options (#)(1)		(2)(3)				Awards(4)
						Threshold				Target				Maximum				Threshold				Target				Maximum
						($)				($)				($)				(#)				(#)				(#)
Gerard H. Brandi			1/16/2007				—				—				—				—				—				—				—				3,000			$	32.60			$	20,010
Reginald E. Cormier			1/16/2007				—				—				—				—				—				—				—				2,500			$	32.60			$	16,675
Donna H. West			1/16/2007				—				—				—				—				—				—				—				2,500			$	32.60			$	16,675
James L. Milinazzo			1/16/2007				—				—				—				—				—				—				—				2,500			$	32.60			$	16,675
William F. Rivers			1/16/2007				—				—				—				—				—				—				—				2,000			$	32.60			$	13,340

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information with respect to the named executive officers concerning unexercised stock option awards as of December 31, 2007. None of the named executive officers has outstanding stock awards as of December 31, 2007.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

		Option Awards																				Stock Awards
																																		Equity
																														Equity				Incentive
																														Incentive				Plan
																														Plan				Awards:
																														Awards:				Market
																														Number				or Payout
										Equity												Number				Market				of				Value of
										Incentive												of				Value of				Unearned				Unearned
										Plan												Shares				Shares				Shares,				Shares,
						Number of				Awards:												or Units				or Units				Units or				Units or
		Number of				Securities				Number of												of Stock				of Stock				Other				Other
		Securities				Underlying				Securities												That				That				Rights				Rights
		Underlying				Unexercised				Underlying				Option								Have				Have				That				That
		Unexercised				Options (#)				Unexercised				Exercise				Option				Not				Not				Have Not				Have Not
		Options (#)				Unexercisable				Unearned				Price				Expiration				Vested				Vested				Vested				Vested
Name		Exercisable				(1)				Options (#)				($)				Date				(#)				($)				(#)				($)
Gerard H. Brandi			3,750				0				0			$	29.50				1/19/2008
			3,750				0				0			$	25.00				1/18/2009
			3,750				0				0			$	19.00				1/17/2010
			1,500				0				0			$	20.67				1/15/2011
			1,500				0				0			$	27.63				1/14/2012
			2,500				0				0			$	28.44				1/20/2013
			2,500				0				0			$	42.90				1/14/2014
			3,000				0				0			$	37.15				1/17/2015
			600				2,400				0			$	32.80				1/16/2016
			0				3,000				0			$	32.60				1/15/2017
Reginald E. Cormier			1,625				0				0			$	29.50				1/19/2008
			3,000				0				0			$	25.00				1/18/2009
			3,000				0				0			$	19.00				1/17/2010
			1,500				0				0			$	20.67				1/15/2011
			1,500				0				0			$	27.63				1/14/2012
			1,000				0				0			$	28.44				1/20/2013
			2,500				0				0			$	42.90				1/14/2014
			2,500				0				0			$	37.15				1/17/2015
			500				2,000				0			$	32.80				1/16/2016
			0				2,500				0			$	32.60				1/15/2017
Donna H. West			2,625				0				0			$	29.50				1/19/2008
			3,000				0				0			$	25.00				1/18/2009
			3,000				0				0			$	19.00				1/17/2010
			1,500				0				0			$	20.67				1/15/2011
			1,500				0				0			$	27.63				1/14/2012
			1,000				0				0			$	28.44				1/20/2013
			2,500				0				0			$	42.90				1/14/2014
			2,500				0				0			$	37.15				1/17/2015
			500				2,000				0			$	32.80				1/16/2016
			0				2,500				0			$	32.60				1/15/2017

Option Awards

Stock Awards

Equity

Equity

Incentive

Incentive

Plan

Plan

Awards:

Awards:

Market

Number

or Payout

Equity

Number

Market

of

Value of

Incentive

of

Value of

Unearned

Unearned

Plan

Shares

Shares

Shares,

Shares,

Number of

Awards:

or Units

or Units

Units or

Units or

Number of

Securities

Number of

of Stock

of Stock

Other

Other

Securities

Underlying

Securities

That

That

Rights

Rights

Underlying

Unexercised

Underlying

Option

Have

Have

That

That

Unexercised

Options (#)

Unexercised

Exercise

Option

Not

Not

Have Not

Have Not

Options (#)

Unexercisable

Unearned

Price

Expiration

Vested

Vested

Vested

Vested

Name

Exercisable

(1)

Options (#)

($)

Date

(#)

($)

(#)

($)

James L. Milinazzo

500

2,000

0

$

32.80

1/16/2016

0

2,500

0

$

32.60

1/15/2017

William F. Rivers

2,000

0

0

$

37.15

1/17/2015

400

1,600

0

$

32.80

1/16/2016

0

2,000

0

$

32.60

1/15/2017

Option Exercises and Stock Vested

The following table sets forth information with respect to the named executive officers concerning the exercise of stock options during the year ended December 31, 2007. None of the named executive officers have outstanding stock awards as of December 31, 2007.

OPTION EXERCISES AND STOCK VESTED

		Option Awards								Stock Awards
		Number of Shares				Value Realized				Number of Shares				Value Realized
		Acquired on Exercise				on				Acquired on Vesting				on
Name		(#)				Exercise ($)				(#)				Vesting($)
Gerard H. Brandi(1)			5,000			$	63,438				0				0
Reginald E. Cormier(1)			2,000			$	17,558				0				0
Donna H. West(1)			3,500			$	44,406				0				0
James L. Milinazzo			0			$	0				0				0
William F. Rivers			0			$	0				0				0

Pension Benefits

The following table outlines the named executive officer’s number of years of credited service, present value of accumulated benefit as of October 31, 2007, and payments during the year ended December 31, 2007 under the SBERA pension plan and, for Mr. Brandi only, the Executive Supplemental Retirement Agreement. The SBERA pension plan is a tax-qualified defined benefit plan that covers substantially all our employees. Under this plan, participants are entitled to receive a normal

retirement benefit upon retirement at age 65 in an amount determined pursuant to the plan’s benefit formula. For further information about the benefit formula, see the description of this plan beginning on page 6 of the section of this Amendment No. 1 to our Annual Report on Form 10-K/A entitled “Compensation Discussion and Analysis.” Benefits may be payable in a lump sum upon termination of employment. Participants may also elect to be paid in different forms of annuities. The table below also shows the present value of the accumulated benefit to Mr. Brandi under his Executive Supplemental Retirement Agreement as of December 31, 2007. This agreement provides for 180 monthly payments of $2,500 to Mr. Brandi upon his retirement or 120 monthly payments of $3,000 to his beneficiary in the case of his death prior to retirement.

PENSION BENEFITS

								Present Value
								of
				Number of Years				Accumulated				Payments During
Name		Plan Name		Credited Service (#)				Benefit($)				Last Fiscal Year($)
Gerard H. Brandi		SBERA Pension Plan			34.08			$	1,222,120	(2)		$	0
		Executive Supplemental
		Retirement Agreement			N/A	(1)		$	307,376	(3)		$	0
Reginald E. Cormier		SBERA Pension Plan			20.08			$	449,720	(2)		$	0
Donna H. West		SBERA Pension Plan			32.33			$	855,590	(2)		$	0
James L. Milinazzo		SBERA Pension Plan			2.67			$	34,255	(2)		$	0
William F. Rivers		SBERA Pension Plan			3.10			$	29,887	(2)		$	0

Nonqualified Deferred Compensation

We also maintain a nonqualified deferred compensation program. Under this program, each participant receives a contribution each year equal to 20% of the portion of his or her taxable compensation that exceeds the amount that may be recognized as compensation under tax-qualified retirement plans, such as the SBERA pension plan and our ESOP. For plan years beginning in 2006, the limit was $220,000. We may also provide additional contributions at our discretion to reward a participant for long service or other significant contributions. Bank contributions are credited with earnings or losses tied to investment returns of the trust. The benefits earned under this program are not payable until the executive’s termination of employment, at which time it will be paid in a lump sum in cash. Currently, only two executives participate in this program.

The following table outlines employer contributions to the Deferred Compensation Plan during the year ended December 31, 2007. The table also details earnings on plan balances during the year, and the aggregate amount of all Deferred Compensation Plan obligations as of December 31, 2007. No employee contributions are permitted under the Deferred Compensation Plan.

NONQUALIFIED DEFERRED COMPENSATION

		Executive								Aggregate				Aggregate
		Contributions				Registrant				Earnings in				Withdrawals/				Aggregate
		in				Contributions in				Last				Distributions				Balance
Name		Last FY ($)				Last FY ($)(1)				FY ($)				($)				at Last FYE ($)
Gerard H. Brandi			0			$	58,960			$	56,860				0			$	1,448,102
Reginald E. Cormier			0				0				0				0				0
Donna H. West			0			$	20,000			$	1,153				0			$	45,089
James L. Milinazzo			0				0				0				0				0
William F. Rivers			0				0				0				0				0

Potential Post-Employment Payments

The named executive officers are entitled to certain compensation in the event of termination of such executive’s employment. This section is intended to discuss these post-employment payments, assuming separation from employment on December 31, 2007.

The Corporation and the Bank have employment agreements with Messrs. Brandi and Cormier and Ms. West, and the Bank has employment agreements with Messrs. Milinazzo and Rivers (each an “Employment Agreement” and collectively, the “Employment Agreements”). Pursuant to the Employment Agreements, each officer will devote his or her full business time and best efforts to the business and affairs of the Corporation and/or the Bank, as the case may be.

The term of the Employment Agreement with Mr. Brandi is three years, with a daily automatic extension of an additional one day for a continuous remaining term of three years unless either Mr. Brandi or the Corporation and the Bank give notice of intent not to extend the term of the agreement. The term of the Employment Agreements with each of Ms. West and Messrs. Cormier, Milinazzo, and Rivers is two years, with a daily automatic extension of an additional one day for a continuous remaining term of two years unless either the respective officer or the Corporation and/or the Bank, as the case may be, gives notice of intent not to extend the term of the agreement.

Under the respective Employment Agreements, the Corporation and/or the Bank, as the case may be, may terminate the officer’s employment, without incurring any continuing obligations to him or her, at any time, for “cause,” as defined in the Employment Agreements. In addition, the Employment Agreements provide generally that if the Corporation and/or the Bank, as the case may be, were to terminate the officer’s employment for any reason other than for cause, or, solely with respect to Mr. Brandi, he were to terminate his employment for “good reason,” as defined in his Employment Agreement, the officer would be entitled to a severance payment from the Corporation or the Bank, as the case may be. This severance payment would be approximately equal to three times the sum of the officer’s current base compensation and most recent bonus (or average bonus if higher), plus the vesting of the officer’s stock-based awards and the continuation of benefits for a period of three years. The severance amount payable to Mr. Brandi in the foregoing situations would also include an additional payment approximately equal to 60% of the difference between Mr. Brandi’s current compensation and the current year’s compensation limit under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”). In the case of Messrs. Rivers and Milinazzo, however, the severance payments from the Bank are approximately equal to two times the sum of their respective current base compensation and most recent bonus (or average bonus if higher), plus the vesting of stock-based awards and the continuation of benefits for a period of two years.

The Employment Agreements also generally provide that if there were a “Change in Control” of the Corporation, and if at any time during the two-year period following the Change in Control, either the Corporation and/or the Bank, as the case may be, were to terminate the employment of any of the officers for any reason other than for “cause” or if any of the officers were to terminate his or her employment for “good reason,” including a substantial adverse change in his or her title or responsibilities or a reduction in his or her annual base salary, the officer would be entitled to receive a Change in Control payment, instead of a severance payment. In the case of Mr. Brandi, however, the Change in Control payment would be the same as his severance payment described above. In the case of the other officers, the Change in Control payment would be approximately equal to three times his or her average taxable compensation over the five previous years of his or her employment with the Corporation and/or the Bank, as the case may be, plus the vesting of the officer’s stock-based awards and the continuation of benefits for a period of three years. For purposes of the Employment Agreements, a “Change in Control” is generally deemed to have occurred when (1) a person or group acquires beneficial ownership of 50% or more of the Common Stock of the Corporation, (2) as a result of a tender offer, proxy contest, merger or similar transaction, persons who were Directors before such transaction cease to constitute at least a majority of the Board of Directors of the Corporation, or (3) the stockholders of the Corporation approve a merger, a plan of liquidation or an agreement for the sale of all or substantially all of the Corporation’s assets.

Any Change in Control payments to Mr. Cormier, Ms. West, Mr. Milinazzo, or Mr. Rivers under the Employment Agreements may be subject to reduction if such reduction would result in a higher net after-tax amount to the executive. In

the case of Mr. Brandi, however, if any payments under his Employment Agreement are non-deductible by the Corporation or the Bank and Mr. Brandi becomes subject to an excise tax as a result of Section 4999 of the Code, then Mr. Brandi is entitled to an additional gross-up payment in an amount such that after Mr. Brandi pays all taxes on such gross-up payment, he will retain an amount equal to the excise tax imposed upon the payments.

The Employment Agreements also generally provide that if the officer is terminated due to his or her death, then the Corporation or the Bank, as the case may be, will pay to a designated beneficiary or the officer’s estate, a lump sum cash payment equal to such officer’s accrued and unpaid salary to the date of his or her death plus his or her accrued and unpaid incentive compensation, if any. In addition, his or her stock-based awards will vest. In addition, such officer’s spouse or dependents would also be entitled to receive health insurance coverage paid by the Bank, substantially similar to the coverage received prior to the date of termination, for a period of one year.

In addition, under the Employment Agreements, if the officer becomes disabled (as determined under the Employment Agreements), he or she would be entitled to receive his or her full salary until the earlier of his or her death, his or her becoming eligible for disability income under the Bank’s disability income plan (generally after 90 days), or, for Mr. Brandi, Mr. Cormier, and Ms. West, three years following the date of termination, and, for Mr. Milinazzo and Mr. Rivers, two years following the date of termination. The officer would also be entitled to receive health insurance coverage paid by the Bank, substantially similar to the coverage received prior to the date of termination, for a period of, in the case of Mr. Brandi, Mr. Cormier, and Ms. West, three years, and in the case of Mr. Milinazzo and Mr. Rivers, two years. In addition, his or her stock-based awards will vest.

Except for Mr. Brandi, the Employment Agreements also contain provisions that generally prevent the officers from competing with the Bank or the Corporation, attempting to hire employees of the Bank or the Corporation or encouraging any customer to terminate its relationship with the Bank or the Corporation during the term of the officer’s employment and up to three years after the officer’s employment with the Bank or the Corporation is terminated, except following a Change in Control.

The following table outlines the post-employment payments that would be made, assuming separation from the Corporation and/or the Bank on December 31, 2007:

														Involuntary or
														Good Reason
						Involuntary								Termination
		Voluntary				Termination Not				For Cause				(Change in
Payments and Benefits		Termination				for Cause				Termination				Control)(1)				Death				Disability
Gerard H. Brandi
Severance			0			$	1,873,080	(2)			0			$	1,937,880	(3)			0				0
Accelerated Vesting of Stock Options			0			$	5,950	(4)			0			$	7,795	(5)		$	5,950	(4)		$	5,950	(4)
Other Benefits			0			$	1,029,708	(6)			0			$	1,040,508	(7)		$	4,096	(8)		$	165,856	(9)
Tax Gross-Up			0				0				0			$	1,249,609	(10)			0				0
Total			0			$	2,908,738				0			$	4,235,792			$	10,046			$	171,806
Reginald E. Cormier
Severance			0			$	522,300	(11)			0			$	395,213	(12)			0				0
Accelerated Vesting of Stock Options			0			$	4,959	(13)			0			$	6,496	(14)		$	4,959	(13)		$	4,959	(13)
Other Benefits			0			$	36,406	(15)			0			$	36,406	(16)		$	4,096	(8)		$	75,556	(17)
Tax Gross-Up			0				0				0				0	(18)			0				0
Total			0			$	563,665				0			$	438,115			$	9,055			$	80,515
Donna H. West
Severance			0			$	600,000	(11)			0			$	453,841	(12)			0				0
Accelerated Vesting of Stock Options			0			$	4,959	(13)			0			$	6,496	(14)		$	4,959	(13)		$	4,959	(13)
Other Benefits			0			$	13,509	(15)			0			$	13,509	(16)		$	4,096	(8)		$	55,509	(19)
Tax Gross-Up			0				0				0				0	(18)			0				0
Total			0			$	618,468				0			$	473,846			$	9,055			$	60,468

														Involuntary or
														Good Reason
						Involuntary								Termination
		Voluntary				Termination Not				For Cause				(Change in
Payments and Benefits		Termination				for Cause				Termination				Control)(1)				Death				Disability
James L. Milinazzo
Severance			0			$	279,400	(20)			0			$	383,962	(12)			0				0
Accelerated Vesting of Stock Options			0			$	4,959	(13)			0			$	$6,496	(14)		$	4,959	(13)		$	4,959	(13)
Other Benefits			0			$	0	(21)			0			$	0			$	0	(8)		$	33,300	(22)
Tax Gross-Up			0				0				0				0	(18)			0				0
Total			0			$	284,359				0			$	390,458			$	4,959			$	38,259
William F. Rivers
Severance			0			$	243,400	(20)			0			$	287,847	(12)			0				0
Accelerated Vesting of Stock Options			0			$	3,967	(13)			0			$	5,196	(14)		$	3,967	(13)		$	3,967	(13)
Other Benefits			0			$	23,139	(21)			0			$	36,406	(23)		$	11,038	(8)		$	52,314	(24)
Tax Gross-Up			0				0				0				0	(18)			0				0
Total			0			$	270,506				0			$	329,449			$	15,005			$	56,281

The amounts shown in the above table do not include payments and benefits to the extent they have been earned prior to the termination of employment or are provided on a non-discriminatory basis generally to salaried employees upon termination of employment. These include:

	•		Accrued salary and vacation pay.
	•		Distribution of plan balances under our ESOP and the non-qualified deferred compensation plan. For more information about plan balances of certain named executive officers, see the section entitled “Executive Compensation — Nonqualified Deferred Compensation” on page 12 of this Amendment No. 1 to our Annual Report on Form 10-K/A.
	•		Distributions of benefits under the SBERA pension plan and Executive Supplemental Retirement Agreement. For more information, see the section entitled “Executive Compensation — Pension Benefits” beginning on page 11 of this Amendment No. 1 to our Annual Report on Form 10-K/A.
	•		Life insurance proceeds in the event of death.

•

Payments under our long-term disability plan in the event of disability.

DIRECTOR COMPENSATION

We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board of Directors. In setting director compensation, we consider the role of the Directors, the amount of time that Directors expend in fulfilling their duties as well as the expertise required of Board members.

Members of the Board of Directors of the Corporation (excluding Executive Committee members and employees of the Corporation or the Bank) received $1,000 for each Board of Directors or committee meeting attended during 2007 and will receive $1,200 for each Board of Directors or committee meeting attended during 2008. Members of the Executive Committee received $500 for each Board of Directors meeting attended during 2007 and will receive $600 for each Board of Directors meeting attended during 2008. In addition, members of the Executive Committee (excluding employees of the Corporation and/or the Bank) received during 2007, and will receive during 2008, an annual payment of $6,000, and such members of the Executive Committee received an additional $500 for each meeting attended of any committee of the Corporation during 2007 and will receive an additional $600 for each meeting attended of any committee of the Corporation during 2008. Directors of the Corporation and the Bank also are reimbursed for expenses incurred in connection with attendance at the meetings. During 2007, the chairmen of the various committees (other than the Executive Committee) received an additional $100 for each committee meeting over which they presided, and will receive an additional $200 for each committee meeting over which they preside in 2008, and the Secretary of the Corporation, who is also the Clerk of the Bank, received, and will receive in 2008, an annual payment of $1,000. In addition, during 2007, each non-employee Director received options to purchase 1,000 shares of the Corporation’s Common Stock. Members of the Audit Committee received in 2007, and will receive in 2008, an additional annual payment of $1,000.

Director Summary Compensation Table

The table below summarizes the compensation paid to non-employee Directors for the fiscal year ended December 31, 2007.

DIRECTOR COMPENSATION(1)

																		Change in
																		Pension
																		Value and
																		Nonqualified
														Non-Equity				Deferred
		Fees Earned				Stock				Option				Incentive Plan				Compensation				All Other
		or Paid in				Awards				Awards				Compensation				Earnings				Compensation				Total
Name		Cash ($)(2)				($)				($)(3)(4)				($)				($)				($)				($)
Mathias B. Bedell(5)		$	13,600				0			$	2,590				0				0				0			$	16,190
Allan S. Bufferd		$	22,000				0			$	2,590				0				0				0			$	24,590
Kathleen M. Camilli		$	9,000				0			$	2,590				0				0				0			$	11,590
Stephen W. Carr		$	18,250				0			$	2,710				0				0				0			$	20,960
Alexander S. Costello		$	9,100				0			$	2,590				0				0				0			$	11,690
O. Bradley Latham		$	10,500				0			$	2,590				0				0				0			$	13,090
Stephen E. Marshall		$	18,950				0			$	2,590				0				0				0			$	21,540
Paul J. McCarthy		$	11,500				0			$	953				0				0				0			$	12,453
Nalin M. Mistry		$	6,500				0			$	953				0				0				0			$	7,453
Nancy L. Pettinelli		$	18,200				0			$	2,590				0				0				0			$	20,790
William F. Rucci, Jr.		$	19,150				0			$	2,590				0				0				0			$	21,740